UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~September~~June 30, ~~2021~~2022


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

Commission file number: 001-13149

STRYKER CORPORATION
(Exact name of registrant as specified in its charter)

Michigan

38-1239739

(State of incorporation)

(I.R.S. Employer Identification No.)

2825 Airview Boulevard

Kalamazoo,

Michigan

49002

(Address of principal executive offices)

(Zip Code)

(269)

385-2600

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 Par Value	SYK	New York Stock Exchange
1.125% Notes due 2023	SYK23	New York Stock Exchange
0.250% Notes due 2024	SYK24A	New York Stock Exchange
2.125% Notes due 2027	SYK27	New York Stock Exchange
0.750% Notes due 2029	SYK29	New York Stock Exchange
2.625% Notes due 2030	SYK30	New York Stock Exchange
1.000% Notes due 2031	SYK31	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Small reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were ~~377,239,958~~378,320,706 shares of Common Stock, $0.10 par value, on ~~September~~June 30, ~~2021.~~2022.


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

PART I – FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)


		Three Months				Nine Months					Three Months				Six Months
		2021		2020		2021		2020			2022		2021		2022		2021
Net sales	Net sales	$	4,160	$	3,737	$	12,407	$	10,089	Net sales	$	4,493	$	4,294	$	8,768	$	8,247
Cost of sales	Cost of sales	1,518		1,276		4,484		3,749		Cost of sales	1,667		1,522		3,208		2,966
Gross profit	Gross profit	$	2,642	$	2,461	$	7,923	$	6,340	Gross profit	$	2,826	$	2,772	$	5,560	$	5,281
Research, development and engineering expenses	Research, development and engineering expenses	306		242		904		729		Research, development and engineering expenses	351		310		764		598
Selling, general and administrative expenses	Selling, general and administrative expenses	1,602		1,244		4,682		3,799		Selling, general and administrative expenses	1,539		1,505		3,249		3,080
Recall charges	Recall charges	16		2		98		(4)		Recall charges	4		76		18		82
Amortization of intangible assets	Amortization of intangible assets	144		114		474		342		Amortization of intangible assets	160		149		310		330
Total operating expenses	Total operating expenses	$	2,068	$	1,602	$	6,158	$	4,866	Total operating expenses	$	2,054	$	2,040	$	4,341	$	4,090
Operating income	Operating income	$	574	$	859	$	1,765	$	1,474	Operating income	$	772	$	732	$	1,219	$	1,191
Other income (expense), net	Other income (expense), net	(79)		(79)		(241)		(191)		Other income (expense), net	(52)		(70)		(113)		(162)
Earnings before income taxes	Earnings before income taxes	$	495	$	780	$	1,524	$	1,283	Earnings before income taxes	$	720	$	662	$	1,106	$	1,029
Income taxes	Income taxes	57		159		192		252		Income taxes	64		70		127		135
Net earnings	Net earnings	$	438	$	621	$	1,332	$	1,031	Net earnings	$	656	$	592	$	979	$	894

Net earnings per share of common stock:	Net earnings per share of common stock:									Net earnings per share of common stock:
Basic	Basic	$	1.17	$	1.66	$	3.54	$	2.75	Basic	$	1.73	$	1.57	$	2.59	$	2.37
Diluted	Diluted	$	1.14	$	1.63	$	3.48	$	2.71	Diluted	$	1.72	$	1.55	$	2.56	$	2.34

Weighted-average shares outstanding (in millions):	Weighted-average shares outstanding (in millions):									Weighted-average shares outstanding (in millions):
Basic	Basic	377.1		375.7		376.8		375.3		Basic	378.3		376.9		378.0		376.6
Effect of dilutive employee stock compensation	Effect of dilutive employee stock compensation	5.6		4.5		5.5		4.7		Effect of dilutive employee stock compensation	3.9		5.4		4.5		5.4
Diluted	Diluted	382.7		380.2		382.3		380.0		Diluted	382.2		382.3		382.5		382.0

Cash dividends declared per share of common stock	Cash dividends declared per share of common stock	$	0.63	$	0.575	$	1.89	$	1.725	Cash dividends declared per share of common stock	$	0.695	$	0.63	$	1.39	$	1.26

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


		Three Months				Nine Months					Three Months				Six Months
		2021		2020		2021		2020			2022		2021		2022		2021
Net earnings	Net earnings	$	438	$	621	$	1,332	$	1,031	Net earnings	$	656	$	592	$	979	$	894
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Marketable securities	Marketable securities	3		—		3		—		Marketable securities	—		—		(1)		—
Pension plans	Pension plans	5		(6)		8		(14)		Pension plans	8		(4)		7		3
Unrealized gains (losses) on designated hedges	Unrealized gains (losses) on designated hedges	7		(2)		43		(58)		Unrealized gains (losses) on designated hedges	24		8		25		36
Financial statement translation	Financial statement translation	112		(194)		287		(239)		Financial statement translation	161		(80)		214		175
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	$	127	$	(202)	$	341	$	(311)	Total other comprehensive income (loss), net of tax	$	193	$	(76)	$	245	$	214
Comprehensive income	Comprehensive income	$	565	$	419	$	1,673	$	720	Comprehensive income	$	849	$	516	$	1,224	$	1,108

See accompanying notes to Consolidated Financial Statements.


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

CONSOLIDATED BALANCE SHEETS


		September 30		December 31			June 30		December 31
		2021		2020			2022		2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	2,563	$	2,943	Cash and cash equivalents	$	1,044	$	2,944
Marketable securities	Marketable securities	76		81		Marketable securities	83		75
Accounts receivable, less allowance of $146 ($131 in 2020)		2,817		2,701
Accounts receivable, less allowance of $144 ($167 in 2021)						Accounts receivable, less allowance of $144 ($167 in 2021)	3,145		3,022
Inventories:	Inventories:					Inventories:
Materials and supplies	Materials and supplies	663		678		Materials and supplies	790		691
Work in process	Work in process	274		251		Work in process	315		264
Finished goods	Finished goods	2,497		2,565		Finished goods	2,644		2,359
Total inventories	Total inventories	$	3,434	$	3,494	Total inventories	$	3,749	$	3,314
Prepaid expenses and other current assets	Prepaid expenses and other current assets	570		488		Prepaid expenses and other current assets	804		662
Total current assets	Total current assets	$	9,460	$	9,707	Total current assets	$	8,825	$	10,017
Property, plant and equipment:	Property, plant and equipment:					Property, plant and equipment:
Land, buildings and improvements	Land, buildings and improvements	1,627		1,546		Land, buildings and improvements	1,662		1,656
Machinery and equipment	Machinery and equipment	3,813		3,636		Machinery and equipment	3,887		3,842
Total property, plant and equipment	Total property, plant and equipment	$	5,440	$	5,182	Total property, plant and equipment	$	5,549	$	5,498
Less accumulated depreciation	Less accumulated depreciation	2,694		2,430		Less accumulated depreciation	2,746		2,665
Property, plant and equipment, net	Property, plant and equipment, net	$	2,746	$	2,752	Property, plant and equipment, net	$	2,803	$	2,833
Goodwill	Goodwill	12,893		12,778		Goodwill	15,115		12,918
Other intangibles, net	Other intangibles, net	5,058		5,554		Other intangibles, net	5,245		4,840
Noncurrent deferred income tax assets	Noncurrent deferred income tax assets	1,860		1,530		Noncurrent deferred income tax assets	1,625		1,760
Other noncurrent assets	Other noncurrent assets	2,128		2,009		Other noncurrent assets	2,419		2,263
Total assets	Total assets	$	34,145	$	34,330	Total assets	$	36,032	$	34,631

Liabilities and shareholders' equity	Liabilities and shareholders' equity					Liabilities and shareholders' equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	934	$	810	Accounts payable	$	1,160	$	1,129
Accrued compensation	Accrued compensation	976		925		Accrued compensation	779		1,092
Income taxes	Income taxes	373		207		Income taxes	300		192
Dividends payable	Dividends payable	238		237		Dividends payable	263		263
Accrued product liabilities	Accrued product liabilities	439		515		Accrued product liabilities	400		401
Accrued expenses and other liabilities	Accrued expenses and other liabilities	1,467		1,586		Accrued expenses and other liabilities	1,495		1,465
Current maturities of debt	Current maturities of debt	22		761		Current maturities of debt	7		7
Total current liabilities	Total current liabilities	$	4,449	$	5,041	Total current liabilities	$	4,404	$	4,549
Long-term debt, excluding current maturities	Long-term debt, excluding current maturities	12,629		13,230		Long-term debt, excluding current maturities	13,374		12,472
Income taxes	Income taxes	929		990		Income taxes	787		913
Other noncurrent liabilities	Other noncurrent liabilities	1,960		1,985		Other noncurrent liabilities	1,793		1,820
Total liabilities	Total liabilities	$	19,967	$	21,246	Total liabilities	$	20,358	$	19,754
Shareholders' equity	Shareholders' equity					Shareholders' equity
Common stock, $0.10 par value	Common stock, $0.10 par value	38		38		Common stock, $0.10 par value	38		38
Additional paid-in capital	Additional paid-in capital	1,875		1,741		Additional paid-in capital	1,989		1,890
Retained earnings	Retained earnings	13,081		12,462		Retained earnings	13,933		13,480
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(816)		(1,157)		Accumulated other comprehensive loss	(286)		(531)
Total shareholders' equity	Total shareholders' equity	$	14,178	$	13,084	Total shareholders' equity	$	15,674	$	14,877
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	34,145	$	34,330	Total liabilities and shareholders' equity	$	36,032	$	34,631

See accompanying notes to Consolidated Financial Statements.


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)


		Three Months				Nine Months					Three Months				Six Months
		2021		2020		2021		2020			2022		2021		2022		2021
Common stock shares outstanding (in millions)	Common stock shares outstanding (in millions)									Common stock shares outstanding (in millions)
Beginning	Beginning	377.1		375.6		376.1		374.5		Beginning	378.2		376.7		377.5		376.1
Issuance of common stock under stock compensation and benefit plans	Issuance of common stock under stock compensation and benefit plans	0.1		0.2		1.1		1.3		Issuance of common stock under stock compensation and benefit plans	0.1		0.4		0.8		1.0

Ending	Ending	377.2		375.8		377.2		375.8		Ending	378.3		377.1		378.3		377.1

Common stock	Common stock									Common stock
Beginning	Beginning	$	38	$	38	$	38	$	37	Beginning	$	38	$	38	$	38	$	38
Issuance of common stock under stock compensation and benefit plans	Issuance of common stock under stock compensation and benefit plans	—		—		—		1		Issuance of common stock under stock compensation and benefit plans	—		—		—		—

Ending	Ending	$	38	$	38	$	38	$	38	Ending	$	38	$	38	$	38	$	38
Additional paid-in capital	Additional paid-in capital									Additional paid-in capital
Beginning	Beginning	$	1,844	$	1,706	$	1,741	$	1,628	Beginning	$	1,947	$	1,806	$	1,890	$	1,741
Issuance of common stock under stock compensation and benefit plans	Issuance of common stock under stock compensation and benefit plans	(3)		1		(7)		(7)		Issuance of common stock under stock compensation and benefit plans	6		(1)		(8)		(4)

Share-based compensation	Share-based compensation	34		29		141		115		Share-based compensation	36		39		107		107
Ending	Ending	$	1,875	$	1,736	$	1,875	$	1,736	Ending	$	1,989	$	1,844	$	1,989	$	1,844
Retained earnings	Retained earnings									Retained earnings
Beginning	Beginning	$	12,881	$	11,725	$	12,462	$	11,748	Beginning	$	13,540	$	12,525	$	13,480	$	12,462

Net earnings	Net earnings	438		621		1,332		1,031		Net earnings	656		592		979		894

Cash dividends declared	Cash dividends declared	(238)		(217)		(713)		(650)		Cash dividends declared	(263)		(236)		(526)		(475)
Ending	Ending	$	13,081	$	12,129	$	13,081	$	12,129	Ending	$	13,933	$	12,881	$	13,933	$	12,881
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)									Accumulated other comprehensive income (loss)
Beginning	Beginning	$	(943)	$	(715)	$	(1,157)	$	(606)	Beginning	$	(479)	$	(867)	$	(531)	$	(1,157)
Other comprehensive income (loss)	Other comprehensive income (loss)	127		(202)		341		(311)		Other comprehensive income (loss)	193		(76)		245		214
Ending	Ending	$	(816)	$	(917)	$	(816)	$	(917)	Ending	$	(286)	$	(943)	$	(286)	$	(943)

Total shareholders' equity	Total shareholders' equity	$	14,178	$	12,986	$	14,178	$	12,986	Total shareholders' equity	$	15,674	$	13,820	$	15,674	$	13,820

See accompanying notes to Consolidated Financial Statements.


