syk-20260626


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


STRYKER CORPORATION


ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

About Stryker

Stryker Corporation is a global leader in medical technologies

and, together with our customers, we are driven to make

healthcare better. We offer innovative products and services in

MedSurg, Neurotechnology, and Orthopaedics that help improve

patient and healthcare outcomes. Alongside our customers

around the world, we impact more than 150 million patients

annually. Our goal is to achieve sales growth at the high-end of

the medical technology (MedTech) industry and maintain our

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

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

In the first quarter 2026 we announced a change in our

organizational structure. Our new Ortho Tech business combines

the orthopaedic instruments portfolio from our Instruments

business with the Mako and enabling technologies portfolio from

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

cutting accessories, enabling technologies and the teams behind

these products together under one business, we are simplifying

the customer experience and striving to increase our speed to

market through focused innovation.

Following this reorganization we will continue to have two

business segments - (i) MedSurg and Neurotechnology and (ii)

Orthopaedics, each of which comprise a reportable segment. All

historical financial segment information has been recast to

conform to this new presentation.

MedSurg and Neurotechnology products include surgical

equipment and navigation systems (Instruments), endoscopic

and communications systems (Endoscopy), patient handling,

emergency medical equipment, intensive care disposable

products, clinical communication and artificial intelligence-

assisted virtual care platform technology (Medical), and minimally

invasive products for the treatment of acute ischemic and

hemorrhagic stroke and venous thromboembolism (Vascular), a

comprehensive line of products for traditional brain and open

skull-based surgical procedures; orthobiologic and biosurgery

products, including synthetic bone grafts and vertebral

augmentation products (Neuro Cranial). Orthopaedics products

include implants and surgical equipment such as navigation

systems and robotics used in total joint replacements, such as

hip, knee and shoulder, ankle and trauma and extremities

surgeries. We bring patients and physicians advanced implant

designs and specialized instrumentation that make orthopaedic

surgery and recovery simpler, faster and more effective. We

support surgeons with technologies, products and services they

need to support each patient’s clinical challenge.

Macroeconomic Environment

In 2025 the United States government has announced new tariffs

on goods imported into the United States from dozens of

countries, including China and the European Union member

states. In response, governments have threatened or imposed

reciprocal tariffs or taken other measures, and the United States

is in the process of negotiating with certain governments. We

continue to monitor and evaluate the situation. Tariffs are

expected to continue to result in an increase in certain product

costs or have adverse impacts on, among other things, demand

for our products and supply chains. The overall macroeconomic

and geopolitical environment, including tariffs or changes in trade

policies, slower economic growth or recession, market volatility

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

risks that could impact our business and results of operations.

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

Factors."

Overview of 2025

In 2025 we achieved reported net sales growth of 11.2%.

Excluding the impact of acquisitions and divestitures, sales grew

10.3% in constant currency. We reported net earnings of $3,246

and net earnings per diluted share of $8.40. Excluding the impact

of certain items, we achieved adjusted net earnings(1) of $5,267

and adjusted net earnings per diluted share(1) of $13.63

representing growth of 11.8%.

We continued our capital allocation strategy by investing $4,960

in acquisitions and paying $1,284 in dividends to our

shareholders.

In 2025 we completed various acquisitions for total consideration

of $4,960, net of cash acquired. Refer to Note 6 to our

Consolidated Financial Statements for further information.

In February 2025 we entered into a new revolving credit

agreement that replaces our previous agreement dated October

2021. The primary changes included increasing the aggregate

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

the maturity date to February 25, 2030. On December 31, 2025

there were no borrowings outstanding under our revolving credit

facility or our commercial paper program which allows for

maturities up to 397 days from the date of issuance. The

maximum amount of our commercial paper that can be

outstanding at any time is $3,000.

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

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

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

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

unsecured notes due February 10, 2035. In the second quarter

2025 we repaid $650 of 1.150% senior unsecured notes and in

the fourth quarter 2025 we repaid $750 of 3.375% senior

unsecured notes.

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


STRYKER CORPORATION

CONSOLIDATED RESULTS OF OPERATIONS


				Percent Net Sales			Percentage Change
	2025	2024	2023	2025	2024	2023	2025 vs. 2024	2024 vs. 2023
Net sales	$25,116	$22,595	$20,498	100.0%	100.0%	100.0%	11.2%	10.2%
Gross profit	16,065	14,440	13,058	64.0	63.9	63.7	11.3	10.6
Research, development and engineering expenses	1,623	1,466	1,388	6.5	6.5	6.8	10.7	5.6
Selling, general and administrative expenses	8,651	7,685	7,111	34.4	34.0	34.7	12.6	8.1
Amortization of intangible assets	732	623	635	2.9	2.8	3.1	17.5	(1.9)
Goodwill and other impairments	170	977	36	0.7	4.3	0.2	nm	nm
Interest expense	(607)	(409)	(363)	(2.4)	(1.8)	(1.8)	48.4	12.7
Other income	232	212	148	0.9	0.9	0.8	9.4	43.2
Income taxes	1,268	499	508	nm	nm	nm	154.1	(1.8)
Net earnings	$3,246	$2,993	$3,165	12.9%	13.2%	15.4%	8.5%	(5.4)%

Net earnings per diluted share	$8.40	$7.76	$8.25				8.2%	(5.9)%
Adjusted net earnings per diluted share(1)	$13.63	$12.19	$10.60				11.8%	15.0%

nm - not meaningful


Geographic and Segment Net Sales				Percentage Change
Geographic and Segment Net Sales				2025 vs. 2024		2024 vs. 2023
	2025	2024	2023	As Reported	Constant Currency	As Reported	Constant Currency
Geographic:
United States	$19,006	$16,943	$15,257	12.2%	12.2%	11.0%	11.0%
International	6,110	5,652	5,241	8.1	6.4	7.9	9.8
Total	$25,116	$22,595	$20,498	11.2%	10.7%	10.2%	10.7%
Segment:
MedSurg and Neurotechnology	$13,692	$11,753	$10,558	16.5%	16.2%	11.3%	11.8%
Orthopaedics	11,424	10,842	9,940	5.4	4.8	9.1	9.6
Total	$25,116	$22,595	$20,498	11.2%	10.7%	10.2%	10.7%


