v3.25.4
Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]  
Nature of Operations Stryker (the "Company," "we," "us," or
"our") is a global leader in medical technologies and, together
with our customers, we are driven to make healthcare better. We
offer innovative products and services in MedSurg,
Neurotechnology and Orthopaedics that help improve patient and
healthcare outcomes. Our products include surgical equipment
and surgical navigation systems; endoscopic and
communications systems; patient handling, emergency medical
equipment and intensive care disposable products; clinical
communication and artificial intelligence-assisted virtual care
platform technology; products for traditional brain and open skull-
based surgical procedures; minimally invasive products for the
treatment of acute ischemic and hemorrhagic stroke and venous
thromboembolism; implants used in joint replacement and trauma
surgeries; Mako robotic-arm assisted technology; as well as other
products used in a variety of medical specialties.
Basis of Presentation and Consolidation The Consolidated
Financial Statements include the Company and its subsidiaries.
All significant intercompany accounts and transactions are
eliminated in consolidation. We have no material interests in
variable interest entities. Certain prior year amounts have been
reclassified to conform with current year presentation in our
Consolidated Financial Statements.
Use of Estimates The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States (GAAP) requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities on the
date of the financial statements and the reported amounts of net
sales and expenses in the reporting period. Actual results could
differ from those estimates.
Revenue Recognition Sales are recognized as the
performance obligations to deliver products or services (including
services under extended warranty service contracts) are satisfied
and are recorded based on the amount of consideration we
expect to receive in exchange for satisfying the performance
obligations. Our sales are recognized primarily when we transfer
control to the customer, which can be on the date of shipment,
the date of receipt by the customer or, for most Orthopaedics
products, when we have received a purchase order and
appropriate notification the product has been used or implanted.
Products and services are primarily transferred to customers at a
point in time, with some transfers of services taking place over
time.
Sales represent the amount of consideration we expect to receive
from customers in exchange for transferring products and
services. Net sales exclude sales, value added and other taxes
we collect from customers. Other costs to obtain and fulfill
contracts are generally expensed as incurred due to the short-
term nature of most of our sales. We extend terms of payment to
our customers based on commercially reasonable terms for the
markets of our customers, while also considering their credit
quality.
A provision for estimated sales returns, discounts and rebates is
recognized as a reduction of sales in the same period that the
sales are recognized. Our estimate of the provision for sales
returns has been established based on contract terms with our
customers and historical business practices and current trends.
Shipping and handling costs charged to customers are included
in net sales.
Cost of Sales Cost of sales include direct materials and
supplies consumed in the manufacture of product, as well as
manufacturing labor, depreciation expense and direct overhead
expense necessary to acquire and convert the purchased
materials and supplies into finished product. Cost of sales also
includes the cost to distribute products to customers, inbound
freight costs, warehousing costs and other shipping and handling
activity.
Research, Development and Engineering Expenses Research, development and engineering costs are charged to
expense as incurred and include research, development and
engineering activities relating to the development of new
products, improvement of existing products, technical support of
products and compliance with governmental regulations for the
protection of customers and patients. Costs primarily include
salaries, wages, consulting and depreciation and maintenance of
research facilities and equipment.
Selling, General and Administrative Expenses include
selling expenses, marketing expenses, administrative and other
indirect overhead costs, amortization of loaner instrumentation,
depreciation and amortization expense of non-manufacturing
assets and other miscellaneous operating items.
Currency Translation Financial statements of subsidiaries
outside the United States generally are measured using the local
currency as the functional currency. Adjustments to translate
those statements into United States Dollars are recorded in other
comprehensive income (OCI). Transactional exchange gains and
losses are included in other income.
Cash Equivalents Highly liquid investments with remaining
stated maturities of three months or less when purchased or
other money market instruments that are redeemable upon
demand are considered cash equivalents and recorded at cost.
Short-term Investments Short-term investments that have a
maturity greater than three months and less than a year from the
date of purchase primarily include time deposits, certificates of
deposit, commercial paper, bonds and notes, substantially all of
which are denominated in United States Dollars and are stated at
cost plus accrued interest, which approximates fair value. We
expect to hold all of our short-term investments to maturity.