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


		Nine Months					Six Months
		2021		2020			2022		2021
Operating activities	Operating activities					Operating activities
Net earnings	Net earnings	$	1,332	$	1,031	Net earnings	$	979	$	894
Adjustments to reconcile net earnings to net cash provided by operating activities:	Adjustments to reconcile net earnings to net cash provided by operating activities:					Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	Depreciation	278		247		Depreciation	185		187
Amortization of intangible assets	Amortization of intangible assets	474		342		Amortization of intangible assets	310		330
Asset impairments	Asset impairments	119		161		Asset impairments	—		3
Share-based compensation	Share-based compensation	141		115		Share-based compensation	107		107
Recall charges	Recall charges	98		(4)		Recall charges	18		82
Sale of inventory stepped-up to fair value at acquisition	Sale of inventory stepped-up to fair value at acquisition	231		9		Sale of inventory stepped-up to fair value at acquisition	12		137
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(145)		467		Accounts receivable	(159)		(24)
Inventories	Inventories	(231)		(154)		Inventories	(523)		(128)
Accounts payable	Accounts payable	134		(26)		Accounts payable	34		57
Accrued expenses and other liabilities	Accrued expenses and other liabilities	184		(184)		Accrued expenses and other liabilities	(257)		22
Recall-related payments	Recall-related payments	(180)		(13)		Recall-related payments	(19)		(163)
Income taxes	Income taxes	(193)		5		Income taxes	(132)		(98)
Other, net	Other, net	21		44		Other, net	177		(76)
Net cash provided by operating activities	Net cash provided by operating activities	$	2,263	$	2,040	Net cash provided by operating activities	$	732	$	1,330
Investing activities	Investing activities					Investing activities
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(226)		(26)		Acquisitions, net of cash acquired	(2,563)		(104)
Purchases of marketable securities	Purchases of marketable securities	(38)		(34)		Purchases of marketable securities	(38)		(31)
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	43		44		Proceeds from sales of marketable securities	29		28
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(319)		(322)		Purchases of property, plant and equipment	(262)		(189)
Other investing, net	Other investing, net	(5)		(11)		Other investing, net	—		(2)
Net cash used in investing activities	Net cash used in investing activities	$	(545)	$	(349)	Net cash used in investing activities	$	(2,834)	$	(298)
Financing activities	Financing activities					Financing activities
Proceeds (payments) on short-term borrowings, net	Proceeds (payments) on short-term borrowings, net	7		3		Proceeds (payments) on short-term borrowings, net	(376)		(7)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	5		2,293		Proceeds from issuance of long-term debt	1,500		5
Payments on long-term debt	Payments on long-term debt	(1,151)		(500)		Payments on long-term debt	(252)		(1,151)
Payments of dividends	Payments of dividends	(713)		(647)		Payments of dividends	(525)		(475)

Cash paid for taxes from withheld shares	Cash paid for taxes from withheld shares	(88)		(79)		Cash paid for taxes from withheld shares	(84)		(74)
Other financing, net	Other financing, net	(137)		(24)		Other financing, net	(23)		(27)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	$	(2,077)	$	1,046	Net cash provided by (used in) financing activities	$	240	$	(1,729)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(21)		9		Effect of exchange rate changes on cash and cash equivalents	(38)		(5)
Change in cash and cash equivalents	Change in cash and cash equivalents	$	(380)	$	2,746	Change in cash and cash equivalents	$	(1,900)	$	(702)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	2,943		4,337		Cash and cash equivalents at beginning of period	2,944		2,943
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	2,563	$	7,083	Cash and cash equivalents at end of period	$	1,044	$	2,241

See accompanying notes to Consolidated Financial Statements.


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


STRYKER CORPORATION						~~2021 Third~~2022 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 ~~September~~June 30, ~~2021 and~~2022 and the results of operations for the three and ~~nine~~six months ~~2021.~~2022. 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 ~~2020.~~2021.

New Accounting Pronouncements Not Yet Adopted

We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.

New Accounting Pronouncements Recently Adopted

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

NOTE 2 - REVENUE RECOGNITION

Our policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for ~~2020.~~2021.

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


Net Sales by Product Line	Net Sales by Product Line									Net Sales by Product Line
		Three Months				Nine Months					Three Months				Six Months
		2021		2020		2021		2020			2022		2021		2022		2021
Orthopaedics:
MedSurg and Neurotechnology:										MedSurg and Neurotechnology:
Instruments										Instruments	$	563	$	517	$	1,091	$	986
Endoscopy										Endoscopy	600		518		1,138		987
Medical										Medical	666		640		1,330		1,262
Neurovascular										Neurovascular	306		301		607		590
Neuro Cranial										Neuro Cranial	337		310		660		591
Other										Other	77		73		146		134
											$	2,549	$	2,359	$	4,972	$	4,550
Orthopaedics and Spine:										Orthopaedics and Spine:
Knees	Knees	$	439	$	435	$	1,325	$	1,108	Knees	$	500	$	474	$	964	$	886
Hips	Hips	328		334		990		866		Hips	364		353		691		662
Trauma and Extremities	Trauma and Extremities	639		430		1,953		1,152		Trauma and Extremities	676		674		1,361		1,314
Spine										Spine	290		307		569		585
Other	Other	123		118		373		307		Other	114		127		211		250
		$	1,529	$	1,317	$	4,641	$	3,433		$	1,944	$	1,935	$	3,796	$	3,697
MedSurg:
Instruments		$	525	$	467	$	1,511	$	1,308
Endoscopy		525		467		1,512		1,238
Medical		636		600		1,898		1,819
Sustainability		69		66		203		181
		$	1,755	$	1,600	$	5,124	$	4,546
Neurotechnology and Spine:
Neurotechnology		$	594	$	518	$	1,775	$	1,370
Spine		282		302		867		740
		$	876	$	820	$	2,642	$	2,110
Total	Total	$	4,160	$	3,737	$	12,407	$	10,089	Total	$	4,493	$	4,294	$	8,768	$	8,247

Net Sales by Geography
Three Months 2021 Three Months 2020
United States International United States International
Orthopaedics:
Knees $ 321 $ 118 $ 332 $ 103
Hips 199 129 223 111
Trauma and Extremities 447 192 285 145
Other 97 26 97 21
$ 1,064 $ 465 $ 937 $ 380
MedSurg:
Instruments $ 415 $ 110 $ 369 $ 98
Endoscopy 418 107 380 87
Medical 496 140 455 145
Sustainability 68 1 65 1
$ 1,397 $ 358 $ 1,269 $ 331
Neurotechnology and Spine:
Neurotechnology $ 357 $ 237 $ 323 $ 195
Spine 201 81 219 83
$ 558 $ 318 $ 542 $ 278
Total $ 3,019 $ 1,141 $ 2,748 $ 989
Net Sales by Geography
Nine Months 2021 Nine Months 2020
United States International United States International
Orthopaedics:
Knees $ 964 $ 361 $ 833 $ 275
Hips 606 384 564 302
Trauma and Extremities 1,362 591 753 399
Other 290 83 262 45
$ 3,222 $ 1,419 $ 2,412 $ 1,021
MedSurg:
Instruments $ 1,171 $ 340 $ 1,028 $ 280
Endoscopy 1,179 333 997 241
Medical 1,457 441 1,363 456
Sustainability 200 3 179 2
$ 4,007 $ 1,117 $ 3,567 $ 979
Neurotechnology and Spine:
Neurotechnology $ 1,063 $ 712 $ 835 $ 535
Spine 611 256 543 197
$ 1,674 $ 968 $ 1,378 $ 732
Total $ 8,903 $ 3,504 $ 7,357 $ 2,732


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


Net Sales by Geography
	Six Months 2022				Six Months 2021
	United States		International		United States		International
MedSurg and Neurotechnology:
Instruments	$	865	$	226	$	756	$	230
Endoscopy	891		247		761		226
Medical	1,061		269		961		301
Neurovascular	223		384		226		364
Neuro Cranial	545		115		480		111
Other	143		3		132		2
	$	3,728	$	1,244	$	3,316	$	1,234
Orthopaedics and Spine:
Knees	$	713	$	251	$	643	$	243
Hips	432		259		407		255
Trauma and Extremities	976		385		915		399
Spine	409		160		410		175
Other	158		53		193		57
	$	2,688	$	1,108	$	2,568	$	1,129
Total	$	6,416	$	2,352	$	5,884	$	2,363

Contract Assets and Liabilities

On ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 contract assets recorded in our Consolidated Balance Sheets were not significant.

Our contract liabilities arise as a result of consideration received from customers at inception of contracts for certain businesses or where the timing of billing for services precedes satisfaction of our performance obligations. We generally satisfy performance obligations within one year from the contract inception date. Our contract liabilities were ~~$501~~$640 and ~~$416~~$529 on ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

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


Three Months 2021		Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Three Months 2022												Three Months 2022	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	Beginning	$	(3)	$	(256)	$	26	$	(710)	$	(943)	Beginning	$	(1)	$	(156)	$	41	$	(363)	$	(479)
OCI	OCI	4		2		6		71		83		OCI	—		8		32		268		308
Income taxes	Income taxes	—		—		(2)		47		45		Income taxes	—		(2)		(4)		(98)		(104)
Reclassifications to:	Reclassifications to:											Reclassifications to:
Cost of sales	Cost of sales	—		—		4		—		4		Cost of sales	—		—		(3)		—		(3)
Other (income) expense	Other (income) expense	—		4		(2)		(8)		(6)		Other (income) expense	—		2		(1)		(11)		(10)
Income taxes	Income taxes	(1)		(1)		1		2		1		Income taxes	—		—		—		2		2
Net OCI	Net OCI	$	3	$	5	$	7	$	112	$	127	Net OCI	$	—	$	8	$	24	$	161	$	193
Ending	Ending	$	—	$	(251)	$	33	$	(598)	$	(816)	Ending	$	(1)	$	(148)	$	65	$	(202)	$	(286)

Three Months 2020 Marketable Securities Pension Plans Hedges Financial Statement Translation Total
Beginning $ (3) $ (187) $ (9) $ (516) $ (715)
OCI — (11) 2 (248) (257)
Income taxes — 3 (1) 59 61
Reclassifications to:
Cost of sales — — (3) — (3)
Other (income) expense — 2 (1) (7) (6)
Income taxes — — 1 2 3
Net OCI $ — $ (6) $ (2) $ (194) $ (202)
Ending $ (3) $ (193) $ (11) $ (710) $ (917)
Nine Months 2021 Marketable Securities Pension Plans Hedges Financial Statement Translation Total
Beginning $ (3) $ (259) $ (10) $ (885) $ (1,157)
OCI 4 1 40 269 314
Income taxes — (2) (13) 37 22
Reclassifications to:
Cost of sales — — 9 — 9
Other (income) expense — 12 7 (25) (6)
Income taxes (1) (3) — 6 2
Net OCI $ 3 $ 8 $ 43 $ 287 $ 341
Ending $ — $ (251) $ 33 $ (598) $ (816)
Nine Months 2020 Marketable Securities Pension Plans Hedges Financial Statement Translation Total
Beginning $ (3) $ (179) $ 47 $ (471) $ (606)
OCI — (25) (70) (285) (380)
Income taxes — 5 18 61 84
Reclassifications to:
Cost of sales — — (3) — (3)
Other (income) expense — 8 (4) (20) (16)
Income taxes — (2) 1 5 4
Net OCI $ — $ (14) $ (58) $ (239) $ (311)
Ending $ (3) $ (193) $ (11) $ (710) $ (917)


Three Months 2021	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(252)	$	18	$	(630)	$	(867)
OCI	—		(9)		7		(75)		(77)
Income taxes	—		2		(3)		2		1
Reclassifications to:
Cost of sales	—		—		4		—		4
Other (income) expense	—		4		(1)		(9)		(6)
Income taxes	—		(1)		1		2		2
Net OCI	$	—	$	(4)	$	8	$	(80)	$	(76)
Ending	$	(3)	$	(256)	$	26	$	(710)	$	(943)


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


Six Months 2021	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(259)	$	(10)	$	(885)	$	(1,157)
OCI	—		(1)		34		198		231
Income taxes	—		(2)		(11)		(10)		(23)
Reclassifications to:
Cost of sales	—		—		5		—		5
Other (income) expense	—		8		9		(17)		—
Income taxes	—		(2)		(1)		4		1
Net OCI	$	—	$	3	$	36	$	175	$	214
Ending	$	(3)	$	(256)	$	26	$	(710)	$	(943)

NOTE 4 - DERIVATIVE INSTRUMENTS

We use operational and economic hedges, foreign currency exchange forward contracts, net investment hedges (both derivative and non-derivative financial instruments) and interest rate derivative instruments to manage the impact of currency exchange and interest rate fluctuations on earnings, cash flow and equity. We do not enter into derivative instruments for speculative purposes. We are exposed to potential credit loss in the event of nonperformance by our counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum loss exposure is the asset balance of the instrument. We have not changed our hedging

strategies, accounting practices or objectives from those disclosed in our Annual Report on Form 10-K for ~~2020.~~2021.

Foreign Currency Hedges


September 2021		Cash Flow		Net Investment		Non-Designated		Total
June 2022										June 2022	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	Gross notional amount	$	945	$	1,755	$	6,016	$	8,716	Gross notional amount	$	676	$	1,578	$	5,194	$	7,448
Maximum term in years	Maximum term in years							4.2		Maximum term in years							4.4
Fair value:	Fair value:									Fair value:
Other current assets	Other current assets	$	12	$	19	$	43	$	74	Other current assets	$	36	$	—	$	158	$	194
Other noncurrent assets	Other noncurrent assets	2		36		—		38		Other noncurrent assets	2		150		—		152
Other current liabilities	Other current liabilities	(10)		—		(10)		(20)		Other current liabilities	(4)		—		(10)		(14)
Other noncurrent liabilities		(1)		—		—		(1)

Total fair value	Total fair value	$	3	$	55	$	33	$	91	Total fair value	$	34	$	150	$	148	$	332


December 2020		Cash Flow		Net Investment		Non-Designated		Total
December 2021										December 2021	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	Gross notional amount	$	949	$	1,828	$	5,382	$	8,159	Gross notional amount	$	973	$	2,266	$	5,512	$	8,751
Maximum term in years	Maximum term in years							4.9		Maximum term in years							4.9
Fair value:	Fair value:									Fair value:
Other current assets	Other current assets	$	9	$	—	$	7	$	16	Other current assets	$	15	$	39	$	92	$	146
Other noncurrent assets	Other noncurrent assets	—		4		—		4		Other noncurrent assets	1		65		—		66
Other current liabilities	Other current liabilities	(12)		—		(121)		(133)		Other current liabilities	(7)		—		(10)		(17)
Other noncurrent liabilities		(1)		(26)		—		(27)

Total fair value	Total fair value	$	(4)	$	(22)	$	(114)	$	(140)	Total fair value	$	9	$	104	$	82	$	195

We ~~have €1,500 in~~had €1.5 billion and €2.0 billion on June 30, 2022 and December 31, 2021 of certain foreign currency forward ~~currency~~ contracts designated as net investment hedges to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros. In addition to these derivative financial instruments designated as net investment hedges, we ~~have designated €4,350~~had €4.4 billion on June 30, 2022 and December 31, 2021 of senior unsecured notes designated as net investment hedges to selectively hedge portions of our investment in certain international subsidiaries. The currency effects of our Euro-denominated senior unsecured notes are reflected in AOCI within shareholders' equity where they offset gains and losses recorded on our net investment in international subsidiaries.