Supplemental Net Sales Growth Information
				Percentage Change
				2025 vs. 2024					2024 vs. 2023
						United States	International				United States	International
	2025	2024	2023	As Reported	Constant Currency	As Reported	As Reported	Constant Currency	As Reported	Constant Currency	As Reported	As Reported	Constant Currency
MedSurg and Neurotechnology:
Instruments	$1,228	$1,069	$929	14.9%	14.6%	15.8%	8.9%	6.8%	15.0%	15.1%	15.6%	11.4%	11.6%
Endoscopy	3,807	3,389	3,068	12.3	12.3	12.2	12.8	12.4	10.5	11.0	11.1	7.7	10.7
Medical	4,204	3,852	3,459	9.1	8.8	10.0	4.8	2.8	11.4	11.7	14.6	(2.0)	(0.3)
Vascular	1,968	1,307	1,226	50.6	50.0	107.5	14.8	13.4	6.6	8.2	4.7	7.9	10.5
Neuro Cranial	2,485	2,136	1,876	16.3	15.9	16.5	15.5	13.1	13.9	14.1	15.0	8.7	10.2
	$13,692	$11,753	$10,558	16.5%	16.2%	17.9%	11.6%	10.1%	11.3%	11.8%	13.1%	5.4%	7.6%
Orthopaedics:
Knees	$2,656	$2,447	$2,273	8.5%	8.2%	7.6%	11.0%	9.7%	7.6%	8.2%	6.7%	10.4%	12.2%
Hips	1,865	1,704	1,544	9.5	8.9	7.4	12.9	11.2	10.3	11.3	7.2	15.9	18.4
Trauma and Extremities	3,948	3,507	3,147	12.6	11.8	13.1	11.0	8.2	11.4	11.6	12.6	8.3	9.1
Ortho Tech	2,770	2,477	2,263	11.8	11.4	13.0	8.3	6.4	9.5	10.1	9.5	9.3	11.9
	$11,239	$10,135	$9,227	10.9%	10.3%	10.9%	10.9%	8.8%	9.8%	10.4%	9.5%	10.6%	12.5%
Spinal Implants	185	707	713	(73.9)	(73.9)	(76.0)	(69.3)	(69.2)	(0.7)	(0.3)	(2.1)	2.5	3.8
	$11,424	$10,842	$9,940	5.4%	4.8%	5.5%	5.2%	3.3%	9.1%	9.6%	8.7%	10.0%	11.8%
Total	$25,116	$22,595	$20,498	11.2%	10.7%	12.2%	8.1%	6.4%	10.2%	10.7%	11.0%	7.9%	9.8%

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

orthopaedic instruments portfolio (Orthopaedic Instruments) from Instruments with Other Orthopaedics. In addition, our spine enabling

technologies portfolio (Enabling Technologies) from Other Orthopaedics was combined with the remaining Instruments business to align

with our internal reporting structure. Ortho Tech includes sales related to Orthopaedic Instruments of $2,110, $1,917 and $1,754 and

Other Orthopaedics of $660, $560 and $509 for 2025, 2024 and 2023. Instruments includes sales related to Enabling Technologies of

$155, $152 and $149 for 2025, 2024 and 2023.


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


STRYKER CORPORATION

Consolidated Net Sales

Consolidated net sales in 2025 increased 11.2% as reported and

10.7% in constant currency, as foreign currency exchange rates

positively impacted net sales by 0.5%. Excluding the 0.4% impact

of acquisitions and divestitures, net sales in constant currency

increased by 9.9% from increased unit volume and 0.4% due to

higher prices. The unit volume increase was primarily due to

higher shipments across all businesses.

Consolidated net sales in 2024 increased 10.2% as reported and

10.7% in constant currency, as foreign currency exchange rates

negatively impacted net sales by 0.5%. Excluding the 0.5%

impact of acquisitions and divestitures, net sales in constant

currency increased by 9.1% from increased unit volume and

1.1% due to higher prices. The unit volume increase was due to

higher shipments across all MedSurg and Neurotechnology

businesses and most Orthopaedics businesses.

MedSurg and Neurotechnology Net Sales

MedSurg and Neurotechnology net sales in 2025 increased

16.5% as reported and 16.2% in constant currency, as foreign

currency exchange rates positively impacted net sales by 0.3%.

Excluding the 5.4% impact of acquisitions and divestitures, net

sales in constant currency increased by 10.3% from increased

unit volume and 0.5% due to higher prices. The unit volume

increase was due to higher shipments across all MedSurg and

Neurotechnology businesses.

MedSurg and Neurotechnology net sales in 2024 increased

11.3% as reported and 11.8% in constant currency, as foreign

currency exchange rates negatively impacted net sales by 0.5%.

Excluding the 0.5% impact of acquisitions and divestitures, net

sales in constant currency increased by 9.7% from increased unit

volume and 1.6% due to higher prices. The unit volume increase

was due to higher shipments across all MedSurg and

Neurotechnology businesses.

Orthopaedics Net Sales

Orthopaedics net sales in 2025 increased 5.4% as reported and

4.8% in constant currency, as foreign currency exchange rates

positively impacted net sales by 0.6%. Excluding the 4.8% impact

of acquisitions and divestitures, net sales in constant currency

increased by 9.3% from increased unit volume and 0.3% due to

higher prices. The unit volume increase was due to higher

shipments across most Orthopaedics businesses.

Orthopaedics net sales in 2024 increased 9.1% as reported and

9.6% in constant currency, as foreign currency exchange rates

negatively impacted net sales by 0.5%. Excluding the 0.7%

impact of acquisitions and divestitures, net sales in constant

currency increased by 8.5% from increased unit volume and

0.4% due to higher prices. The unit volume increase was due to

higher shipments across all Orthopaedics businesses.

Gross Profit

Gross profit was $16,065, $14,440 and $13,058 in 2025, 2024,

and 2023. The key components of the change were:


	Gross Profit Percent Net Sales
2023	63.7%
Sales pricing	40 bps
Volume and mix	60 bps
Manufacturing and supply chain costs	(40) bps
Inventory stepped up to fair value	(20) bps
Structural optimization and other special charges	(20) bps
2024	63.9%
Sales pricing	10 bps
Volume and mix	70 bps
Manufacturing and supply chain costs	0 bps
Inventory stepped up to fair value	(60) bps
Structural optimization and other special charges	(10) bps
2025	64.0%

Gross profit as a percentage of net sales increased to 64.0% in

2025 from 63.9% in 2024 primarily due to higher sales pricing

and favorable volume partially offset by higher amortization of

inventory stepped up to fair value.