Marketable Securities Marketable securities include marketable
debt securities and mutual funds. Mutual funds are acquired to
offset changes in certain liabilities related to deferred
compensation arrangements and are expected to be used to
settle these liabilities. Mutual funds are recognized in other
noncurrent assets. Pursuant to our investment policy, all
individual marketable security investments must have a minimum
credit quality of single A (Standard & Poor’s and Fitch) and A2
(Moody’s Corporation) at the time of acquisition, while the overall
portfolio of marketable securities must maintain a minimum
average credit quality of double A (Standard & Poor’s and Fitch)
or Aa (Moody’s Corporation). In the event of a rating downgrade
below the minimum credit quality subsequent to purchase, the
marketable security investment is evaluated to determine the
appropriate action to take to minimize the overall risk to our
marketable security investment portfolio. Our marketable
securities are classified as available-for-sale and trading
securities. Investments in trading securities represent participant-
directed investments of deferred employee compensation.
Accounts Receivable Accounts receivable include trade and
other miscellaneous receivables. An allowance is maintained for
doubtful accounts for estimated losses in the collection of
accounts receivable. Estimates are made regarding the ability of
customers to make required payments based on historical credit
experience, current market conditions and expected credit
losses. Accounts receivable are written off when all reasonable
collection efforts are exhausted.
Inventories Inventories are stated at the lower of cost or net
realizable value, with cost generally determined using the first-in,
first-out (FIFO) cost method. For excess and obsolete inventory
resulting from the potential inability to sell specific products at
prices in excess of current carrying costs, reserves are
maintained to reduce current carrying cost to net realizable value.
Financial Instruments Our financial instruments include cash,
cash equivalents, marketable securities, accounts receivable,
other investments, accounts payable, debt and foreign currency
exchange contracts. The carrying value of our financial
instruments, with the exception of our senior unsecured notes,
approximates fair value on December 31, 2025 and 2024. Refer
to Notes 3 and 10 for further details.
All marketable securities are recognized at fair value.
Adjustments to the fair value of marketable securities that are
classified as available-for-sale are recognized as increases or
decreases, net of income taxes, within accumulated other
comprehensive income (AOCI) in shareholders’ equity and
adjustments to the fair value of marketable securities that are
classified as trading are recognized in earnings. The amortized
cost of marketable debt securities is adjusted for amortization of
premiums and discounts to maturity computed under the effective
interest method. Such amortization, interest and realized gains
and losses are included in other income. The cost of securities
sold is determined by the specific identification method.
We review declines in the fair value of our investments classified
as available-for-sale to determine whether the decline in fair
value is a result of credit loss or other factors. Impairments of
available-for-sale marketable debt securities related to credit loss
are included in earnings and impairments related to other factors
are recognized within AOCI.
Derivatives All derivatives are recognized at fair value and
reported on a gross basis. We enter into forward currency
exchange contracts to mitigate the impact of currency fluctuations
on transactions denominated in nonfunctional currencies, thereby
limiting our risk that would otherwise result from changes in
exchange rates. The periods of the forward currency exchange
contracts correspond to the periods of the exposed transactions,
with realized gains and losses included in the measurement and
recording of transactions denominated in the nonfunctional
currencies. All forward currency exchange contracts are recorded
at their fair value each period.
Forward currency exchange contracts designated as cash flow
hedges are designed to hedge the variability of cash flows
associated with forecasted transactions denominated in a foreign
currency that will take place in the future. These nonfunctional
currency exposures principally relate to forecasted intercompany
sales and purchases of manufactured products and generally
have maturities up to eighteen months. Changes in value of
derivatives designated as cash flow hedges are recorded in AOCI
in shareholders’ equity until earnings are affected by the
variability of the underlying cash flows. At that time, the
applicable amount of gain or loss from the derivative instrument
that is deferred in shareholders’ equity is reclassified into
earnings and is included in cost of goods sold. Cash flows
associated with these hedges are included in cash provided by
operating activities in the same category as the cash flows from
the items being hedged.