On ~~September~~June 30, ~~2021~~2022 the total after tax gain (loss) in AOCI related to designated net investment hedges was ~~($185).~~$254.

Net Currency Exchange Rate Gains (Losses)


Derivative	Derivative		Three Months				Nine Months				Derivative		Three Months				Six Months
instrument:	instrument:	Recorded in:	2021		2020		2021		2020		instrument:	Recorded in:	2022		2021		2022		2021
Cash Flow	Cash Flow	Cost of sales	$	(4)	$	3	$	(9)	$	3	Cash Flow	Cost of sales	$	3	$	(4)	$	3	$	(5)
Net Investment	Net Investment	Other income (expense), net	8		7		25		20		Net Investment	Other income (expense), net	11		9		22		17
Non-Designated	Non-Designated	Other income (expense), net	(5)		(3)		(6)		(12)		Non-Designated	Other income (expense), net	2		1		3		(1)
		Total	$	(1)	$	7	$	10	$	11		Total	$	16	$	6	$	28	$	11

Pretax gains (losses) on derivatives designated as cash flow hedges of $1$38 and net investment hedges of ~~$30~~$32 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense), net in earnings within 12 months as of ~~September~~June 30, ~~2021.~~2022. 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

~~In the nine months 2021 a loss~~Pretax gains of ~~$11 was~~$5 recorded in AOCI related to other interest rate hedges closed in conjunction with debt issuances are expected to be reclassified ~~from AOCI~~ to other income (expense), net in earnings ~~relating to the termination~~within 12 months of ~~forward starting~~June 30, 2022. The cash flow effect of interest rate ~~swaps with notional amounts of $750 designated as~~hedges is recorded in cash flow ~~hedges as we now consider it~~from operations.


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

probable that the original forecasted debt issuances will not occur. Pretax gains of $5 recorded in AOCI related to other interest rate hedges closed in conjunction with debt issuances are expected to be reclassified to other income (expense) in earnings within 12 months of September 30, 2021. 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 ~~2020.~~2021.

There were no significant transfers into or out of any level of the fair value hierarchy in ~~2021.~~2022.


Assets Measured at Fair Value	Assets Measured at Fair Value	September		December		Assets Measured at Fair Value	June		December
		2021		2020			2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	2,563	$	2,943	Cash and cash equivalents	$	1,044	$	2,944
Trading marketable securities	Trading marketable securities	184		171		Trading marketable securities	160		193
Level 1 - Assets	Level 1 - Assets	$	2,747	$	3,114	Level 1 - Assets	$	1,204	$	3,137
Available-for-sale marketable securities:	Available-for-sale marketable securities:					Available-for-sale marketable securities:
Corporate and asset-backed debt securities	Corporate and asset-backed debt securities	$	46	$	38	Corporate and asset-backed debt securities	$	47	$	48

Foreign government debt securities						Foreign government debt securities	2		2
United States agency debt securities	United States agency debt securities	5		5		United States agency debt securities	4		5
United States Treasury debt securities	United States Treasury debt securities	22		36		United States Treasury debt securities	27		19
Foreign government		1		—

Certificates of deposit	Certificates of deposit	2		2		Certificates of deposit	3		1
Total available-for-sale marketable securities	Total available-for-sale marketable securities	$	76	$	81	Total available-for-sale marketable securities	$	83	$	75
Foreign currency exchange forward contracts	Foreign currency exchange forward contracts	112		20		Foreign currency exchange forward contracts	346		212

Level 2 - Assets	Level 2 - Assets	$	188	$	101	Level 2 - Assets	$	429	$	287
Total assets measured at fair value	Total assets measured at fair value	$	2,935	$	3,215	Total assets measured at fair value	$	1,633	$	3,424


Liabilities Measured at Fair Value	Liabilities Measured at Fair Value	September		December		Liabilities Measured at Fair Value	June		December
		2021		2020			2022		2021
Deferred compensation arrangements	Deferred compensation arrangements	$	184	$	171	Deferred compensation arrangements	$	160	$	193
Level 1 - Liabilities	Level 1 - Liabilities	$	184	$	171	Level 1 - Liabilities	$	160	$	193
Foreign currency exchange forward contracts	Foreign currency exchange forward contracts	$	21	$	160	Foreign currency exchange forward contracts	$	14	$	17
Interest rate swap liability		—		53

Level 2 - Liabilities	Level 2 - Liabilities	$	21	$	213	Level 2 - Liabilities	$	14	$	17
Contingent consideration:	Contingent consideration:					Contingent consideration:
Beginning	Beginning	$	393	$	306	Beginning	$	306	$	393
Additions	Additions	43		108		Additions	1		62
Change in estimate	Change in estimate	11		9		Change in estimate	(27)		(1)
Settlements	Settlements	(133)		(30)		Settlements	(24)		(148)
Ending	Ending	$	314	$	393	Ending	$	256	$	306
Level 3 - Liabilities	Level 3 - Liabilities	$	314	$	393	Level 3 - Liabilities	$	256	$	306
Total liabilities measured at fair value	Total liabilities measured at fair value	$	519	$	777	Total liabilities measured at fair value	$	430	$	516

											Fair Value of Available for Sale Securities by Maturity
		September 2021		December 2020			June 2022		December 2021
Due in one year or less	Due in one year or less	$	39	$	42	Due in one year or less	$	52	$	36
Due after one year through three years	Due after one year through three years	$	37	$	39	Due after one year through three years	$	31	$	39

On ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest and marketable securities income was ~~$15~~$20 and ~~$19~~$18 in the three months and ~~$50~~$35 and ~~$84~~$35 in the ~~nine~~six months ~~2021~~2022 and ~~2020,~~2021, which was recorded in other income (expense)., net.

Our investments in available-for-sale marketable securities had a minimum credit quality rating of A2 (Moody's), A (Standard & Poor's) and A (Fitch). We do not plan to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

NOTE 6 - CONTINGENCIES AND COMMITMENTS

We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters, the most significant of which are more fully

described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management had sufficient information to reasonably estimate our future obligations, a liability representing

management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for certain claims and expenses. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, results of operations and cash flows.

In April 2022 the United States District Court for the District of Delaware issued a judgment following a jury verdict in favor of PureWick Corporation (PureWick) for its 2019 complaint seeking patent infringement damages related to our PrimaFit and PrimoFit products. The court awarded damages and we recorded charges of $28 in March 2022. In June 2022 PureWick filed a motion to seek enhancement of the judgment and if successful, the judgment could total approximately $100 and include an injunction against future sales. We intend to appeal the outcome of this case.

Recall Matters

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

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

With the acquisition of Wright ~~as more fully described~~Medical Group N.V. (Wright) in ~~Note 7,~~November 2020, we are responsible for certain product liability claims, primarily related to certain hip products sold by Wright prior to its 2014 divestiture of the OrthoRecon business. We will continue to evaluate each claim and the possible loss we may incur.

We have incurred, and expect to incur in the future, costs associated with the defense and settlement of these matters. For the nine months 2021 we have recorded charges of $98 and made payments of $180, primarily related to Rejuvenate and ABG II Modular-Neck hip stems. Based on the information that has been received, we have estimated the remaining range of probable loss related to recall matters globally to be approximately $410 to $545. We have recorded reserves representing the remaining minimum of the range 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


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

We have incurred, and expect to incur in the future, costs associated with the defense and settlement of these matters. For the six months 2022 we have recorded charges of $18 primarily related to Wright hip products and made payments of $19 primarily related to Rejuvenate and ABG II Modular-Neck hip stems. Based on the information that has been received, we have estimated the remaining range of probable loss related to recall matters globally to be approximately $380 to $515. We have recorded reserves representing the remaining minimum of the range of probable loss. The final outcomes of these matters are dependent on many factors that are difficult to predict. Accordingly the ultimate cost related to these matters may be materially different than the amount of our current estimate and accruals and could have a material adverse effect on our results of operations and cash flows.


Leases	Leases	September			December			Leases	June			December
		2021			2020				2022			2021
Right-of-use assets	Right-of-use assets	$	400		$	423		Right-of-use assets	$	469		$	419
Lease liabilities, current	Lease liabilities, current	$	108		$	109		Lease liabilities, current	$	118		$	112
Lease liabilities, non-current	Lease liabilities, non-current	$	298		$	325		Lease liabilities, non-current	$	353		$	310

Other information:	Other information:							Other information:
Weighted-average remaining lease term	Weighted-average remaining lease term	5.6 years			5.6 years			Weighted-average remaining lease term	5.6 years			5.4 years
Weighted-average discount rate	Weighted-average discount rate	2.83		%	2.57		%	Weighted-average discount rate	2.66		%	2.86		%

Three Months Nine Months
2021 2020 2021 2020
Operating lease cost $ 35 $ 27 $ 102 $ 94


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

NOTE 7 - ACQUISITIONS

We acquire stock in companies and various assets that continue to support our capital deployment and product development strategies. The aggregate purchase price of our acquisitions, net of cash acquired was ~~$267~~$2,563 and ~~$26~~$108 in the ~~nine~~six months ~~2021~~2022 and ~~2020.~~2021.

In ~~September 2021~~February 2022 we completed the acquisition of ~~Gauss Surgical,~~Vocera Communications, Inc. ~~(Gauss)~~(Vocera) for $79.25 per share, or an aggregate purchase price of $2.6 billion, net of cash acquired ($3.0 billion including convertible notes). ~~Gauss~~Vocera is a ~~medical device company that has developed Triton, an artificial intelligence-enabled platform for real-time monitoring of blood loss during surgery. Gauss~~leader in the digital care coordination and communication category. Vocera is part of our ~~Instruments~~Medical business within ~~MedSurg.~~MedSurg and Neurotechnology. Goodwill attributable to the acquisition reflects the strategic benefits of expanding our presence in adjacent markets, diversifying our product portfolio, advancing innovations, and accelerating our digital aspirations. This goodwill is not deductible for tax purposes.

In ~~November 2020 we completed~~ the ~~acquisition of Wright Medical Group N.V. (Wright) for $30.75 per share, or an aggregate purchase price of $4.1 billion ($5.6 billion including~~six months 2022 note holders elected to redeem the 1.50% and 0.50% convertible notes). Wright is a global medical device company focused on extremities and biologics. Wright is part of our Trauma and Extremities business within Orthopaedics. Goodwill attributable to the acquisition is not deductible for tax purposes.

~~In December 2020 we completed the acquisition of OrthoSensor, Inc. (OrthoSensor). OrthoSensor is a leader~~notes assumed in the ~~digital evolution~~Vocera acquisition for $101 and $324. These repayments are classified as financing activities in the Consolidated Statements of ~~musculoskeletal care~~Cash Flows.

Share-based awards for Vocera employees vested upon our acquisition and ~~sensor technology for total joint replacement. OrthoSensor is part~~a charge of ~~our Orthopaedics business. Goodwill attributable to the acquisition is not deductible for tax purposes~~.$132 was recorded in selling, general and administrative expenses in 2022.

Purchase price allocations for our significant acquisitions are:


Purchase Price Allocation of Acquired Net Assets
~~2020~~2022	~~Wright~~Vocera
Tangible assets and liabilities:
Accounts receivable	$	~~127~~33
Inventory	~~448~~13
Deferred income tax assets	~~472~~73
Other assets	~~345~~92
Debt	~~(1,446)~~(425)
Deferred income tax liabilities	~~(494)~~(182)
~~Product liabilities~~	~~(208)~~
Other liabilities	~~(292)~~(115)
Intangible assets:

Customer and distributor relationships	~~182~~550
Developed technology and patents	~~1,503~~178
Trade name	5818


Goodwill	~~3,386~~2,328
Purchase price, net of cash acquired of $281	$	~~4,081~~2,563
Weighted-average life of intangible assets	1213

Purchase price allocations for ~~Wright and other acquisitions~~Vocera were based on preliminary valuations, primarily related to intangible assets ~~product liabilities~~ and deferred income taxes. Our

estimates and assumptions are subject to change within the measurement period.


Consolidated Estimated Amortization Expense	Consolidated Estimated Amortization Expense									Consolidated Estimated Amortization Expense
Remainder of 2021		2022		2023		2024		2025
Remainder of 2022										Remainder of 2022	2023		2024		2025		2026
$	149	$	577	$	558	$	534	$	512	320	$	620	$	590	$	570	$	513

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 ~~September~~June 30, ~~2021.~~2022.

In ~~October 2021~~February 2022 we entered into a ~~new revolving credit~~$1.5 billion term loan agreement that ~~replaces~~matures on February 22, 2025 and bears interest at a base rate based on the Term Secured Overnight Financing Rate (SOFR) plus 0.725%. In June 2022 we repaid $250 on the term loan.

In 2022 our ~~previous agreement dated August 19, 2016. The primary changes were~~Board of Directors approved an increase to ~~increase~~ the ~~aggregate principal~~maximum amount of ~~the facility by $750~~commercial paper that can be outstanding from $1,500 to ~~$2,250, extend the maturity date to October 26, 2026, increase the leverage ratio to 3.75 and provide LIBOR replacement language.~~ $2,250.

On ~~September~~June 30, ~~2021~~2022 there were no borrowings outstanding under our ~~previous~~ credit facility or commercial paper ~~programs.~~program which allows for maturities up to 397 days from the date of issuance.