Gross profit as a percentage of net sales increased to 63.9% in

2024 from 63.7% in 2023 due to higher sales pricing and

favorable volume offset by higher manufacturing and supply

chain costs primarily due to inflationary pressures impacting fixed

and variable manufacturing costs as well as higher amortization

of inventory stepped up to fair value.

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

gross profit as a percent of net sales between 2025, 2024 and

2023, we generally expect segment mix to have an unfavorable

impact for the foreseeable future as we anticipate more rapid

sales growth in our lower gross margin MedSurg and

Neurotechnology segment than our Orthopaedics segment.

Research, Development and Engineering Expenses

Research, development and engineering expenses as a

percentage of net sales in 2025 of 6.5% remained flat with 2024.

Research, development and engineering expenses as a

percentage of net sales in 2024 decreased to 6.5% from 6.8% in

2023 primarily due to lower spend on medical device regulations

in the European Union.

Selling, General and Administrative Expenses

Selling, general and administrative expenses as a percentage of

net sales in 2025 increased to 34.4% from 34.0% in 2024

primarily due to higher acquisition-related costs and continued

investments to support our growth. A charge of $139 for share-

based awards for Inari employees that vested upon our

acquisition is included in 2025.

Selling, general and administrative expenses as a percentage of

net sales in 2024 decreased to 34.0% from 34.7% in 2023

primarily due to continued spend discipline and lower charges for

structural optimization and certain legal matters partially offset by

higher acquisition-related costs.

Amortization of Intangible Assets

Amortization of intangible assets was $732, $623 and $635 in

2025, 2024 and 2023. These amounts include amortization

related to intangible assets acquired in 2025 from Inari, 2024

from various acquisitions and 2023 from Cerus Endovascular

Limited (Cerus). Refer to Notes 6 and 8 to our Consolidated

Financial Statements for further information.

Goodwill and Other Impairments

Goodwill and other impairments of $170, $977 and $36 were

recorded in 2025, 2024 and 2023.


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


STRYKER CORPORATION

In 2024 we recorded goodwill impairment charges of $456 related

to our Spine business and recognized an estimated loss of $362

as a result of classifying certain assets in our Spinal Implants

business as held for sale. Refer to Notes 8 and 16 to our

Consolidated Financial Statements for further information.

In 2025, 2024 and 2023 we recorded other impairments of $109,

$159 and $36. Refer to Note 15 to our Consolidated Financial

Statements for further information.

Operating Income

Operating income was $4,889, $3,689 and $3,888 in 2025, 2024

and 2023. Operating income increased as a percentage of sales

to 19.5% in 2025 from 16.3% in 2024 and increased from 19.0%

in 2023. Refer to the comments above for discussion of the

primary drivers of the change.

MedSurg and Neurotechnology operating income as a

percentage of net sales increased to 27.0% in 2025 from 26.7%

in 2024. MedSurg and Neurotechnology operating income as a

percentage of net sales increased to 26.7% in 2024 from 25.5%

in 2023. Orthopaedics operating income as a percentage of net

sales increased to 33.2% in 2025 from 31.8% in 2024.

Orthopaedics operating income as a percentage of net sales

increased to 31.8% in 2024 from 30.6% in 2023. The key

components of the change were:


	Operating Income Percent Net Sales
	MedSurg and Neurotechnology	Orthopaedics
2023	25.5%	30.6%
Sales pricing	60 bps	10 bps
Volume	40 bps	60 bps
Manufacturing and supply chain costs	(30) bps	(20) bps
Research, development and engineering expenses	0 bps	10 bps
Selling, general and administrative expenses	50 bps	60 bps
2024	26.7%	31.8%
Sales pricing	20 bps	10 bps
Volume	100 bps	30 bps
Manufacturing and supply chain costs	90 bps	(70) bps
Research, development and engineering expenses	(20) bps	30 bps
Selling, general and administrative expenses	(160) bps	140 bps
2025	27.0%	33.2%

The increase in MedSurg and Neurotechnology operating income

as a percentage of net sales in 2025 from 2024 was primarily

driven by higher unit volumes and prices, and lower

manufacturing and supply chain costs partially offset by higher

selling, general and administrative expenses due to the

acquisition of Inari.

The increase in MedSurg and Neurotechnology operating income

as a percentage of net sales in 2024 from 2023 was primarily

driven by higher unit volumes, higher prices and a decrease in

selling, general and administrative expenses as a percentage of

sales partially offset by higher manufacturing and supply chain

costs.

The increase in Orthopaedics operating income as a percentage

of net sales for 2025 from 2024 was primarily driven by lower

selling, general and administrative expenses, higher unit volumes

and prices partially offset by higher manufacturing and supply

chain costs.

The increase in Orthopaedics operating income as a percentage

of net sales for 2024 from 2023 was primarily driven by higher

sales volumes, higher prices, and a decrease in selling, general

and administrative expenses as a percentage of sales partially

offset by higher manufacturing and supply chain costs.

Interest Expense

Interest expense was $607, $409 and $363 in 2025, 2024 and

2023. The increase in 2025 from 2024 was due to increased

interest expense from our 2025 debt issuances. The increase in

2024 from 2023 was primarily due to the impact of additional

interest expense from our 2024 debt issuances.

Other Income

Other income was $232, $212 and $148 in 2025, 2024 and 2023.

The increase in 2025 from 2024 was primarily due to higher

interest income in 2025. The increase in 2024 from 2023 was

primarily due to higher interest income.

Income Taxes

Our effective tax rate was 28.1%, 14.3% and 13.8% for 2025,

2024 and 2023. The effective income tax rate for 2025 increased

from 2024 due to the 2025 tax effect of transfers of intellectual

property between tax jurisdictions and the 2024 tax effect of the

sale of the Spinal Implants business. The effective income tax

rate for 2024 increased from 2023 due to the 2023 tax effect of

transfers of intellectual property between tax jurisdictions offset

by the 2024 tax effect of the sale of the Spinal Implants business.

Our future results of operations could be affected by changes in

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

regulations and judicial rulings. We are continuing to evaluate the

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

guidance is published and new regulations are adopted. In

addition, further changes in the tax laws could arise, including as

a result of the base erosion and profit shifting project undertaken

by the Organisation for Economic Cooperation and Development

(OECD). The OECD, which represents a coalition of member

countries, has put forth two proposed frameworks that revise the

existing profit allocation and nexus rules (Pillar 1) and ensure a

minimal level of taxation (Pillar 2), respectively, and several

countries enacted tax legislation based on these frameworks. In

January 2026, the OECD released Administrative Guidance

containing the SbS System and introduced two new Pillar 2 safe

harbors for multinationals headquartered in jurisdictions including

the United States with eligible tax systems. The safe harbors

must now be legislated domestically by each country with

enacted Pillar 2 legislation impacted by the new OECD

Administrative Guidance. These tax law changes and any

additional contemplated tax law changes, could impact tax

expense in future periods.