Forward currency exchange contracts are used to offset our
exposure to the change in value of specific foreign currency
denominated assets and liabilities, primarily intercompany
payables and receivables. These derivatives are not designated
as hedges and, therefore, changes in the value of these forward
contracts are recognized in earnings, thereby offsetting the
current earnings effect of the related changes in value of foreign
currency denominated assets and liabilities. The estimated fair
value of our forward currency exchange contracts represents the
measurement of the contracts at month-end spot rates as
adjusted by current forward points.
From time to time, we designate derivative and non-derivative
financial instruments as net investment hedges of our
investments in certain international subsidiaries. For derivative
instruments that are designated and qualify as a net investment
hedge, the effective portion of the derivative's gain or loss is
recognized in OCI and reported as a component of AOCI. We
have elected to use the spot method to assess effectiveness for
our derivatives designated as net investment hedges.
Accordingly, the change in fair value attributable to changes in
the spot rate is recorded in AOCI. We exclude the spot-forward
difference from the assessment of hedge effectiveness and
amortize this amount separately on a straight-line basis over the
term of the forward contracts. This amortization is recognized in
other income.
From time to time, we designate forward starting interest rate
derivative instruments as cash flow hedges to manage the
exposure to interest rate volatility with regard to future issuance
and refinancing of debt. Changes in value of derivatives
designated as cash flow hedges are recorded in AOCI until
earnings are affected by the variability of the underlying cash
flows. At that time, the applicable amount of gain or loss from the
derivative instrument that is deferred in shareholders’ equity is
reclassified into earnings and is included in interest expense.
Interest rate derivative instruments designated as fair value
hedges have been used in the past to manage the exposure to
interest rate movements and to reduce borrowing costs by
converting fixed-rate debt into floating-rate debt. Under these
agreements, we agree to exchange, at specified intervals, the
difference between fixed and floating interest amounts calculated
by reference to an agreed-upon notional principal amount.
Property, Plant and Equipment Property, plant and equipment
is stated at cost. Depreciation is generally computed by the
straight-line method over the estimated useful lives of three to 30
years for buildings and improvements and three to 15 years for
machinery and equipment.
Goodwill and Other Intangible Assets Goodwill represents the
excess of purchase price over fair value of tangible net assets of
acquired businesses at the acquisition date, after amounts
allocated to other identifiable intangible assets. Factors that
contribute to the recognition of goodwill include synergies that are
specific to our business and not available to other market
participants and are expected to increase net sales and profits;
acquisition of a talented workforce; cost savings opportunities;
the strategic benefit of expanding our presence in core and
adjacent markets; and diversifying our product portfolio.
The fair values of other identifiable intangible assets acquired in a
business combination are primarily determined using the income
approach. Other intangible assets include, but are not limited to,
developed technologies, customer and distributor relationships
(which reflect expected continued customer or distributor
patronage) and trademarks and patents. Intangible assets with
determinable useful lives are amortized on a straight-line basis
over their estimated useful lives of four to 40 years. Certain
acquired trade names are considered to have indefinite lives and
are not amortized, but are assessed annually for potential
impairment as described below.
In some of our acquisitions, we acquire in-process research and
development (IPRD) intangible assets. For acquisitions
accounted for as business combinations IPRD is considered to
be an indefinite-lived intangible asset until the research is
completed (then it becomes a determinable-lived intangible
asset) or determined to have no future use (then it is impaired).
For asset acquisitions IPRD is expensed immediately unless
there is an alternative future use.
Goodwill, Intangibles and Long-Lived Asset Impairment Tests We perform our annual impairment test for goodwill as of
October 31 each year. We consider qualitative indicators of the
fair value of a reporting unit when it is unlikely that a reporting
unit has impaired goodwill and periodically corroborate that
assessment with quantitative information. In certain
circumstances, we may also utilize a discounted cash flow
analysis that requires certain assumptions and estimates be
made regarding market conditions and our future profitability.
Indefinite-lived intangible assets are also tested at least annually
for impairment by comparing the individual carrying values to the
fair value.
We review long-lived assets for indicators of impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The evaluation is
performed at the lowest level of identifiable cash flows.