Summary of Total Debt September 2021 December 2020
Rate Due
Senior unsecured notes:
2.625% March 15, 2021 $ — $ 750
1.125% November 30, 2023 642 668
0.600% December 1, 2023 598 597
3.375% May 15, 2024 592 590
0.250% December 3, 2024 989 1,030
1.150% June 15, 2025 645 644
3.375% November 1, 2025 747 747
3.500% March 15, 2026 993 992
2.125% November 30, 2027 873 909
3.650% March 7, 2028 597 596
0.750% March 1, 2029 931 969
1.950% June 15, 2030 990 989
2.625% November 30, 2030 751 782
1.000% December 3, 2031 867 903
4.100% April 1, 2043 392 392
4.375% May 15, 2044 395 395
4.625% March 15, 2046 982 981
2.900% June 15, 2050 642 641
Variable term loan November 10, 2023 — 400
Other 25 16
Total debt $ 12,651 $ 13,991
Less current maturities of debt 22 761
Total long-term debt $ 12,629 $ 13,230
September 2021 December 2020
Unamortized debt issuance costs $ 64 $ 71
Borrowing capacity on existing facilities $ 1,408 $ 2,903
Fair value of senior unsecured notes $ 13,736 $ 15,022


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


STRYKER CORPORATION						2022 Second Quarter Form 10-Q


Summary of Total Debt			June 2022		December 2021
	Rate	Due
Senior unsecured notes:
	1.125%	November 30, 2023	$	577	$	622
	0.600%	December 1, 2023	598		598
	3.375%	May 15, 2024	595		593
	0.250%	December 3, 2024	890		958
	1.150%	June 15, 2025	646		645
	3.375%	November 1, 2025	748		748
	3.500%	March 15, 2026	994		994
	2.125%	November 30, 2027	784		845
	3.650%	March 7, 2028	597		597
	0.750%	March 1, 2029	836		901
	1.950%	June 15, 2030	990		990
	2.625%	November 30, 2030	675		727
	1.000%	December 3, 2031	779		840
	4.100%	April 1, 2043	392		392
	4.375%	May 15, 2044	395		395
	4.625%	March 15, 2046	982		982
	2.900%	June 15, 2050	642		642
Term loan		February 22, 2025	1,250		—

Other			11		10
Total debt			$	13,381	$	12,479
Less current maturities of debt			7		7
Total long-term debt			$	13,374	$	12,472

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

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.

~~In March 2021 we repaid $750 of senior unsecured notes with a coupon of 2.625% that were due on March 15, 2021.~~

~~In June 2021 we repaid the $400 term loan that was due on November 10, 2023.~~

NOTE 9 - INCOME TAXES

Our effective tax rates ~~were~~of 8.9% and 11.5% in the three and ~~20.4%~~six months 2022 include the reversal of deferred income tax on undistributed earnings of foreign subsidiaries determined to be indefinitely reinvested and certain discrete tax items. Our effective tax rates of 10.6% and 13.1% in the three and six months 2021 include certain discrete tax items.

related interest by approximately $220.


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


~~STRYKER CORPORATION~~						~~2021 Third Quarter Form 10-Q~~

2020. The change in the effective income tax rate for the three months was primarily due to lower pre-tax income and certain discrete tax items recorded in 2021. The change in effective income tax rates for the nine months reflects certain discrete tax items recorded in 2021.

In March 2021 the American Rescue Plan Act (the Act) was signed into law in the United States. We do not expect the provisions of the Act to have a material impact on our annual effective tax rate or Consolidated Financial Statements in 2021.

NOTE 10 - SEGMENT INFORMATION

Three Months Nine Months
2021 2020 2021 2020
Orthopaedics $ 1,529 $ 1,317 $ 4,641 $ 3,433
MedSurg 1,755 1,600 5,124 4,546
Neurotechnology and Spine 876 820 2,642 2,110
Net sales $ 4,160 $ 3,737 $ 12,407 $ 10,089
Orthopaedics $ 455 $ 472 $ 1,388 $ 1,027
MedSurg 425 451 1,266 1,085
Neurotechnology and Spine 283 228 864 513
Segment operating income $ 1,163 $ 1,151 $ 3,518 $ 2,625
Items not allocated to segments:
Corporate and other (105) (104) (421) (371)
Acquisition and integration-related charges (126) (29) (495) (85)
Amortization of intangible assets (144) (114) (474) (342)
Restructuring-related and other charges (178) (29) (209) (292)
Medical device regulations (27) (14) (72) (60)
Recall-related matters (16) (2) (98) 4
Regulatory and legal matters 7 — 16 (5)
Consolidated operating income $ 574 $ 859 $ 1,765 $ 1,474
As previously disclosed, effective December 31, 2021 we changed our reportable business segments to (i) MedSurg and Neurotechnology and (ii) Orthopaedics and Spine to align to our new internal reporting structure. We have reflected these changes in all historical periods presented.


	Three Months				Six Months
	2022		2021		2022		2021
MedSurg and Neurotechnology	$	2,549	$	2,359	$	4,972	$	4,550
Orthopaedics and Spine	1,944		1,935		3,796		3,697
Net sales	$	4,493	$	4,294	$	8,768	$	8,247
MedSurg and Neurotechnology	$	601	$	702	$	1,212	$	1,337
Orthopaedics and Spine	607		563		1,129		1,018
Segment operating income	$	1,208	$	1,265	$	2,341	$	2,355
Items not allocated to segments:
Corporate and other	$	(145)	$	(154)	$	(344)	$	(316)
Acquisition and integration-related costs	(37)		(120)		(186)		(369)
Amortization of intangible assets	(160)		(149)		(310)		(330)
Restructuring-related and other charges	(62)		(17)		(171)		(31)
Medical device regulations	(32)		(26)		(60)		(45)
Recall-related matters	(4)		(76)		(18)		(82)
Regulatory and legal matters	4		9		(33)		9

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

There ~~were~~were no significant changes to total assets by segment from information provided in our Annual Report on Form 10-K for ~~2020.~~

~~NOTE 11 - ASSET IMPAIRMENTS~~

The government in China has launched regional and national programs for volume-based procurement ("VBP") of high-value medical consumables to reduce healthcare costs. Each VBP program has specific requirements to award contracts to2021, other than the lowest bidders who are able to satisfy the quality and quantity requirements. The successful bidders may be guaranteed sales volume for certain products, while unsuccessful bidders may lose unit sales volume. We expect that the prices required for a successful bid will, nevertheless, negatively impact our existing commercial operations of joint replacement and trauma products in China. As a resultaddition of the ~~outcome of certain regional programs for our trauma products and the national VBP program for hips and knees we recorded charges of $105 to impair certain long-lived and intangible~~ assets acquired in the ~~third quarter of 2021. These charges were~~Vocera acquisition which are included in ~~selling, general~~the MedSurg and administrative expenses. Spine products are part of the VBP program in one province and it is not clear to what extent spine products will be included in further provincial or national VBP programs. We do not expect any significant impairments related to the potential Spine VBP programs. Our business in China represented approximately 2% of our revenues for the year ended December 31, 2020.Neurotechnology segment.

In the second quarter of 2020 due to the significant negative impact the COVID-19 pandemic had on our operations and financial results, we suspended certain in-process investments resulting in charges of $189 to impair certain long-lived assets (primarily the portion of our investment in a new global ERP system that was in-process of being developed for future deployment) and product line and other exit costs. These charges were included in cost of sales and selling, general and administrative expenses.


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q


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

ABOUT STRYKER

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

We segregate our operations into ~~three~~two reportable business segments: ~~Orthopaedics,~~(i) MedSurg and Neurotechnology and (ii) Orthopaedics and Spine. ~~Orthopaedics products consist primarily of implants used in hip~~MedSurg and ~~knee joint replacements and trauma and extremities surgeries. MedSurg~~Neurotechnology products include surgical equipment and ~~surgical~~ navigation systems (Instruments), endoscopic and communications systems (Endoscopy), patient handling, emergency medical equipment and intensive care disposable products (Medical), ~~reprocessed~~minimally invasive products for the treatment of acute ischemic and ~~remanufactured medical devices (Sustainability)~~hemorrhagic stroke (Neurovascular), a comprehensive line of products for traditional brain and open skull based surgical procedures; orthobiologic and biosurgery products, including synthetic bone grafts and vertebral augmentation products (Neuro Cranial) and other medical device products used in a variety of medical specialties. ~~Neurotechnology~~Orthopaedics and Spine products ~~include neurosurgical, neurovascular~~consist primarily of implants used in hip and knee joint replacements and trauma and extremity surgeries, and cervical, thoracolumbar and interbody systems used in spinal ~~implant devices.~~injury, deformity and degenerative therapies.

COVID-19 Pandemic and Macroeconomic Environment

The COVID-19 global pandemic and macroeconomic environment has led to severe disruptions in the market and the global and United States economies that may continue for a prolonged ~~duration and trigger a recession or a period of economic slowdown.~~period. In response to the COVID-19 pandemic, various governmental authorities and private enterprises have implemented numerous containment measures, ~~to contain the pandemic,~~ such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns. A significant number of our global suppliers, vendors, distributors and manufacturing facilities are located in regions that have been affected by the pandemic. Those operations have been materially adversely affected by restrictive government and private enterprise measures implemented in response to the pandemic. This has led to product shortages and an increase in raw material and component pricing as well as other inflationary pressures particularly on our manufacturing costs.

~~Some of our products are particularly sensitive to reductions in elective medical procedures. Elective medical procedures were suspended in~~During the ~~first~~ quarter of 2020 in many of the markets where our products are marketed and sold, which negatively affected our business, cash flows, financial condition and results of operations through the first quarter of 2021. In the second quarter of 2021 we ~~saw partial~~have seen recovery of elective procedures as the impact of the COVID-19 pandemic has subsided in ~~most geographies; however,~~many geographies, with the exception of some countries in the ~~third quarter 2021 we saw hospitalization rates increase,~~Asia Pacific region. However sales growth in certain products has been constrained by the continuing supply chain challenges and electronic component shortages, especially impacting the capital products in our MedSurg businesses.

Russia and Ukraine Conflict

The military conflict in Russia and Ukraine and the sanctions imposed by the United States ~~as a result of~~government and other nations in response to this conflict have caused significant volatility and disruptions to the ~~Delta variant. This, along with hospital staffing shortages, has adversely impacted elective procedures and has slowed the recovery in our Orthopaedic and Spine implant business~~global markets. Given that we ~~experienced~~provide life-saving and life-enhancing products, we plan to continue operating in Russia provided we can safely do so. During the ~~second quarter~~six months 2022 net sales in Russia were approximately 0.2% of ~~2021.~~

~~Overview~~our revenues. Although Russia does not constitute a material portion of ~~the Three and Nine Months~~

~~In the three months 2021 we achieved sales growth of 11.3% and 16.0% from 2020 and 2019. Excluding~~our business, there is uncertainty around the impact ~~of acquisitions~~it will have on the global economy, supply chains and ~~divestitures sales grew 4.5%~~fuel prices generally, and ~~8.4% in constant currency. We reported operating income margin of 13.8%, net earnings of $438 and net earnings per diluted share of $1.14. Excluding the~~therefore our business. Refer to Part II, Item 1A. "Risk

~~impact of certain items, adjusted operating income margin(1)~~ ~~contracted by 260 bps to 25.4%, with adjusted net earnings(1)~~ ~~of $842 and adjusted net earnings per diluted share(1)~~ ~~of $2.20 representing growth of 2.8%.~~

InFactors" in our Quarterly Report on Form 10-Q for the nine months 2021 we achieved sales growth of 23.0% and 15.4% from 2020 and 2019. Excluding the impact of acquisitions and divestitures sales grew 14.2% and 7.6% in constant currency. We reported operating income margin of 14.2%, net earnings of $1,332 and net earnings per diluted share of $3.48. Excluding the impact of certain items, adjusted operating income margin~~(1)~~ ~~increased by 270 bps to 25.0%, with adjusted net earnings(1)~~ ~~of $2,440 and adjusted net earnings per diluted share(1)~~ ~~of $6.38 representing growth of 38.1%.~~

~~Recent Developments~~

Inquarter ended March 2021 we repaid $750 of our senior unsecured notes with a coupon of 2.625% that were due on March 15, 2021. In June 2021 we repaid the $400 term loan that was due on November 10, 2023. Refer to Note 8 to our Consolidated Financial Statements31, 2022 for further ~~information.~~details.

We have not repurchased any shares of our common stock under our authorized repurchase program in 2021. The total dollar value of shares of our common stock that could be acquired under our authorized share repurchase program was $1,033 as of September 30, 2021. We previously announced our intention to suspend our repurchase program through 2021.China Volume-Based Procurement and Import Purchase Evaluation

The government in China has launched regional and national programs for volume-based procurement ("VBP") of high-value medical consumables to reduce healthcare costs. Each VBP program has specific requirements to award contracts to the lowest bidders who are able to satisfy the quality and quantity requirements. The successful bidders may be guaranteed sales volume for certain products, while unsuccessful bidders may lose unit sales volume. ~~We expect that the~~The prices required for a successful bid ~~will, nevertheless,~~have negatively ~~impact~~impacted our existing commercial operations of joint replacement and trauma products in China. ~~As a result of the outcome of certain regional programs for~~To date our ~~trauma products and~~other businesses have not been significantly impacted; however, the national spine products VBP program was initiated in July 2022. China has also issued national guiding standards for ~~hips~~Import Purchase Evaluation which has increased the purchase of locally sourced equipment in China's public hospitals and ~~knees we recorded charges of $105 to impair certain long-lived and intangible assets~~is impacting our MedSurg business in the third quarter of 2021. These charges were included in selling, general and administrative expenses. Spine products are part of the VBP program in one province and it is not clear to what extent spine products will be included in further provincial or national VBP programs. We do not expect any significant impairments related to the potential Spine VBP programs.China. Our business in China represented approximately 2%2.6% of our revenues for the ~~year ended December 31, 2020.~~six months 2022.

Overview of the Three and Six Months

In the three months 2022 we achieved sales growth of 4.6% from 2021. Excluding the impact of acquisitions and divestitures sales grew 6.1% in constant currency. We reported operating income margin of 17.2%, net earnings of $656 and net earnings per diluted share of $1.72. Excluding the impact of certain items, adjusted operating income margin(1) contracted by 220 basis points to 23.7%, with adjusted net earnings(1) of $860 and adjusted net earnings per diluted share(1) of $2.25 in line with 2021.