Net Earnings

Net earnings for 2025 increased to $3,246 or $8.40 per diluted

share from $2,993 or $7.76 per diluted share in 2024 and $3,165

or $8.25 per diluted share in 2023. Refer to the comments above

for discussion of the primary drivers of the change.

Non-GAAP Financial Measures

We supplement the reporting of our financial information

determined under accounting principles generally accepted in the

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

including percentage sales growth in constant currency;

percentage organic sales growth; adjusted gross profit; adjusted

selling, general and administrative expenses; adjusted research,

development and engineering expenses; adjusted operating

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

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

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

believe these non-GAAP financial measures provide meaningful


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


STRYKER CORPORATION

information to assist investors and shareholders in understanding

our financial results and assessing our prospects for future

performance. Management believes percentage sales growth in

constant currency and the other adjusted measures described

above are important indicators of our operations because they

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

core operating results and provide a baseline for analyzing trends

in our underlying businesses. Management uses these non-

GAAP financial measures for reviewing the operating results of

reportable business segments and analyzing potential future

business trends in connection with our budget process and bases

certain management incentive compensation on these non-GAAP

financial measures. To measure percentage sales growth in

constant currency, we remove the impact of changes in foreign

currency exchange rates that affect the comparability and trend

of sales. Percentage sales growth in constant currency is

calculated by translating current and prior year results at the

same foreign currency exchange rate. To measure percentage

organic sales growth, we remove the impact of changes in

foreign currency exchange rates, acquisitions and divestitures,

which affect the comparability and trend of sales. Percentage

organic sales growth is calculated by translating current year and

prior year results at the same foreign currency exchange rates

excluding the impact of acquisitions and divestitures. To measure

earnings performance on a consistent and comparable basis, we

exclude certain items that affect the comparability of operating

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

adjustment was determined based on the tax effect of the

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

These adjustments are irregular in timing and may not be

indicative of our past and future performance. The following are

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

period:

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

integrating recently acquired businesses (e.g., costs

associated with the termination of sales relationships,

employee retention and workforce reductions, manufacturing

integration costs and other integration-related activities),

changes in the fair value of contingent consideration,

amortization of inventory stepped-up to fair value, specific

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

rationalization) related to the consummation of the

acquisition process and legal entity rationalization and

acquisition-related tax items.

2.Amortization of purchased intangible assets. Periodic

amortization expense related to purchased intangible assets.

3.Structural optimization and other special charges. Costs

associated with employee retention and workforce

reductions, the closure or transfer of manufacturing and

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

costs and redundant employee costs during the work

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

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

certain long-lived and intangible asset write-offs and

impairments and other charges.

4.Medical device regulations. Costs specific to updating our

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

remanufacturing to comply with the new medical device

reporting regulations and other requirements of the

European Union.

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

probable loss, or the minimum of the range of probable

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

resolve the Rejuvenate, LFIT V40, Wright legacy hip

products and other product recalls.

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

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

probable losses when a best estimate within a range is not

known, to resolve certain regulatory or other legal matters

and the amount of favorable awards from settlements.

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

discrete tax items.

Because non-GAAP financial measures are not standardized, it

may not be possible to compare these financial measures with

other companies' non-GAAP financial measures having the same

or similar names. These adjusted financial measures should not

be considered in isolation or as a substitute for reported sales

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

research, development and engineering expenses, operating

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

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

the most directly comparable GAAP financial measures. These

non-GAAP financial measures are an additional way of viewing

aspects of our operations when viewed with our GAAP results

and the reconciliations to corresponding GAAP financial

measures at the end of the discussion of Consolidated Results of

Operations below. We strongly encourage investors and

shareholders to review our financial statements and publicly-filed

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

measure.

The weighted-average diluted shares outstanding used in the

calculation of adjusted net earnings per diluted share are the

same as those used in the calculation of reported net earnings

per diluted share for the respective period.


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


STRYKER CORPORATION

Reconciliation of the Most Directly Comparable GAAP Financial Measure to Non-GAAP Financial Measure


2025	Gross Profit	Selling, General & Administrative Expenses	Research, Development & Engineering Expenses	Operating Income	Other Income (Expense), Net	Income Taxes	Net Earnings	Effective Tax Rate	Diluted EPS
Reported	$16,065	$8,651	$1,623	$4,889	$(375)	$1,268	$3,246	28.1%	$8.40
Acquisition and integration-related costs:
Inventory stepped-up to fair value	173	—	—	173	—	42	131	0.3	0.34
Other acquisition and integration-related (a)	24	(296)	(15)	335	—	36	299	(0.3)	0.78
Amortization of purchased intangible assets	—	—	—	732	—	151	581	0.9	1.49
Structural optimization and other special charges (b)	74	(113)	(4)	191	(27)	24	140	—	0.37
Goodwill and other impairments (c)	—	—	—	170	—	50	120	0.5	0.31
Medical device regulations (d)	1	—	(37)	38	—	8	30	0.1	0.08
Recall-related matters (e)	54	(4)	—	58	—	10	48	—	0.12
Regulatory and legal matters (f)	—	(17)	—	17	—	5	12	—	0.03
Tax matters (g)	—	—	—	—	—	(660)	660	(14.5)	1.71
Adjusted	$16,391	$8,221	$1,567	$6,603	$(402)	$934	$5,267	15.1%	$13.63


2024	Gross Profit	Selling, General & Administrative Expenses	Research, Development & Engineering Expenses	Operating Income	Other Income (Expense), Net	Income Taxes	Net Earnings	Effective Tax Rate	Diluted EPS
Reported	$14,440	$7,685	$1,466	$3,689	$(197)	$499	$2,993	14.3%	$7.76
Acquisition and integration-related costs:
Inventory stepped-up to fair value	46	—	—	46	—	12	34	0.2	0.09
Other acquisition and integration-related (a)	—	(107)	(1)	108	—	23	85	0.2	0.22
Amortization of purchased intangible assets	—	—	—	623	—	128	495	1.0	1.28
Structural optimization and other special charges (b)	59	(77)	(2)	138	1	29	110	0.3	0.29
Goodwill and other impairments (c)	—	—	—	977	—	125	852	(0.6)	2.21
Medical device regulations (d)	9	—	(49)	58	—	14	44	0.1	0.11
Recall-related matters (e)	11	(29)	—	40	—	10	30	0.1	0.08
Regulatory and legal matters (f)	—	(36)	—	36	—	7	29	0.1	0.08
Tax matters (g)	—	—	—	—	—	(28)	28	(0.9)	0.07
Adjusted	$14,565	$7,436	$1,414	$5,715	$(196)	$819	$4,700	14.8%	$12.19