Undiscounted cash flows expected to be generated by the related
assets are estimated over the asset's useful life based on
updated projections. If the evaluation indicates that the carrying
amount of the asset may not be recoverable, any potential
impairment is measured based upon the fair value of the related
asset or asset group as determined by an appropriate market
appraisal or other valuation technique.
Assets And Liabilities Held For Sale We classify assets and
liabilities or disposal groups to be sold as held for sale in the
period in which all of the following criteria are met: management,
having the authority to approve the action, commits to a plan to
sell the disposal group; the disposal group is available for
immediate sale in its present condition subject only to terms that
are usual and customary for sales of such disposal groups; an
active program to locate a buyer and other actions required to
complete the plan to sell the disposal group have been initiated;
the sale of the disposal group is probable, and transfer of the
disposal group is expected to qualify for recognition as a
completed sale within one year, except if events or circumstances
beyond our control extend the period of time required to sell the
disposal group beyond one year; the disposal group is being
actively marketed for sale at a price that is reasonable in relation
to its current fair value; and actions required to complete the plan
indicate that it is unlikely that significant changes to the plan will
be made or that the plan will be withdrawn.
We initially measure a disposal group that is classified as held for
sale at the lower of its carrying value or fair value less any costs
to sell. Any loss resulting from this measurement is recognized in
the period in which the held for sale criteria are met. Conversely,
gains are not recognized on the sale of a disposal group until the
sale is completed. We assess the fair value of a disposal group,
less any costs to sell, each reporting period it remains classified
as held for sale and report any subsequent changes as an
adjustment to the carrying value of the disposal group, as long as
the new carrying value does not exceed the carrying value of the
disposal group at the time it was initially classified as held for
sale.
Upon determining that a disposal group meets the criteria to be
classified as held for sale, we cease depreciation and
amortization of the assets and disclose the major classes of
assets and liabilities of the disposal group in the Notes to the
Consolidated Financial Statements. Refer to Note 16 for further
information.
Share-Based Compensation hare-based compensation is in
the form of stock options, restricted stock units (RSUs) and
performance stock units (PSUs). Stock options are granted under
long-term incentive plans to certain key employees and non-
employee directors at an exercise price not less than the fair
market value of the underlying common stock, which is the
quoted closing price of our common stock on the day prior to the
date of grant. The options are granted for periods of up to 10
years and become exercisable in varying installments.
We grant RSUs to key employees and non-employee directors
and PSUs to certain key employees under our long-term
incentive plans. The fair value of RSUs is determined based on
the number of shares granted and the quoted closing price of our
common stock on the date of grant, adjusted for the fact that
RSUs do not include anticipated dividends. RSUs generally vest
in one-third increments over a three-year period and are settled
in stock. PSUs are earned over a three-year performance cycle
and vest in March of the year following the end of that
performance cycle. The number of PSUs that will ultimately be
earned is based on our performance relative to pre-established
goals in that three-year performance cycle. The fair value of
PSUs is determined based on the quoted closing price of our
common stock on the day of grant.
Compensation expense is recognized in the Consolidated
Statements of Earnings based on the estimated fair value of the
awards on the grant date. Compensation expense recognized
reflects an estimate of the number of awards expected to vest
after taking into consideration an estimate of award forfeitures
based on actual experience and is recognized on a straight-line
basis over the requisite service period, which is generally the
period required to obtain full vesting. Management expectations
related to the achievement of performance goals associated with
PSU grants is assessed regularly and that assessment is used to
determine whether PSU grants are expected to vest. If
performance-based milestones related to PSU grants are not met
or not expected to be met, any compensation expense
recognized associated with such grants will be reversed.
Income Taxes Deferred income tax assets and liabilities are
determined based on differences between financial reporting and
income tax bases of assets and liabilities and are measured
using the enacted income tax rates in effect for the years in which
the differences are expected to reverse. Deferred income tax
benefits generally represent the change in net deferred income
tax assets and liabilities in the year. Other amounts result from
adjustments related to acquisitions and foreign currency as
appropriate.