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

Recent Developments

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

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

(1) Refer to "Non-GAAP Financial Measures" for a discussion of non-GAAP financial measures used in this report and a reconciliation to the most directly comparable GAAP financial measure.


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

CONSOLIDATED RESULTS OF OPERATIONS
Three Months Nine Months
Percent Net Sales Percentage Percent Net Sales Percentage
2021 2020 2021 2020 Change 2021 2020 2021 2020 Change
Net sales $ 4,160 $ 3,737 100.0 % 100.0 % 11.3 % $ 12,407 $ 10,089 100.0 % 100.0 % 23.0 %
Gross profit 2,642 2,461 63.5 65.9 7.4 7,923 6,340 63.9 62.8 25.0
Research, development and engineering expenses 306 242 7.4 6.5 26.4 904 729 7.3 7.2 24.0
Selling, general and administrative expenses 1,602 1,244 38.5 33.3 28.8 4,682 3,799 37.7 37.7 23.2
Recall charges 16 2 0.4 0.1 nm 98 (4) 0.8 — nm
Amortization of intangible assets 144 114 3.5 3.1 26.3 474 342 3.8 3.4 38.6
Other income (expense), net (79) (79) (1.9) (2.1) — (241) (191) (1.9) (1.9) 26.2
Income taxes 57 159 nm nm (64.2) 192 252 nm nm (23.8)
Net earnings $ 438 $ 621 10.5 % 16.6 % (29.5) % $ 1,332 $ 1,031 10.7 % 10.2 % 29.2 %
Net earnings per diluted share $ 1.14 $ 1.63 (30.1) % $ 3.48 $ 2.71 28.4 %
Adjusted net earnings per diluted share(1)
$ 2.20 $ 2.14 2.8 % $ 6.38 $ 4.62 38.1 %


CONSOLIDATED RESULTS OF OPERATIONS
	Three Months										Six Months
					Percent Net Sales				Percentage						Percent Net Sales				Percentage
	2022		2021		2022		2021		Change		2022		2021		2022		2021		Change
Net sales	$	4,493	$	4,294	100.0	%	100.0	%	4.6	%	$	8,768	$	8,247	100.0	%	100.0	%	6.3	%
Gross profit	2,826		2,772		62.9		64.6		1.9		5,560		5,281		63.4		64.0		5.3
Research, development and engineering expenses	351		310		7.8		7.2		13.2		764		598		8.7		7.3		27.8
Selling, general and administrative expenses	1,539		1,505		34.3		35.0		2.3		3,249		3,080		37.1		37.3		5.5
Recall charges	4		76		0.1		1.8		nm		18		82		0.2		1.0		nm
Amortization of intangible assets	160		149		3.6		3.5		7.4		310		330		3.5		4.0		(6.1)
Other income (expense), net	(52)		(70)		(1.2)		(1.6)		(25.7)		(113)		(162)		(1.3)		(2.0)		(30.2)
Income taxes	64		70		nm		nm		(8.6)		127		135		nm		nm		(5.9)
Net earnings	$	656	$	592	14.6	%	13.8	%	10.8	%	$	979	$	894	11.2	%	10.8	%	9.5	%

Net earnings per diluted share	$	1.72	$	1.55					11.0	%	$	2.56	$	2.34					9.4	%
Adjusted net earnings per diluted share(1)	$	2.25	$	2.25					—	%	$	4.22	$	4.18					1.0	%

nm - not meaningful


Geographic and Segment Net Sales	Geographic and Segment Net Sales	Three Months								Nine Months								Geographic and Segment Net Sales	Three Months								Six Months
						Percentage Change								Percentage Change									Percentage Change								Percentage Change
		2021		2020		As Reported		Constant Currency		2021		2020		As Reported		Constant Currency			2022		2021		As Reported		Constant Currency		2022		2021		As Reported		Constant Currency
Geographic:	Geographic:																	Geographic:
United States	United States	$	3,019	$	2,748	9.9	%	9.9	%	$	8,903	$	7,357	21.0	%	21.0	%	United States	$	3,311	$	3,100	6.8	%	6.8	%	$	6,416	$	5,884	9.0	%	9.0	%
International	International	1,141		989		15.3		12.8		3,504		2,732		28.2		21.1		International	1,182		1,194		(1.0)		9.7		2,352		2,363		(0.5)		7.8
Total	Total	$	4,160	$	3,737	11.3	%	10.7	%	$	12,407	$	10,089	23.0	%	21.0	%	Total	$	4,493	$	4,294	4.6	%	7.6	%	$	8,768	$	8,247	6.3	%	8.7	%
Segment:	Segment:																	Segment:
Orthopaedics		$	1,529	$	1,317	16.1	%	15.5	%	$	4,641	$	3,433	35.2	%	33.0	%
MedSurg		1,755		1,600		9.4		8.9		5,124		4,546		12.7		11.2
Neurotechnology and Spine		876		820		7.3		6.4		2,642		2,110		25.2		22.8
MedSurg and Neurotechnology																		MedSurg and Neurotechnology	$	2,549	$	2,359	8.0	%	10.6	%	$	4,972	$	4,550	9.3	%	11.3	%
Orthopaedics and Spine																		Orthopaedics and Spine	1,944		1,935		0.5		3.9		3,796		3,697		2.7		5.4
Total	Total	$	4,160	$	3,737	11.3	%	10.7	%	$	12,407	$	10,089	23.0	%	21.0	%	Total	$	4,493	$	4,294	4.6	%	7.6	%	$	8,768	$	8,247	6.3	%	8.7	%


Supplemental Net Sales Growth Information	Supplemental Net Sales Growth Information																													Supplemental Net Sales Growth Information
		Three Months														Nine Months															Three Months														Six Months
						Percentage Change														Percentage Change															Percentage Change														Percentage Change
										United States		International												United States		International													United States		International												United States		International
		2021		2020		As Reported		Constant Currency		As Reported				Constant Currency		2021		2020		As Reported		Constant Currency		As Reported				Constant Currency			2022		2021		As Reported		Constant Currency		As Reported				Constant Currency		2022		2021		As Reported		Constant Currency		As Reported				Constant Currency
Orthopaedics:
MedSurg and Neurotechnology:																														MedSurg and Neurotechnology:
Instruments																														Instruments	$	563	$	517	8.9	%	11.3	%	12.3	%	(3.1)	%	7.7	%	$	1,091	$	986	10.7	%	12.7	%	14.3	%	(1.4)	%	7.0	%
Endoscopy																														Endoscopy	600		518		15.7		18.2		16.2		13.8		25.8		1,138		987		15.3		17.5		17.1		9.2		18.9
Medical																														Medical	666		640		4.1		6.2		10.0		(14.6)		(6.1)		1,330		1,262		5.4		7.0		10.5		(10.7)		(4.3)
Neurovascular																														Neurovascular	306		301		1.6		7.2		(1.8)		3.7		12.9		607		590		2.7		6.9		(1.6)		5.4		12.2
Neuro Cranial																														Neuro Cranial	337		310		8.5		10.3		9.4		4.1		14.7		660		591		11.6		13.1		13.5		3.8		11.7
Other																														Other	77		73		5.8		5.8		4.9		68.5		74.5		146		134		8.8		8.8		8.1		57.6		60.7
																															$	2,549	$	2,359	8.0	%	10.6	%	10.9	%	(0.1)	%	9.9	%	$	4,972	$	4,550	9.3	%	11.3	%	12.4	%	0.8	%	8.5	%
Orthopaedics and Spine:																														Orthopaedics and Spine:
Knees	Knees	$	439	$	435	0.8	%	0.3	%	(3.3)	%	13.9	%	11.7	%	$	1,325	$	1,108	19.5	%	17.8	%	15.8	%	31.0	%	23.6	%	Knees	$	500	$	474	5.5	%	8.7	%	5.3	%	6.2	%	18.6	%	$	964	$	886	8.8	%	11.5	%	10.9	%	3.2	%	13.1	%
Hips	Hips	328		334		(1.6)		(2.3)		(10.6)		16.7		14.5		990		866		14.4		12.1		7.4		27.5		20.9		Hips	364		353		3.2		7.6		4.5		1.2		13.0		691		662		4.5		8.1		6.3		1.5		10.9
Trauma and Extremities	Trauma and Extremities	639		430		49.0		48.2		56.9		33.4		30.9		1,953		1,152		69.6		66.5		80.8		48.5		40.2		Trauma and Extremities	676		674		0.2		3.4		3.1		(6.5)		4.4		1,361		1,314		3.6		6.2		6.7		(3.7)		4.8
Spine																														Spine	290		307		(5.1)		(2.3)		(3.6)		(8.9)		1.0		569		585		(2.6)		(0.3)		(0.1)		(8.5)		(0.7)
Other	Other	123		118		3.4		3.2		(0.2)		19.4		18.2		373		307		21.6		20.6		11.0		82.2		74.3		Other	114		127		(10.8)		(7.3)		(13.8)		0.1		16.3		211		250		(15.5)		(13.0)		(18.4)		(5.5)		5.9
		$	1,529	$	1,317	16.1	%	15.5	%	13.6	%	22.4	%	20.2	%	$	4,641	$	3,433	35.2	%	33.0	%	33.6	%	39.1	%	31.6	%		$	1,944	$	1,935	0.5	%	3.9	%	1.6	%	(2.0)	%	9.5	%	$	3,796	$	3,697	2.7	%	5.4	%	4.7	%	(1.9)	%	7.2	%
MedSurg:
Instruments		$	525	$	467	11.5	%	10.9	%	12.4	%	7.9	%	5.5	%	$	1,511	$	1,308	15.4	%	13.9	%	13.9	%	20.9	%	13.8	%
Endoscopy		525		467		12.2		11.8		9.9		22.5		20.1		1,512		1,238		22.1		20.7		18.2		38.4		31.0
Medical		636		600		6.1		5.5		9.2		(3.5)		(6.0)		1,898		1,819		4.4		2.7		7.0		(3.3)		(9.6)
Sustainability		69		66		4.2		4.1		3.9		25.8		19.0		203		181		12.1		12.0		11.6		59.2		48.4
		$	1,755	$	1,600	9.4	%	8.9	%	10.1	%	6.8	%	4.4	%	$	5,124	$	4,546	12.7	%	11.2	%	12.3	%	14.0	%	7.1	%
Neurotechnology and Spine:
Neurotechnology		$	594	$	518	14.7	%	13.6	%	10.6	%	21.4	%	18.5	%	$	1,775	$	1,370	29.6	%	26.9	%	27.4	%	33.1	%	26.2	%
Spine		282		302		(5.4)		(5.9)		(8.0)		1.6		(0.3)		867		740		17.1		15.3		12.5		29.5		22.6
		$	876	$	820	7.3	%	6.4	%	3.1	%	15.7	%	13.0	%	$	2,642	$	2,110	25.2	%	22.8	%	21.5	%	32.2	%	25.2	%
Total	Total	$	4,160	$	3,737	11.3	%	10.7	%	9.9	%	15.3	%	12.8	%	$	12,407	$	10,089	23.0	%	21.0	%	21.0	%	28.2	%	21.1	%	Total	$	4,493	$	4,294	4.6	%	7.6	%	6.8	%	(1.0)	%	9.7	%	$	8,768	$	8,247	6.3	%	8.7	%	9.0	%	(0.5)	%	7.8	%

Consolidated Net Sales

Consolidated net sales increased ~~11.3%~~4.6% in the three months ~~2021~~2022 as reported and ~~10.7%~~7.6% in constant currency, as foreign currency exchange rates ~~positively~~negatively impacted net sales by ~~0.6%~~3.0%. Excluding the ~~6.2%~~1.5% impact of acquisitions and divestitures, net sales in constant currency increased by ~~5.2%~~7.5% from increased unit volume partially offset by ~~0.7% due to lower prices. The unit volume increase was due to higher shipments of MedSurg and Neurotechnology products.~~

Consolidated net sales increased 23.0% in the nine months 2021 as reported and 21.0% in constant currency, as foreign currency exchange rates positively impacted net sales by 2.0%. Excluding the 6.8% impact of acquisitions and divestitures, net sales in constant currency increased by 14.9% from increased unit volume partially offset by 0.7%1.4% due to lower prices. The unit volume increase was due to higher shipments across most MedSurg and Neurotechnology products and most Orthopaedics and Spine products.

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


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

~~Orthopaedics~~MedSurg and Neurotechnology Net Sales

~~Orthopaedics~~MedSurg and Neurotechnology net sales increased ~~16.1%~~8.0% in the three months ~~2021~~2022 as reported and ~~15.5%~~10.6% in constant currency, as foreign currency exchange rates ~~positively~~negatively impacted net sales by ~~0.6%~~2.6%. Excluding the ~~17.3%~~2.7% impact of acquisitions, ~~and divestitures,~~ net sales in constant currency ~~decreased 1.2%~~increased by 7.8% from ~~lower~~increased unit volume and ~~0.6%~~0.1% from ~~lower~~higher prices. The unit volume ~~decrease~~increase was due to ~~lower~~higher shipments ~~of hips, trauma~~across most MedSurg and ~~extremities~~Neurotechnology products.

MedSurg and ~~other orthopaedics products.~~

~~Orthopaedics~~Neurotechnology net sales increased ~~35.2%~~9.3% in the ~~nine~~six months ~~2021~~2022 as reported and ~~33.0%~~11.3% in constant currency, as foreign currency exchange rates ~~positively~~negatively impacted net sales by ~~2.2%~~2.0%. Excluding the ~~20.0%~~2.0% impact of acquisitions, ~~and divestitures,~~ net sales in constant currency increased ~~14.4%~~by 9.3% from increased unit volume. The unit volume increase was due to higher shipments across all MedSurg products.

Orthopaedics and Spine Net Sales

Orthopaedics and Spine net sales increased 0.5% in the three months 2022 as reported and 3.9% in constant currency, as foreign currency exchange rates negatively impacted net sales by 3.4%. Net sales in constant currency increased 7.1% from increased unit volume partially offset by ~~1.4%~~3.2% from lower prices. The unit volume increase was due to higher shipments of hips, knees and trauma and extremities products.