2023	Gross Profit	Selling, General & Administrative Expenses	Research, Development & Engineering Expenses	Operating Income	Other Income (Expense), Net	Income Taxes	Net Earnings	Effective Tax Rate	Diluted EPS
Reported	$13,058	$7,111	$1,388	$3,888	$(215)	$508	$3,165	13.8%	$8.25
Acquisition and integration-related costs:
Inventory stepped-up to fair value	—	—	—	—	—	—	—	—	—
Other acquisition and integration-related (a)	—	(20)	—	20	—	(25)	45	(0.8)	0.12
Amortization of purchased intangible assets	—	—	—	635	—	132	503	1.2	1.31
Structural optimization and other special charges (b)	39	(130)	(1)	170	—	38	132	0.4	0.34
Goodwill and other impairments (c)	—	—	—	36	—	9	27	0.1	0.08
Medical device regulations (d)	2	—	(94)	96	—	22	74	0.2	0.19
Recall-related matters (e)	—	(18)	—	18	—	4	14	—	0.04
Regulatory and legal matters (f)	—	(92)	—	92	—	29	63	0.4	0.16
Tax matters (g)	—	—	—	—	(8)	(51)	43	(1.2)	0.11
Adjusted	$13,099	$6,851	$1,293	$4,955	$(223)	$666	$4,066	14.1%	$10.60

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


	2025	2024	2023
Termination of sales relationships	$—	$4	$5
Employee retention and workforce reductions	60	22	6
Changes in the fair value of contingent consideration	21	8	(1)
Manufacturing integration costs	19	3	2
Stock compensation payments upon a change in control	140	22	—
Other integration-related activities	95	49	8
Adjustments to Operating Income	$335	$108	$20
Charges for acquisition-related tax provisions	—	—	—
Other income taxes related to acquisition and integration-related costs	36	23	(25)
Adjustments to Income Taxes	$36	$23	$(25)
Adjustments to Net Earnings	$299	$85	$45


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


STRYKER CORPORATION

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


	2025	2024	2023
Employee retention and workforce reductions	$55	$23	$69
Closure/transfer of manufacturing and other facilities	31	31	50
Product line exits	13	37	22
Termination of sales relationships	7	8	—
Other charges	85	39	29
Adjustments to Operating Income	$191	$138	$170
Adjustments to Other Income (Expense), Net	$(27)	$1	$—
Adjustments to Income Taxes	$24	$29	$38
Adjustments to Net Earnings	$140	$110	$132


	2025	2024	2023
Goodwill impairments	$—	$456	$—
Certain long-lived and intangible asset write-offs and impairments	114	466	26
Product line exits (e.g., long-lived asset and specifically-identified intangible asset write-offs)	56	55	10
Adjustments to Operating Income	$170	$977	$36
Adjustments to Income Taxes	$50	$125	$9
Adjustments to Net Earnings	$120	$852	$27

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

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

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

resolve certain recall-related matters.

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

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

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


	2025	2024	2023
Adjustments related to the transfer of certain intellectual properties between tax jurisdictions	$(718)	$(185)	$(89)
Certain tax audit settlements	—	(1)	24
Deferred tax benefit on outside basis related to the anticipated sale of the Spinal Implants business	—	170	—
Other tax matters	58	(12)	14
Adjustments to Income Taxes	$(660)	$(28)	$(51)
Benefits for certain tax audit settlements	—	—	(9)
Other tax related adjustments	—	—	1
Adjustments to Other Income (Expense), Net	$—	$—	$(8)
Adjustments to Net Earnings	$660	$28	$43

FINANCIAL CONDITION AND LIQUIDITY


Net cash provided by (used in):	2025	2024	2023
Operating activities	$5,044	$4,242	$3,711
Investing activities	(4,866)	(3,000)	(962)
Financing activities	113	(525)	(1,594)
Effect of exchange rate changes	68	(36)	(28)
Change in cash and cash equivalents	$359	$681	$1,127

We believe our financial condition continues to be of high quality,

as evidenced by our ability to generate substantial cash from

operations and to readily access capital markets at competitive

rates despite the current macroeconomic environment. Operating

cash flow provides the primary source of cash to fund operating

needs and capital expenditures. Excess operating cash is used

first to fund acquisitions to complement our portfolio of

businesses. Other discretionary uses include dividends and

potentially share repurchases. We supplement operating cash

flow with debt to fund our activities as necessary. Our overall

cash position reflects our business results and a global cash

management strategy that takes into account liquidity

management, economic factors and tax considerations.

Operating Activities

Cash provided by operating activities was $5,044, $4,242 and

$3,711 in 2025, 2024 and 2023. The increase in 2025 was

primarily due to higher cash earnings and working capital

improvements. The increase in 2024 from 2023 was primarily due

to higher cash earnings partially offset by changes in working

capital.

Investing Activities

Cash used in investing activities was $4,866, $3,000 and $962 in

2025, 2024 and 2023. Cash used in 2025 included cash paid for

the acquisition of Inari, purchases of property, plant and

equipment, partially offset by proceeds from the sale of short

term investments and our Spinal Implants business. Cash used in

2024 included cash paid for various acquisitions and purchases

of short-term investments partially offset by proceeds from other

investing activities.

Financing Activities

Cash provided by financing activities in 2025 was $113 and used

in financing activities in 2024 and 2023 was $525 and $1,594.

Cash provided by 2025 was primarily driven by dividend

payments of $1,284 and repayments of $1,400 to pay off

maturing senior unsecured notes. These repayments were offset

by net proceeds of $2,979 from the issuance of senior unsecured

notes as described in Note 10 to our Consolidated Financial

statements. Cash used in 2024 was primarily driven by dividend

payments of $1,219 and repayments of $2,039 to pay off

maturing senior unsecured notes. These repayments were offset

by net proceeds of $3,011 from issuance of senior unsecured

notes.