We operate in multiple income tax jurisdictions both within the
United States and internationally. Accordingly, management must
determine the appropriate allocation of income to each of these
jurisdictions based on current interpretations of complex income
tax regulations. Income tax authorities in these jurisdictions
regularly perform audits of our income tax filings. Income tax
audits associated with the allocation of this income and other
complex issues, including inventory transfer pricing and cost
sharing, product royalty and foreign branch arrangements, may
require an extended period of time to resolve and may result in
significant income tax adjustments if changes to the income
allocation are required between jurisdictions with different income
tax rates.
The Tax Cuts and Jobs Act (the Act) was enacted in 2017 in the
United States. The Act also subjects a United States shareholder
to tax on Global Intangible Low-Taxed Income (GILTI) earned by
certain foreign subsidiaries. We have elected to account for GILTI
tax in the year the tax is incurred.
New Accounting Pronouncements Not Yet Adopted and Accounting Pronouncements Recently Adopted New Accounting Pronouncements Not Yet Adopted
In December 2025 the Financial Accounting Standards Board
(FASB) issued ASU 2025-10 (Topic 832): Accounting for
Government Grants Received by Business Entities. This update
establishes guidance on the recognition, measurement and
presentation of government grants received by business entities
including grants related to the purchase, construction or
acquisition of an asset and grants related to income. The update
is effective for fiscal years beginning after December 15, 2028
including interim periods within those fiscal years. Early adoption
is permitted. We do not expect this ASU to have a significant 
impact on our Consolidated Financial Statements.
In September 2025 the FASB issued ASU 2025-07 (Topics 815
and 606): Derivatives and Hedging: Derivatives Scope
Refinements and Revenue from Contracts with Customers:
Scope Clarification for Share-Based Noncash Consideration from
a Customer in a Revenue Contract. This update expands the
scope exception in Topic 815 to certain nonexchange-traded
contracts for which settlement is based on operations or activities
specific to one of the parties to the contract. The update is
effective for fiscal years beginning after December 15, 2026
including interim periods within those fiscal years. Early adoption
is permitted. We are evaluating if the ASU will have an impact on
our Consolidated Financial Statements.
In September 2025 the FASB issued ASU 2025-06 (Subtopic
350-40): Intangibles - Goodwill and Other - Internal-Use
Software: Targeted Improvements to the Accounting for Internal-
Use Software. This update clarifies and modernizes the
accounting for costs related to internal-use software by removing
all references to project stages and clarifying that the probable-
to-complete threshold is not met if significant development
uncertainty exists. The update is effective for fiscal years
beginning after December 15, 2027 including interim periods
within those fiscal years. Early adoption is permitted. We do not
expect this ASU to have a significant  impact on our Consolidated
Financial Statements.
In July 2025 the FASB issued ASU 2025-05 (Topic 326):
Financial Instruments - Credit Losses: Measurement of Credit
Losses for Accounts Receivable and Contract Assets. This
update provides a practical expedient allowing entities to assume
that current conditions as of the balance sheet date will remain
unchanged for the remaining life of the asset when estimating
expected credit losses for current accounts receivable and
current contract assets arising from transactions accounting for
under Accounting Standards Codification 606, Revenue from
Contracts with Customers. The update is effective for fiscal years
beginning after December 15, 2025 including interim periods
within those fiscal years. Early adoption is permitted. We are
evaluating if the ASU will have an impact on our Consolidated
Financial Statements.
In November 2024 the FASB issued ASU 2024-03 (Subtopic
220-40): Income Statement: Reporting Comprehensive Income -
Expense Disaggregation Disclosures which requires
disaggregation of certain expense captions into specified
categories in disclosures within the Notes to the Consolidated
Financial Statements. The new disclosure requirements are
effective for fiscal years beginning after December 15, 2026 and
interim periods within fiscal years beginning after December 15,
2027. Early adoption is permitted. We are evaluating these new
expanded disclosure requirements.
We evaluate all ASUs issued by the FASB for consideration of
their applicability. ASUs not included in our disclosures were
assessed and determined to be either not applicable or are not
expected to have a material impact on our Consolidated Financial
Statements.
Accounting Pronouncements Recently Adopted
We adopted ASU 2023-09 (Topic 740): Income Taxes:
Improvements to Income Tax Disclosures for the annual period
beginning on January 1, 2025. Refer to Note 11 for further
information.