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

~~MedSurg Net Sales~~

MedSurg net sales increased 9.4% in the three months 2021 as reported and 8.9% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.5%. Excluding the 0.1% impact of acquisitions, net sales in constant currency increased by 9.6% from increased unit volume partially offset by 0.8% due to lower prices. The unit volume increase was primarily due to higher shipments across all MedSurg products.

MedSurg net sales increased 12.7% in the nine months 2021 as reported and 11.2% in constant currency, as foreign currency exchange rates positively impacted net sales by 1.5%. Excluding the 0.1% impact of acquisitions, net sales in constant currency increased by 11.4% from increased unit volume partially offset by 0.3% due to lower prices. The unit volume increase was due to higher shipments across all MedSurg products.

~~Neurotechnology and Spine Net Sales~~

Neurotechnology and Spine net sales increased 7.3% in the three months 2021 as reported and 6.4% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.9%. Excluding the 0.3% impact for acquisitions, net sales in constant currency increased by 6.7% from increased unit volume partially offset by 0.6% due to lower prices. The unit volume increase was due to higher shipments of neurotechnology products partially offset by lower shipments of spine products.

Neurotechnology and Spine net sales increased 25.2% in the nine months 2021 as reported and 22.8% in constant currency, as foreign currency exchange rates positively impacted net sales by 2.4%. Excluding the 0.3% impact for acquisitions, net sales in constant currency increased by 23.1% from increased unit volume partially offset by 0.6% due to lower prices. The unit volume increase was due to higher shipments across all Neurotechnology and Spine products.

Gross Profit

Gross profit as a percentage of sales in the three months ~~2021~~2022 decreased to ~~63.5%~~62.9% from ~~65.9%~~64.6% in ~~2020.~~2021. Excluding the impact of the items noted below, gross profit ~~increased~~decreased to ~~66.3%~~63.3% of sales in the three months ~~2021~~2022 from ~~65.9%~~66.0% in ~~2020 primarily~~2021 due to ~~leverage~~increased costs from ~~higher sales volumes~~purchases of electronic components at premium prices on the spot market and ~~favorable mix, partially offset by lower selling prices.~~other inflationary pressures, primarily related to labor, steel and transportation.

Gross profit as a percentage of sales in the ~~nine~~six months ~~2021 increased~~2022 decreased to ~~63.9%~~63.4% from ~~62.8%~~64.0% in ~~2020.~~2021. Excluding the impact of the items noted below, gross profit ~~increased~~decreased to ~~65.9%~~63.7% of sales in the ~~nine~~six months ~~2021~~2022 from ~~63.3%~~65.7% in ~~2020~~2021 primarily due to ~~leverage~~increased costs from purchases of electronic components at premium prices on the spot market and other inflationary pressures, primarily related to labor, steel and transportation. These increased costs were partially offset by higher sales volumes and favorable ~~mix, partially offset by lower selling prices.~~mix.


					Percent Net Sales
Three Months	2022		2021		2022		2021
Reported	$	2,826	$	2,772	62.9	%	64.6	%
Inventory stepped-up to fair value	7		58		0.2		1.4


Restructuring-related and other charges	8		2		0.2		—
Medical device regulations	2		—		—		—



Adjusted	$	2,843	$	2,832	63.3	%	66.0	%


					Percent Net Sales
Six Months	2022		2021		2022		2021
Reported	$	5,560	$	5,281	63.4	%	64.0	%
Inventory stepped-up to fair value	12		137		0.2		1.7


Restructuring-related and other charges	10		—		0.1		—
Medical device regulations	2		1		—		—



Adjusted	$	5,584	$	5,419	63.7	%	65.7	%

Percent Net Sales
Three Months 2021 2020 2021 2020
Reported $ 2,642 $ 2,461 63.5 % 65.9 %
Inventory stepped-up to fair value 94 — 2.3 —
Restructuring-related and other charges 20 — 0.5 —
Medical device regulations 1 — — —
Adjusted $ 2,757 $ 2,461 66.3 % 65.9 %
Percent Net Sales
Nine Months 2021 2020 2021 2020
Reported $ 7,923 $ 6,340 63.9 % 62.8 %
Inventory stepped-up to fair value 231 9 1.9 0.1
Restructuring-related and other charges 20 36 0.1 0.4
Medical device regulations 2 1 — —
Adjusted $ 8,176 $ 6,386 65.9 % 63.3 %

Research, Development and Engineering Expenses

Research, development and engineering expenses increased ~~$64~~$41 or ~~26.4%~~13.2% in the three months ~~2021~~2022 and increased as a percentage of sales to ~~7.4%~~7.8% from ~~6.5%~~7.2% in ~~2020.~~2021. Excluding the impact of the items noted below, expenses increased to ~~6.7%~~7.2% of sales in ~~2021~~2022 from ~~6.1%~~6.6% in ~~2020.~~2021.

Research, development and engineering expenses increased ~~$175~~$166 or ~~24.0%~~27.8% in the ~~nine~~six months ~~2021~~2022 and increased as a percentage of sales to 8.7% from 7.3% ~~from 7.2%~~ in ~~2020.~~2021. Excluding the impact of the items noted below, expenses increased to ~~6.7%~~7.2% of sales in ~~2021~~2022 from ~~6.6%~~6.7% in ~~2020.~~2021.

The increases for the three and ~~nine~~six months ~~are due~~reflect our continued commitment to ~~disciplined ramp up in spending to facilitate our growth, including projects to develop~~ new ~~products, investments in new~~product development and technologies, ~~and~~ integration of recent ~~acquisitions.~~acquisitions and for the six months the write-off of certain intangible assets.

Percent Net Sales
Three Months 2021 2020 2021 2020
Reported $ 306 $ 242 7.4 % 6.5 %
Medical device regulations (26) (13) (0.7) (0.4)
Adjusted $ 280 $ 229 6.7 % 6.1 %
Percent Net Sales
Nine Months 2021 2020 2021 2020
Reported $ 904 $ 729 7.3 % 7.2 %
Medical device regulations (70) (59) (0.6) (0.6)
Adjusted $ 834 $ 670 6.7 % 6.6 %


					Percent Net Sales
Three Months	2022		2021		2022		2021
Reported	$	351	$	310	7.8	%	7.2	%




Medical device regulations	(28)		(26)		(0.6)		(0.6)



Adjusted	$	323	$	284	7.2	%	6.6	%


					Percent Net Sales
Six Months	2022		2021		2022		2021
Reported	$	764	$	598	8.7	%	7.3	%



Restructuring-related and other charges	(79)		—		(0.9)		—
Medical device regulations	(56)		(44)		(0.6)		(0.6)



Adjusted	$	629	$	554	7.2	%	6.7	%

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$358~~$34 or ~~28.8%~~2.3% in the three months ~~2021~~2022 and ~~increased~~decreased as a percentage of sales to ~~38.5%~~34.3% from ~~33.3%~~35.0% in 2020 and included an impairment charge of $105 million recorded for certain long-lived and intangible assets resulting from price reductions on our trauma and joint replacement products in China based on the outcome of the regional and national volume-based procurement programs. Excluding the impact of the items noted below, expenses increased to 34.1% of sales in 2021 from 31.7% in 2020. The increase was due to disciplined ramp up in spending to facilitate our growth.

~~Selling, general and administrative expenses increased $883 or 23.2% in the nine months 2021 and remained flat as a percentage of sales at 37.7%.~~2021. Excluding the impact of the items noted below, expenses decreased to ~~34.2%~~32.4% of sales in ~~2021~~2022 from 33.4% in 2021.

Selling, general and administrative expenses increased $169 or 5.5% in the six months 2022 and decreased as a percentage of sales to 37.1% from 37.3%. Share-based awards for Vocera employees vested upon our acquisition in 2022 and a charge of $132 was recorded. Excluding the impact of the items noted below, expenses decreased to 33.7% of sales in 2022 from 34.3% in ~~2020.~~ 2021.

The ~~decrease was~~decreases as a percentage of sales for the three and six months were due to our continued cost discipline and fixed cost leverage.


					Percent Net Sales
Three Months	2022		2021		2022		2021
Reported	$	1,539	$	1,505	34.3	%	35.0	%

Other acquisition and integration-related	(30)		(62)		(0.8)		(1.4)

Restructuring-related and other charges	(54)		(16)		(1.2)		(0.4)
Medical device regulations	(2)		—		—		—

Regulatory and legal matters	4		9		0.1		0.2

Adjusted	$	1,457	$	1,436	32.4	%	33.4	%


					Percent Net Sales
Six Months	2022		2021		2022		2021
Reported	$	3,249	$	3,080	37.1	%	37.3	%

Other acquisition and integration-related	(174)		(232)		(2.1)		(2.8)

Restructuring-related and other charges	(82)		(31)		(0.9)		(0.3)
Medical device regulations	(2)		—		—		—

Regulatory and legal matters	(33)		9		(0.4)		0.1

Adjusted	$	2,958	$	2,826	33.7	%	34.3	%


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

Percent Net Sales
Three Months 2021 2020 2021 2020
Reported $ 1,602 $ 1,244 38.5 % 33.3 %
Other acquisition and integration-related (32) (29) (0.8) (0.8)
Restructuring-related and other charges (158) (29) (3.8) (0.8)
Regulatory and legal matters 7 — 0.2 —
Adjusted $ 1,419 $ 1,186 34.1 % 31.7 %
Percent Net Sales
Nine Months 2021 2020 2021 2020
Reported $ 4,682 $ 3,799 37.7 % 37.7 %
Other acquisition and integration-related (264) (76) (2.1) (0.8)
Restructuring-related and other charges (189) (256) (1.5) (2.6)
Regulatory and legal matters 16 (5) 0.1 —
Adjusted $ 4,245 $ 3,462 34.2 % 34.3 %

Recall Charges

Recall charges were ~~$16~~$4 and $76 in the three months and ~~$98~~$18 and $82 in the ~~nine~~six months ~~2021~~2022 and ~~minimal~~2021. Charges in the three and ~~nine~~six months ~~2020. Charges~~2022 were primarily ~~due~~related to the previously disclosed Wright hip products, and charges in the three and six months 2021 were primarily related to Rejuvenate and ABG II Modular-Neck hip stems. Refer to Note 6 to our Consolidated Financial Statements for further information.

Amortization of Intangible Assets

Amortization of intangible assets was ~~$144~~$160 and ~~$114~~$149 in the three months and ~~$474~~$310 and ~~$342~~$330 in the ~~nine~~six months ~~2021~~2022 and ~~2020. The increase in 2021 was primarily due to the acquisition of Wright Medical in the fourth quarter of 2020.~~2021. Refer to Note 7 to our Consolidated Financial Statements for further information.

Operating Income

Operating income ~~decreased $285~~increased $40 to ~~13.8%~~17.2% of sales in the three months ~~2021~~2022 from ~~23.0%~~17.0% of sales in ~~2020.~~2021. Excluding the impact of the items noted below, operating income decreased to ~~25.4%~~23.7% of sales in ~~2021~~2022 from ~~28.0%~~25.9% in ~~2020~~2021 primarily due to ~~disciplined spending to facilitate our growth.~~higher costs from inflationary pressures, partially offset by leverage from higher sales volumes and cost discipline.

Operating income increased ~~$291~~$28 or ~~19.7%~~2.4% to ~~14.2%~~13.9% of sales in the ~~nine~~six months ~~2021~~2022 from ~~14.6%~~14.4% of sales in ~~2020.~~2021. Excluding the impact of the items noted below, operating income ~~increased~~decreased to ~~25.0%~~22.8% of sales in ~~2021~~2022 from ~~22.3%~~24.7% in ~~2020~~2021 primarily due to higher costs from inflationary pressures and our continued investments in innovation, partially offset by leverage from higher sales volumes ~~partially offset by disciplined spending to facilitate our growth.~~and cost discipline.

Percent Net Sales
Three Months 2021 2020 2021 2020
Reported $ 574 $ 859 13.8 % 23.0 %
Inventory stepped-up to fair value 94 — 2.3 —
Other acquisition and integration-related 32 29 0.8 0.7
Amortization of purchased intangible assets 144 114 3.5 3.1
Restructuring-related and other charges 178 29 4.2 0.7
Medical device regulations 27 14 0.6 0.4
Recall-related matters 16 2 0.4 0.1
Regulatory and legal matters (7) — (0.2) —
Adjusted $ 1,058 $ 1,047 25.4 % 28.0 %
Percent Net Sales
Nine Months 2021 2020 2021 2020
Reported $ 1,765 $ 1,474 14.2 % 14.6 %
Inventory stepped-up to fair value 231 9 1.9 0.1
Other acquisition and integration-related 264 76 2.1 0.8
Amortization of purchased intangible assets 474 342 3.8 3.3
Restructuring-related and other charges 209 292 1.7 2.9
Medical device regulations 72 60 0.6 0.6
Recall-related matters 98 (4) 0.8 —
Regulatory and legal matters (16) 5 (0.1) —
Adjusted $ 3,097 $ 2,254 25.0 % 22.3 %


					Percent Net Sales
Three Months	2022		2021		2022		2021
Reported	$	772	$	732	17.2	%	17.0	%
Inventory stepped-up to fair value	7		58		0.2		1.4
Other acquisition and integration-related	30		62		0.6		1.4
Amortization of purchased intangible assets	160		149		3.6		3.5
Restructuring-related and other charges	62		17		1.4		0.4
Medical device regulations	32		26		0.7		0.6
Recall-related matters	4		76		0.1		1.8
Regulatory and legal matters	(4)		(9)		(0.1)		(0.2)

Adjusted	$	1,063	$	1,111	23.7	%	25.9	%


					Percent Net Sales
Six Months	2022		2021		2022		2021
Reported	$	1,219	$	1,191	13.9	%	14.4	%
Inventory stepped-up to fair value	12		137		0.1		1.7
Other acquisition and integration-related	174		232		2.0		2.8
Amortization of purchased intangible assets	310		330		3.5		4.0
Restructuring-related and other charges	171		31		2.0		0.4
Medical device regulations	60		45		0.7		0.5
Recall-related matters	18		82		0.2		1.0
Regulatory and legal matters	33		(9)		0.4		(0.1)

Adjusted	$	1,997	$	2,039	22.8	%	24.7	%

Other Income (Expense), Net

Other income (expense), net was ($~~79)~~52) and ($~~79)~~70) in the three months and ($~~241)~~113) and ($~~191)~~162) in the ~~nine~~six months ~~2021~~2022 and ~~2020.~~2021. The ~~increase~~decrease in net expense in ~~2021~~2022 was primarily due to ~~increased~~favorable investment returns and interest ~~expense driven by the additional debt from the bond offerings completed in June 2020 and November 2020.~~income.