We maintain debt levels that we consider appropriate after

evaluating a number of factors including cash requirements for

ongoing operations, investment and financing plans (including

acquisitions and share repurchase activities) and overall cost of


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


STRYKER CORPORATION

capital. Refer to Note 10 to our Consolidated Financial

Statements for further information.


	2025	2024	2023
Dividends paid per common share	$3.36	$3.20	$3.00
Total dividends paid to common shareholders	$1,284	$1,219	$1,139

Liquidity

Cash, cash equivalents and marketable securities were $4,100

and $3,743, and our current assets exceeded current liabilities by

$6,961 and $7,231 on December 31, 2025 and 2024. We

anticipate being able to support our short-term liquidity and

operating needs from a variety of sources including cash from

operations, commercial paper and existing credit lines. We also

have a revolving credit agreement maturing in February 2030

with an aggregate principal amount of $3,000.

We raised funds in the capital markets in the past and may

continue to do so from time-to-time. We continue to have strong

investment-grade short-term and long-term debt ratings that we

believe should enable us to refinance our debt as needed.

Our cash, cash equivalents and marketable securities held in

locations outside the United States was approximately 20% on

December 31, 2025 and 2024.

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.

CONTRACTUAL OBLIGATIONS AND FORWARD-LOOKING

CASH REQUIREMENTS

In 2025 we recorded charges for various legal matters as further

described in Note 7 to our Consolidated Financial Statements.

Recorded reserves represent the 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. The final outcome of

these matters is dependent on many variables that are difficult to

predict. The ultimate cost to entirely resolve these matters may

be materially different from the amount of the current estimates

and could have a material adverse effect on our financial

position, results of operations and cash flows. We are not able to

reasonably estimate the future periods in which payments will be

made.

As further described in Note 11 to our Consolidated Financial

Statements, on December 31, 2025 we had a reserve for

uncertain income tax positions of $403. Due to uncertainties

regarding the ultimate resolution of income tax audits, we are not

able to reasonably estimate the future periods in which any

income tax payments to settle these uncertain income tax

positions will be made.

As further described in Note 12 to our Consolidated Financial

Statements, on December 31, 2025 our defined benefit pension

plans were underfunded by $269, of which approximately $268

related to plans outside the United States. Due to the rules

affecting tax-deductible contributions in the jurisdictions in which

the plans are offered and the impact of future plan asset

performance, changes in interest rates and potential changes in

legislation in the United States and other foreign jurisdictions, we

are not able to reasonably estimate the amounts that may be

required to fund defined benefit pension plans.


Contractual Obligations	Total	2026	2027- 2028	2029- 2030	After 2030
Debt repayments	$15,973	$1,000	$3,988	$4,256	$6,729
Interest payments	4,287	536	957	670	2,124
Minimum lease payments	524	164	212	93	55
Other	85	6	28	27	24
Total	$20,869	$1,706	$5,185	$5,046	$8,932

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In preparing our financial statements in accordance with

generally accepted accounting principles, there are certain

accounting policies, which may require substantial judgment or

estimation in their application. We believe these accounting

policies and the others set forth in Note 1 to our Consolidated

Financial Statements are critical to understanding our results of

operations and financial condition. Actual results could differ from

our estimates and assumptions, and any such differences could

be material to our results of operations and financial condition.

Income Taxes

Our annual tax rate is determined based on our income, statutory

tax rates and the tax impacts of items treated differently for tax

purposes than for financial reporting purposes. Tax law requires

certain items be included in the tax return at different times than

the items are reflected in the financial statements. Some of these

differences are permanent, such as expenses that are not

deductible in our tax return, and some differences are temporary

and reverse over time, such as depreciation expense. These

temporary differences create deferred tax assets and liabilities.

Deferred tax assets generally represent the tax effect of items

that can be used as a tax deduction or credit in future years for

which we have already recorded the tax benefit in our income

statement. Deferred tax liabilities generally represent tax expense

recognized in our financial statements for which payment was

deferred, the tax effect of expenditures for which a deduction was

taken in our tax return but has not yet been recognized in our

financial statements or assets recorded at fair value in business

combinations for which there was no corresponding tax basis

adjustment.

Inherent in determining our annual tax rate are judgments

regarding business plans, tax planning opportunities and

expectations about future outcomes. Realization of certain

deferred tax assets is dependent upon generating sufficient

taxable income in the appropriate jurisdiction prior to the

expiration of the carryforward periods. Although realization is not

assured, management believes it is more likely than not that our

deferred tax assets, net of valuation allowances, will be realized.

We operate in multiple jurisdictions with complex tax policy and

regulatory environments. In certain of these jurisdictions, we may

take tax positions that management believes are supportable but

are potentially subject to successful challenge by the applicable

taxing authority. These differences of interpretation with the

respective governmental taxing authorities can be impacted by

the local economic and fiscal environment. We evaluate our tax

positions and establish liabilities in accordance with the

applicable accounting guidance on uncertainty in income taxes.

We review these tax uncertainties in light of changing facts and

circumstances, such as the progress of tax audits, and adjust

them accordingly. We have a number of audits in process in

various jurisdictions. Although the resolution of these tax

positions is uncertain, based on currently available information,

we believe that it is more likely than not that the ultimate

outcomes will not have a material adverse effect on our financial

position, results of operations or cash flows.


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


STRYKER CORPORATION

Due to the number of estimates and assumptions inherent in

calculating the various components of our tax provision, certain

changes or future events, such as changes in tax legislation,

geographic mix of earnings, completion of tax audits or earnings

repatriation plans, could have an impact on those estimates and

our effective tax rate.

We received a final audit report and assessments from the

German Federal Central Tax Office (FCTO) related to the years

2010 through 2017 of $754 and expect to receive additional

assessments of $11 based on the final audit report. We intend to

defend our filing positions through the FCTO independent

appeals process and/or litigation as necessary. If the resolution of

this matter results in additional German income taxes, we expect

to pursue a claim for associated foreign tax credits. Our

unrecognized tax benefits associated with this matter remain

unchanged from 2024. Refer to Note 11 to our Consolidated

Financial Statements for further discussion.

Acquisitions, Goodwill and Intangibles, and Long-Lived

Assets

Our financial statements include the operations of an acquired

business starting from the completion of the acquisition. In

addition, the assets acquired and liabilities assumed are recorded

on the date of acquisition at their respective estimated fair values,

with any excess of the purchase price over the estimated fair

values of the net assets acquired recorded as goodwill.

Significant judgment is required in estimating the fair value of

intangible assets and in assigning their respective useful lives.