Income Taxes

We are routinely audited by income tax authorities in the jurisdictions we operate. In July 2022 we effectively settled the United States federal income tax audit for years 2014 through 2018. Accordingly in the three months ending September 30, 2022 we expect to reduce our accruals for uncertain tax positions and 12.6% and 19.6% in the nine months 2021 and 2020. The change in the effective income tax rate for the three months was primarily due to lower pre-tax income and certain discrete tax items recorded in 2021. The change in effective income tax rates for the nine months reflects certain discrete tax items recorded in 2021.

Net Earnings

Net earnings ~~decreased~~increased to ~~$438~~$656 or ~~$1.14~~$1.72 per diluted share in the three months ~~2021~~2022 from ~~$621~~$592 or ~~$1.63~~$1.55 per diluted share in ~~2020.~~2021. Adjusted net earnings per diluted share(1) was $2.25 in 2022 in line with 2021.

Net earnings increased to $979 or $2.56 per diluted share in the six months 2022 from $894 or $2.34 per diluted share in 2021. Adjusted net earnings per diluted share(1) increased 1.0% to ~~$2.20~~$4.22 in ~~2021~~2022 from ~~$2.14~~$4.18 in ~~2020. The impact of foreign currency exchange rates increased net earnings per diluted share by approximately $0.04 in 2021 and increased net earnings per diluted share by approximately $0.01 in 2020.~~2021.

~~Net earnings increased to $1,332 or $3.48 per diluted share in the nine months 2021 from $1,031 or $2.71 per diluted share in 2020. Adjusted net earnings per diluted share(1)~~ increased 38.1% to $6.38 in 2021 from $4.62 in 2020. The impact of foreign currency exchange rates increased net earnings per diluted share by approximately $0.16 in 2021 and reduced net earnings per diluted share by approximately $0.01 in 2020.

Percent Net Sales
Three Months 2021 2020 2021 2020
Reported $ 438 $ 621 10.5 % 16.6 %
Inventory stepped-up to fair value 73 — 1.8 —
Other acquisition and integration-related 24 24 0.6 0.6
Amortization of purchased intangible assets 114 93 2.7 2.5
Restructuring-related and other charges 165 26 3.9 0.7
Medical device regulations 23 11 0.6 0.3
Recall-related matters 12 2 0.3 0.1
Regulatory and legal matters (7) — (0.2) —
Tax matters — 35 — 0.9
Adjusted $ 842 $ 812 20.2 % 21.7 %
Percent Net Sales
Nine Months 2021 2020 2021 2020
Reported $ 1,332 $ 1,031 10.7 % 10.2 %
Inventory stepped-up to fair value 176 6 1.4 0.1
Other acquisition and integration-related 204 60 1.6 0.6
Amortization of purchased intangible assets 378 277 3.1 2.6
Restructuring-related and other charges 198 238 1.7 2.4
Medical device regulations 60 47 0.5 0.5
Recall-related matters 85 (2) 0.7 —
Regulatory and legal matters (19) 6 (0.2) 0.1
Tax matters 26 93 0.2 0.9
Adjusted $ 2,440 $ 1,756 19.7 % 17.4 %


					Percent Net Sales
Three Months	2022		2021		2022		2021
Reported	$	656	$	592	14.6	%	13.8	%
Inventory stepped-up to fair value	5		43		0.1		1.0
Other acquisition and integration-related	23		51		0.5		1.2
Amortization of purchased intangible assets	124		113		2.8		2.7
Restructuring-related and other charges	56		15		1.2		0.3
Medical device regulations	26		21		0.6		0.5
Recall-related matters	3		68		0.1		1.6
Regulatory and legal matters	(4)		(12)		(0.1)		(0.3)
Tax matters	(29)		(30)		(0.7)		(0.7)
Adjusted	$	860	$	861	19.1	%	20.1	%


					Percent Net Sales
Six Months	2022		2021		2022		2021
Reported	$	979	$	894	11.2	%	10.8	%
Inventory stepped-up to fair value	9		103		0.1		1.2
Other acquisition and integration-related	128		180		1.5		2.2
Amortization of purchased intangible assets	239		264		2.6		3.3
Restructuring-related and other charges	140		33		1.6		0.4
Medical device regulations	50		37		0.6		0.4
Recall-related matters	14		73		0.2		0.9
Regulatory and legal matters	24		(12)		0.3		(0.1)
Tax matters	29		26		0.3		0.3
Adjusted	$	1,612	$	1,598	18.4	%	19.4	%


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

Non-GAAP Financial Measures

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

workforce reductions and other integration-related activities) and specific costs (e.g., inventory step-up and deal costs) related to the consummation of the acquisition process.

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

3.Restructuring-related and other charges. Costs associated with the termination of sales relationships in certain countries, workforce reductions, elimination of product lines, certain long-lived and intangible asset write-offs and impairments and associated costs and other restructuring-related activities.

4.Medical ~~Device Regulations.~~device regulations. Costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the new medical device reporting regulations and other requirements of the European Union and ~~China~~the more stringent regulations for medical ~~devices.~~devices in China.

5.Recall-related matters. Our best estimate of the minimum of the range of probable loss to resolve the Rejuvenate, LFIT V40 and other product recalls.

6.Regulatory and legal matters. Our best estimate of the minimum of the range of probable loss to resolve certain regulatory matters and other legal settlements.

7.Tax matters. Charges represent the 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, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of our operations when viewed with our GAAP results and the reconciliations to corresponding GAAP financial measures at the end of the discussion of Consolidated Results of Operations below. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The weighted-average diluted shares outstanding used in the calculation of non-GAAP net earnings per diluted share are the same as those used in the calculation of reported net earnings per diluted share for the respective period.

Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Three Months 2021 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other income (expense), net Net Earnings Effective
Tax Rate Diluted EPS
Reported $ 2,642 $ 1,602 $ 306 $ 574 $ (79) $ 438 11.5 % $ 1.14
Reported percent net sales 63.5 % 38.5 % 7.4 % 13.8 % (1.9) % 10.5 %
Acquisition and integration-related charges:
Inventory stepped-up to fair value 94 — — 94 — 73 1.9 0.19
Other acquisition and integration-related — (32) — 32 — 24 0.8 0.06
Amortization of purchased intangible assets — — — 144 — 114 2.0 0.30
Restructuring-related and other charges 20 (158) — 178 — 165 (2.6) 0.44
Medical device regulations 1 — (26) 27 — 23 (0.1) 0.06
Recall-related matters — — — 16 — 12 0.3 0.03
Regulatory and legal matters — 7 — (7) — (7) 0.2 (0.02)
Tax matters — — — — — — — —
Adjusted $ 2,757 $ 1,419 $ 280 $ 1,058 $ (79) $ 842 14.0 % $ 2.20
Adjusted percent net sales 66.3 % 34.1 % 6.7 % 25.4 % (1.9) % 20.2 %


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

Three Months 2020 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other income (expense), net Net Earnings Effective
Tax Rate Diluted EPS
Reported $ 2,461 $ 1,244 $ 242 $ 859 $ (79) $ 621 20.4 % $ 1.63
Reported percent net sales 65.9 % 33.3 % 6.5 % 23.0 % (2.1) % 16.6 %
Acquisition and integration-related charges:
Inventory stepped-up to fair value — — — — — — — —
Other acquisition and integration-related — (29) — 29 — 24 0.1 0.07
Amortization of purchased intangible assets — — — 114 — 93 0.4 0.25
Restructuring-related and other charges — (29) — 29 — 26 (0.1) 0.06
Medical device regulations — — (13) 14 — 11 0.1 0.03
Recall-related matters — — — 2 — 2 (0.2) 0.01
Regulatory and legal matters — — — — — — — —
Tax matters — — — — — 35 (4.6) 0.09
Adjusted $ 2,461 $ 1,186 $ 229 $ 1,047 $ (79) $ 812 16.1 % $ 2.14
Adjusted percent net sales 65.9 % 31.7 % 6.1 % 28.0 % (2.1) % 21.7 %
Nine Months 2021 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other income (expense), net Net Earnings Effective
Tax Rate Diluted EPS
Reported $ 7,923 $ 4,682 $ 904 $ 1,765 $ (241) $ 1,332 12.6 % $ 3.48
Reported percent net sales 63.9 % 37.7 % 7.3 % 14.2 % (1.9) % 10.7 %
Acquisition and integration-related charges:
Inventory stepped-up to fair value 231 — — 231 — 176 1.4 0.46
Other acquisition and integration-related — (264) — 264 — 204 1.4 0.53
Amortization of purchased intangible assets — — — 474 — 378 1.7 0.99
Restructuring-related and other charges 20 (189) — 209 11 198 (0.7) 0.52
Medical device regulations 2 — (70) 72 — 60 0.1 0.16
Recall-related matters — — — 98 — 85 (0.1) 0.22
Regulatory and legal matters — 16 — (16) (3) (19) 0.2 (0.05)
Tax matters — — — — — 26 (1.8) 0.07
Adjusted $ 8,176 $ 4,245 $ 834 $ 3,097 $ (233) $ 2,440 14.8 % $ 6.38
Adjusted percent net sales 65.9 % 34.2 % 6.7 % 25.0 % (1.9) % 19.7 %
Nine Months 2020 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other income (expense), net Net Earnings Effective
Tax Rate Diluted EPS
Reported $ 6,340 $ 3,799 $ 729 $ 1,474 $ (191) $ 1,031 19.6 % $ 2.71
Reported percent net sales 62.8 % 37.7 % 7.2 % 14.6 % (1.9) % 10.2 %
Acquisition and integration-related charges:
Inventory stepped-up to fair value 9 — — 9 — 6 0.1 0.02
Other acquisition and integration-related — (76) — 76 — 60 0.4 0.16
Amortization of purchased intangible assets — — — 342 — 277 1.0 0.73
Restructuring-related and other charges 36 (256) — 292 — 238 0.8 0.62
Medical device regulations 1 — (59) 60 — 47 0.3 0.12
Recall-related matters — — — (4) — (2) (0.2) —
Regulatory and legal matters — (5) — 5 — 6 (0.2) 0.02
Tax matters — — — — 7 93 (6.6) 0.24
Adjusted $ 6,386 $ 3,462 $ 670 $ 2,254 $ (184) $ 1,756 15.2 % $ 4.62
Adjusted percent net sales 63.3 % 34.3 % 6.6 % 22.3 % (1.8) % 17.4 %



Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Three Months 2022	Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Net Earnings			Effective Tax Rate		Diluted EPS
Reported	$	2,826		$	1,539		$	351		$	772		$	(52)		$	656		8.9	%	$	1.72
Reported percent net sales	62.9		%	34.3		%	7.8		%	17.2		%	(1.2)		%	14.6		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value	7			—			—			7			—			5			0.1		0.01
Other acquisition and integration-related	—			(30)			—			30			—			23			0.4		0.06
Amortization of purchased intangible assets	—			—			—			160			—			124			2.0		0.33
Restructuring-related and other charges	8			(54)			—			62			—			56			(0.4)		0.15
Medical device regulations	2			(2)			(28)			32			—			26			0.2		0.07
Recall-related matters	—			—			—			4			—			3			0.1		—
Regulatory and legal matters	—			4			—			(4)			—			(4)			—		(0.02)
Tax matters	—			—			—			—			(12)			(29)			2.6		(0.07)
Adjusted	$	2,843		$	1,457		$	323		$	1,063		$	(64)		$	860		13.9	%	$	2.25
Adjusted percent net sales	63.3		%	32.4		%	7.2		%	23.7		%	(1.4)		%	19.1		%


Three Months 2021	Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Net Earnings			Effective Tax Rate		Diluted EPS
Reported	$	2,772		$	1,505		$	310		$	732		$	(70)		$	592		10.6	%	$	1.55
Reported percent net sales	64.6		%	35.0		%	7.2		%	17.0		%	(1.6)		%	13.8		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value	58			—			—			58			—			43			0.6		0.11
Other acquisition and integration-related	—			(62)			—			62			—			51			0.1		0.13
Amortization of purchased intangible assets	—			—			—			149			—			113			1.4		0.29
Restructuring-related and other charges	2			(16)			—			17			—			15			(0.1)		0.03
Medical device regulations	—			—			(26)			26			—			21			0.1		0.06
Recall-related matters	—			—			—			76			—			68			(0.4)		0.18
Regulatory and legal matters	—			9			—			(9)			(3)			(12)			0.3		(0.03)
Tax matters	—			—			—			—			—			(30)			4.4		(0.07)
Adjusted	$	2,832		$	1,436		$	284		$	1,111		$	(73)		$	861		17.0	%	$	2.25
Adjusted percent net sales	66.0		%	33.4		%	6.6		%	25.9		%	(1.7)		%	20.1		%


Six Months 2022	Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Net Earnings			Effective Tax Rate		Diluted EPS
Reported	$	5,560		$	3,249		$	764		$	1,219		$	(113)		$	979		11.5	%	$	2.56
Reported percent net sales	63.4		%	37.1		%	8.7		%	13.9		%	(1.3)		%	11.2		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value	12			—			—			12			—			9			0.1		0.02
Other acquisition and integration-related	—			(174)			—			174			—			128			2.0		0.33
Amortization of purchased intangible assets	—			—			—			310			—			239			2.6		0.63
Restructuring-related and other charges	10			(82)			(79)			171			—			140			0.6		0.37
Medical device regulations	2			(2)			(56)			60			—			50			0.2		0.13
Recall-related matters	—			—			—			18			—			14			0.2		0.04
Regulatory and legal matters	—			(33)			—			33			—			24			0.4		0.06
Tax matters	—			—			—			—			(12)			29			(3.7)		0.08
Adjusted	$	5,584		$	2,958		$	629		$	1,997		$	(125)		$	1,612		13.9	%	$	4.22
Adjusted percent net sales	63.7		%	33.7		%	7.2		%	22.8		%	(1.4)		%	18.4		%


Six Months 2021	Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Net Earnings			Effective Tax Rate		Diluted EPS
Reported	$	5,281		$	3,080		$	598		$	1,191		$	(162)		$	894		13.1	%	$	2.34
Reported percent net sales	64.0		%	37.3		%	7.3		%	14.4		%	(2.0)		%	10.8		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value	137			—			—			137			—			103			1.1		0.27
Other acquisition and integration-related	—			(232)			—			232			—			180			1.6		0.47
Amortization of purchased intangible assets	—			—			—			330			—			264			1.6		0.69
Restructuring-related and other charges	—			(31)			—			31			11			33			0.3		0.08
Medical device regulations	1			—			(44)			45			—			37			0.2		0.10
Recall-related matters	—			—			—			82			—			73			(0.3)		0.19
Regulatory and legal matters	—			9			—			(9)			(3)			(12)			0.2		(0.03)
Tax matters	—			—			—			—			—			26			(2.6)		0.07
Adjusted	$	5,419		$	2,826		$	554		$	2,039		$	(154)		$	1,598		15.2	%	$	4.18
Adjusted percent net sales	65.7		%	34.3		%	6.7		%	24.7		%	(1.9)		%	19.4		%

~~FINANCIAL CONDITION AND LIQUIDITY~~

Nine Months 2021 2020
Net cash provided by operating activities $ 2,263 $ 2,040
Net cash used in investing activities (545) (349)
Net cash provided by (used in) financing activities (2,077) 1,046
Effect of exchange rate changes on cash and cash equivalents (21) 9
Change in cash and cash equivalents $ (380) $ 2,746

~~Operating Activities~~

Cash provided by operating activities was $2,263 and $2,040 in the nine months 2021 and 2020. The increase was primarily due to higher net earnings partially offset by decreases in overall working capital and higher recall-related payments.

~~Investing Activities~~

~~Cash used in investing activities was $545 and $349 in the nine months 2021 and 2020. The increase in cash used in 2021 was primarily due to increased payments for acquisitions.~~

~~Financing Activities~~

Cash provided by (used in) financing activities was ($2,077) and $1,046 in the nine months 2021 and 2020. Cash used in 2021 was primarily driven by debt repayments of $750 in March 2021 and $400 for the term loan in June 2021. Cash provided in 2020 was driven by the issuance of $2,300 of notes in June 2020 partially offset by debt repayments of $500 in January 2020. We did not repurchase any shares in the nine months 2021 or 2020.

Nine Months 2021 2020
Total dividends paid to common shareholders $ 713 $ 647

~~Liquidity~~

Cash, cash equivalents and marketable securities were $2,639 and $3,024 on September 30, 2021 and December 31, 2020. Current assets exceeded current liabilities by $5,011 and $4,666 on September 30, 2021 and December 31, 2020. We anticipate being able to support our short-term liquidity and operating needs from a variety of sources including cash from operations,


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

FINANCIAL CONDITION AND LIQUIDITY


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

Operating Activities

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

Investing Activities

Cash used in investing activities was $2,834 and $298 in the six months 2022 and 2021. The increase in cash used in 2022 was primarily due to increased payments for acquisitions and investments in capital projects.

Financing Activities

Cash provided by (used in) financing activities was $240 and ($1,729) in the six months 2022 and 2021. Cash provided in 2022 was primarily driven by the issuance of a $1,500 term loan used to fund the Vocera acquisition, of which $250 has been repaid, partially offset by the payment of dividends. Cash used in 2021 was primarily due to debt repayments of $750 in March 2021 and $400 for the term loan in June 2021. We did not repurchase any shares in the six months 2022 and 2021. Dividends paid to common shareholders were $525 and $475 in the six months 2022 and 2021.

Liquidity

Cash, cash equivalents and marketable securities were $1,127 and $3,019 on June 30, 2022 and December 31, 2021. Current assets exceeded current liabilities by $4,421 and $5,468 on June 30, 2022 and December 31, 2021. 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 and capital expenditure and operating expense reductions. In October 2021 we entered into a new revolving credit facility of $2,250 that expires in October 2026 and replaces our previous agreement dated August 19, 2016.lines.

We raised funds in the capital markets in ~~2020, 2019 and 2018~~the past and may continue to do so from time-to-time. We continue to have strong investment-grade short-term and long-term debt ratings that we believe should enable us to refinance our debt as needed.

Our cash, cash equivalents and marketable securities held in locations outside the United States was approximately ~~40%~~55% on ~~September~~June 30, ~~2021~~2022 compared to ~~30%~~26% on December 31, ~~2020.~~2021.

Critical Accounting Policies

There were no changes to our critical accounting policies from those disclosed in our Annual Report on Form 10-K for ~~2020.~~2021.

New Accounting Pronouncements Not Yet Adopted

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

Guarantees and Other Off-Balance Sheet Arrangements

We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, of a magnitude that we believe could have a material impact on our financial condition or liquidity.

OTHER MATTERS

Legal and Regulatory Matters

We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of our business, including

proceedings related to product, labor, intellectual property and other matters. Refer to Note 6 to our Consolidated Financial Statements for further information.

FORWARD-LOOKING STATEMENTS

This report contains statements referring to us that are not historical facts and are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which are intended to take advantage of the "safe harbor" provisions of the Reform Act, are based on current projections about operations, industry conditions, financial condition and liquidity. Words that identify forward-looking statements include words such as "may," "could," "will," "should," "possible," "plan," "predict," "forecast," "potential," "anticipate," "estimate," "expect," "project," "intend," "believe," "may impact," "on track," "goal," "strategy" and words and terms of similar substance used in connection with any discussion of future operating or financial performance, an acquisition or our businesses. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Those statements are not guarantees and are subject to risks, uncertainties and assumptions that are difficult to predict, including uncertainties related to the impact of the COVID-19 pandemic on our operations and financial results. Therefore, actual results could differ materially and adversely from these forward-looking statements. Some important factors that could cause our actual results to differ from our expectations in any forward-looking statements include those risks discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for ~~2020.~~2021 and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. This Form 10-Q should be read in conjunction with our Consolidated Financial Statements and accompanying notes to our Consolidated Financial Statements in our Annual Report on Form

10-K for ~~2020.~~2021. We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that affect the likelihood that actual results will differ from those contained in the forward-looking statements.


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We consider our greatest potential areas of market risk exposure to be exchange rate risk and the impacts of the COVID-19 pandemic on our operations and financial 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 ~~2020.~~2021. There were no material changes from the information provided therein. We are not able to quantify the impacts of the COVID-19 pandemic on our financial results. Qualitative disclosures about the COVID-19 pandemic are included in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q and Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for ~~2020.~~2021.


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


ITEM 4.			CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer (the Certifying Officers), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) on ~~September~~June 30, ~~2021.~~2022. Based on that evaluation, the Certifying Officers concluded the Company's disclosure controls and procedures were effective as of ~~September~~June 30, ~~2021.~~2022.

Changes in Internal Control Over Financial Reporting

There was no change to our internal control over financial reporting during the ~~three~~six months ~~2021~~2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. In February 2022 we completed the acquisition of Vocera and are currently integrating Vocera into our operations, compliance programs and internal control processes. Vocera constituted approximately 8.5% of our total assets as of June 30, 2022, including the goodwill and intangible assets recorded as part of the purchase price allocation and approximately 1% of our net sales in the six months ended June 30, 2022. United States Securities and Exchange Commission guidance allows companies to exclude acquisitions from their assessment of the internal control over financial reporting during the first year following an acquisition while integrating the acquired company. We have excluded the acquired operations of Vocera from our assessment of the Company's internal control over financial reporting.

PART II – OTHER INFORMATION


ITEM 1A.			RISK FACTORS

We are not aware of any material changes to the risk factors included in Item 1A. "Risk Factors" in our Annual Report on Form 10-K for 2021 and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, except for updates to the following risk factor:

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

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


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

We issued ~~170~~6,071 shares of our common stock in the three months ~~2021~~2022 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~~time-to-time in the open market, in privately negotiated transactions or otherwise.

In the ~~nine~~six months ~~2021~~2022 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 ~~September~~June 30, ~~2021. As previously announced we intend to maintain the suspension of our share repurchase program through 2021.~~


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


~~ITEM 5.~~			~~OTHER INFORMATION~~

On October 26, 2021 Stryker Corporation, and certain of its subsidiaries as designated borrowers, entered into a revolving credit agreement with various lenders and issuing banks and Wells Fargo Bank, National Association, as administrative agent (the "2021 Credit Agreement"), that replaces our previous revolving credit agreement dated August 19, 2016 (the "2016 Credit Agreement"). The principle terms of the 2021 Credit Agreement are: (1) an aggregate principal amount of commitments of $2.25 billion, (2) a maturity date of October 26, 2026 and (3) a leverage ratio financial covenant that provides for a maximum permitted leverage ratio of 3.75:1 at the end of any fiscal quarter, with an acquisition holiday no more than twice during the term of the 2021 Credit Agreement that permits the Company to elect to increase the maximum permitted leverage ratio by 1.0 to 4.75:1 for a period of four consecutive fiscal quarters, with the maximum permitted leverage ratio then stepping down by 0.25:1 for each of the next four quarters until it reaches 3.75:1, in connection with the consummation of certain material acquisitions. The 2021 Credit Agreement has an annual facility fee ranging from 6.0 to 11.0 basis points and loans under the 2021 Credit Agreement bear interest at either a Base Rate or an Offshore Rate, in each case as defined in the 2021 Credit Agreement, plus an applicable margin ranging from 0 to 1.5 basis points for Base Rate loans and 56.5 to 101.5 basis points for Offshore Rate loans. The applicable margin for Offshore Rate loans also applies to letters of credit. Both the facility fee and the applicable margin are dependent on the Company's credit ratings. The representations and warranties, covenants and events of default contained in the 2021 Credit Agreement are substantially the same as those contained in the 2016 Credit Agreement. The foregoing summary is qualified in its entirety by the terms of the 2021 Credit Agreement, a copy of which is filed as Exhibit 10(i) hereto and is incorporated herein by reference.2022.


ITEM 6.			EXHIBITS


10(i)			~~Credit Agreement, dated as~~Form of ~~October 26, 2021, among Stryker Corporation as borrower;~~grant notice and terms and conditions for re stricted stock u nits grant ed in 2022 un der the ~~lenders party thereto; and Wells Fargo Bank, N.A., as administrative agent.~~2011 Long-Term Incentive Plan to non-employee directors.
31(i)			Certification of Principal Executive Officer of Stryker Corporation pursuant to Rule 13a-14(a).
31(ii)			Certification of Principal Financial Officer of Stryker Corporation pursuant to Rule 13a-14(a).
32(i)*			Certification by Principal Executive Officer of Stryker Corporation pursuant to 18 U.S.C. Section 1350.
32(ii)*			Certification by Principal Financial Officer of Stryker Corporation pursuant to 18 U.S.C. Section 1350.
101.INS			iXBRL Instance Document
101.SCH			iXBRL Schema Document
101.CAL			iXBRL Calculation Linkbase Document
101.DEF			iXBRL Definition Linkbase Document
101.LAB			iXBRL Label Linkbase Document
101.PRE			iXBRL Presentation Linkbase Document
104			Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

			* Furnished with this Form 10-Q


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


STRYKER CORPORATION						~~2021 Third~~2022 Second Quarter Form 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		STRYKER CORPORATION
		(Registrant)


Date:	~~October 29, 2021~~July 27, 2022	/s/ KEVIN A. LOBO
		Kevin A. Lobo
		Chair, ~~and~~ Chief Executive Officer and President


Date:	~~October 29, 2021~~July 27, 2022	/s/ GLENN S. BOEHNLEIN
		Glenn S. Boehnlein
		Vice President, Chief Financial Officer


						18


Net Sales by Geography
	Three Months 2021				Three Months 2020
	United States		International		United States		International
Orthopaedics:
Knees	$	321	$	118	$	332	$	103
Hips	199		129		223		111
Trauma and Extremities	447		192		285		145
Other	97		26		97		21
	$	1,064	$	465	$	937	$	380
MedSurg:
Instruments	$	415	$	110	$	369	$	98
Endoscopy	418		107		380		87
Medical	496		140		455		145
Sustainability	68		1		65		1
	$	1,397	$	358	$	1,269	$	331
Neurotechnology and Spine:
Neurotechnology	$	357	$	237	$	323	$	195
Spine	201		81		219		83
	$	558	$	318	$	542	$	278
Total	$	3,019	$	1,141	$	2,748	$	989


Net Sales by Geography
	Nine Months 2021				Nine Months 2020
	United States		International		United States		International
Orthopaedics:
Knees	$	964	$	361	$	833	$	275
Hips	606		384		564		302
Trauma and Extremities	1,362		591		753		399
Other	290		83		262		45
	$	3,222	$	1,419	$	2,412	$	1,021
MedSurg:
Instruments	$	1,171	$	340	$	1,028	$	280
Endoscopy	1,179		333		997		241
Medical	1,457		441		1,363		456
Sustainability	200		3		179		2
	$	4,007	$	1,117	$	3,567	$	979
Neurotechnology and Spine:
Neurotechnology	$	1,063	$	712	$	835	$	535
Spine	611		256		543		197
	$	1,674	$	968	$	1,378	$	732
Total	$	8,903	$	3,504	$	7,357	$	2,732