Accordingly, we typically obtain the assistance of third-party

valuation specialists for significant items. The fair value estimates

are based on available historical information and on future

expectations and assumptions deemed reasonable by

management but are inherently uncertain. We typically use an

income method to estimate the fair value of intangible assets,

which is based on forecasts of the expected future cash flows

attributable to the respective assets. Significant estimates and

assumptions inherent in the valuations reflect a consideration of

other marketplace participants and include the amount and timing

of future cash flows (including expected growth rates and

profitability), the underlying product or technology life cycles, the

economic barriers to entry and the discount rate applied to the

cash flows. Unanticipated market or macroeconomic events and

circumstances may occur that could affect the accuracy or

validity of the estimates and assumptions.

Determining the useful life of an intangible asset also requires

judgment. With the exception of certain trade names, the majority

of our acquired intangible assets (e.g., certain trademarks or

brands, customer and distributor relationships, patents and

technologies) are expected to have determinable useful lives.

Our assessment as to the useful lives of these intangible assets

is based on a number of factors including competitive

environment, market share, trademark, brand history, underlying

product life cycles, operating plans and the macroeconomic

environment of the countries in which the trademarked or

branded products are sold. Our estimates of the useful lives of

determinable-lived intangibles are primarily based on these same

factors. Determinable-lived intangible assets are amortized to

expense over their estimated useful life.

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.

Indefinite-lived intangible assets and goodwill are not amortized

but are tested annually for impairment or whenever events or

circumstances indicate such assets may be impaired. Our annual

impairment testing date is October 31. When it is unlikely that an

indefinite-lived intangible asset or goodwill of a reporting unit is

impaired, we perform a qualitative assessment. For goodwill, that

qualitative assessment may be periodically supplemented with a

corroborative quantitative analysis.

When necessary, we perform a quantitative impairment test and

determine the fair value of the indefinite-lived intangible asset or

reporting unit using an income approach. For the quantitative

impairment test of goodwill, when appropriate, we corroborate

our concluded value under the income approach using a market

approach that utilizes trading multiples derived from a peer set of

similar companies. The income approach calculates the present

value of estimated future cash flows and requires certain

assumptions and estimates be made regarding market conditions

and our future profitability. Considerable management judgment

is necessary to evaluate the impact of operating and

macroeconomic changes and to estimate future cash flows used

to measure fair value. Assumptions used in our impairment

evaluations, such as forecasted growth rates and cost of capital,

are consistent with internal business plans. We believe such

assumptions and estimates are also comparable to those that

would be used by other marketplace participants.

We review our other 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, which is

at the individual asset level or the asset group level. The

undiscounted cash flows expected to be generated by the related

assets are estimated over their useful life based on updated

projections. If the evaluation indicates that the carrying amount of

the assets may not be recoverable, any potential impairment is

measured based upon the fair value of the related assets or

asset group as determined by an appropriate market appraisal or

other valuation technique. Assets classified as held for sale, if

any, are recorded at the lower of carrying amount or fair value

less costs to sell.

In our annual impairment test of goodwill as of October 31, 2024

we performed a quantitative assessment of the Spine reporting

unit using a discounted cash flow analysis to estimate the fair

value. The carrying value of the Spine reporting unit exceeded its

fair value and a charge of $273 was recognized in goodwill and

other impairments in our Consolidated Statements of Earnings.

The impairment charge for the Spine reporting unit was driven by

a decrease in future product demand due to the competitive

environment and an increase in the Spine reporting unit’s

weighted average cost of capital.

During the fourth quarter 2024 management committed to a plan

to sell certain assets associated with the Spinal Implants

business (disposal group) and such assets were classified as

held for sale beginning November 2024. We tested the net

carrying amounts of other assets, such as working capital

accounts, and determined that there was no impairment as the

fair values of these assets approximated their carrying values.

Goodwill was allocated to the disposal group and the retained

portion of the Spine reporting unit based on the relative fair

values. Goodwill allocated to the disposal group was tested for

impairment which resulted in an impairment charge of $183. As of


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


STRYKER CORPORATION

December 31, 2024, there was no goodwill remaining attributable

to the Spinal Implants disposal group.

Finally we compared the carrying amount of the disposal group to

the fair value less cost to sell. As a result, we recognized an

estimated loss of $362 to record the disposal group at its fair

value less cost to sell in goodwill and other impairments in our

Consolidated Statements of Earnings.

In April 2025 we completed the sale of the disposal group to the

Viscogliosi Brothers, LLC as further discussed in Note 16. In the

first half of 2025 we recognized immaterial impairment charges to

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

goodwill and other impairments in our Consolidated Statements

of Earnings. The fair value of the disposal group and

consideration received was measured using a discounted cash

flow analysis based upon the selling price and unobservable

inputs, such as market conditions and the rate used to discount

the estimated future cash flows to their present value based on

factors including the disposal group’s cost of equity and market

yield rates, which are Level 3 inputs. Consideration could

increase by up to $57 or decrease by up to $245 based on the

amount received.

With the acquisition of Inari in February 2025 discussed in Note 6

to our Consolidated Financial Statements, we established a new

Peripheral Vascular reporting unit consisting of the acquired Inari

business. Given the proximity of the impairment testing date to

the date of acquisition, the fair value of this new reporting unit

was not expected to exceed its carrying value by a significant

amount. We performed a quantitative impairment test for our

Peripheral Vascular reporting unit at October 31, 2025 and

determined that its fair value exceeded its carrying amount by

12%. At October 31, 2025, goodwill attributable to this reporting

unit was $3,203. The fair value of this reporting unit was

determined using a discounted cash flow analysis, which is a

form of the income approach. Significant inputs to the analysis

included assumptions for future revenue growth, operating

margin and the rate used to discount the estimated future cash

flows to their present value, based on the reporting unit’s

estimated weighted average cost of capital. We believe our

estimates are appropriate based upon current and future market

conditions and the best information available at the impairment

assessment date; however, future impairment charges could be

required if we do not achieve our cash flow, revenue and

profitability projections or if there is an increase in the weighted

average cost of capital.

The assumptions used in the discounted cash flow analysis are

subject to inherent uncertainties and subjectivity. The use of

different assumptions, estimates or judgments with respect to the

estimation of future cash flows and the determination of the

discount rate used to reduce such estimated future cash flows to

their net present value could materially affect the determination of

any impairment charges. Hypothetical changes in our estimates

of the discount rate, long-term revenue growth and long-term

operating margin would result in impairment charges as follows:


Change in selected assumption	Percentage decline in fair value	Impairment charge
100 bps increase in discount rate	14%	$198
100 bps decrease in long-term revenue growth	8	—
100 bps decrease in long-term operating margin	2	—

We did not identify any factors in 2025 or 2024 that would lead us

to believe that our other reporting units were at risk of a goodwill

impairment. Accordingly, we performed qualitative assessments

and concluded it was more likely than not that the fair values of

those reporting units exceeded their respective carrying amounts.

In 2025 our qualitative assessment was supplemented with a

corroborative quantitative analysis which indicated that the

implied fair values of our other reporting units exceed their

respective carrying amounts by at least 100%. Future changes in

the judgments, assumptions and estimates that are used in our

impairment testing for goodwill and indefinite-lived intangible

assets, including discount rates and cash flow projections, could

result in different estimates of fair value. A significant reduction in

estimated fair values could result in impairment charges that

could materially affect our results of operations.

Legal and Other Contingencies

We are involved in various ongoing proceedings, legal actions

and claims arising in the normal course of business, including

proceedings related to product, labor, tax, intellectual property

and other matters that are more fully described in Notes 7 and 11

to our Consolidated Financial Statements. 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, for the resolution of these legal

matters 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 projected by management, additional expense may be

incurred, which could unfavorably affect future operating results.

We are currently 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.

NEW ACCOUNTING PRONOUNCEMENTS

Refer to Note 1 to our Consolidated Financial Statements for

further information.


	11

STRYKER CORPORATION


ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Stryker Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Stryker Corporation and subsidiaries (the Company) as of

December 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive income, shareholders’ equity and cash

flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed

in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial

statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results

of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally

accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),

the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our

report dated February 11, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the

Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be

independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used

and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe

that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were

communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to

the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical

audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by

communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or

disclosures to which they relate.


	Uncertain Tax Positions
Description of the Matter	As described in Note 11 to the consolidated financial statements, the Company is involved in various income tax matters for which the ultimate outcomes are uncertain. As of December 31, 2025, the Company had unrecognized tax benefits of $403. The Company received a final audit report and assessments from the German Federal Central Tax Office (FCTO) related to the years 2010 through 2017 of $754 and expect to receive additional assessments of $11 based on the final audit report. Auditing management’s evaluation of the uncertain tax positions associated with the FCTO tax assessments was especially challenging due to the level of subjectivity and significant judgment associated with the recognition and measurement of the tax positions.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting process for uncertain tax positions. For example, we tested controls over management’s identification of uncertain tax positions and its application of the recognition and measurement principles, including management’s review of developments related to existing uncertain tax positions. Our audit procedures included, among others, evaluating the assumptions the Company used to assess its uncertain tax positions and related unrecognized tax benefits. We evaluated evidence of management’s assessment of the uncertain tax positions related to certain German tax matters. Including inspection of technical memos, inspection of the FCTO tax assessments, and written representations of management. We involved professionals with specialized skill and knowledge to assist in our evaluation of the tax technical merits of the Company’s assessments, the amount of the potential benefits to be realized, and the application of relevant tax law. We also assessed the Company’s disclosures of uncertain tax positions included in Note 11 related to this tax matter.


	12

STRYKER CORPORATION


	Acquisitions
Description of the Matter	As described in Note 6 to the consolidated financial statements, in 2025 the Company completed the acquisition of Inari Medical, Inc. (Inari) for total consideration of $4,810, net of cash acquired. The acquisition was accounted for as a business combination. Auditing the Company’s fair value measurement of certain acquired developed technologies was complex and required significant auditor judgment due to the significant estimation uncertainty in determining the fair value of these intangible assets. The Company used an income approach to measure the developed technology intangible assets acquired. The significant assumptions used to estimate the fair value of the intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates and profit margins.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the identification and measurement of developed technologies. For example, we tested controls over the valuation of intangibles, including the valuation models and underlying assumptions used to develop such estimates. To test the fair value measurement of developed technologies, we performed audit procedures that included, among others, evaluating the Company's use of the income approach and testing the significant assumptions used in the model, as described above. We involved our valuation specialists in assisting with the evaluation of methodologies used by the Company and significant assumptions included in the fair value measurements. For example, to evaluate the revenue growth rates and projected profit margins, we compared the amounts to historical results of the Company’s business, as well as the acquired business’ historical results, and current industry and market trends for those in which the Company operates and performed sensitivity analyses on key assumptions. We also evaluated the adequacy of the Company’s disclosures included in Note 6 related to these acquisitions.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 1974.

Grand Rapids, Michigan

February 11, 2026,

except for the effects of the change in the composition of reportable segments in Notes 1, 2, and 14, as to which the date is June 26,

2026


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


STRYKER CORPORATION

Stryker Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS


	2025	2024
Assets
Current assets
Cash and cash equivalents	$4,011	$3,652
Short-term investments	—	750
Marketable securities	89	91
Accounts receivable, less allowance of $216 ($213 in 2024)	4,039	3,987
Inventories:
Materials and supplies	1,349	1,147
Work in process	415	336
Finished goods	3,546	3,291
Total inventories	$5,310	$4,774
Prepaid expenses and other current assets	1,306	1,593
Total current assets	$14,755	$14,847
Property, plant and equipment:
Land, buildings and improvements	1,793	1,627
Machinery and equipment	5,744	5,056
Total property, plant and equipment	7,537	6,683
Less allowance for depreciation	3,661	3,235
Property, plant and equipment, net	$3,876	$3,448
Goodwill	19,291	15,855
Other intangibles, net	5,681	4,395
Noncurrent deferred income tax assets	1,098	1,742
Other noncurrent assets	3,143	2,684
Total assets	$47,844	$42,971

Liabilities and shareholders' equity
Current liabilities
Accounts payable	$1,799	$1,679
Accrued compensation	1,595	1,403
Income taxes	418	539
Dividend payable	337	320
Accrued expenses and other liabilities	2,645	2,266
Current maturities of debt	1,000	1,409
Total current liabilities	$7,794	$7,616
Long-term debt, excluding current maturities	14,859	12,188
Income taxes	402	349
Other noncurrent liabilities	2,369	2,184
Total liabilities	$25,424	$22,337
Shareholders' equity
Common stock, $0.10 par value	38	38
Additional paid-in capital	2,597	2,361
Retained earnings	20,472	18,528
Accumulated other comprehensive loss	(687)	(293)
Total shareholders' equity	$22,420	$20,634
Total liabilities & shareholders' equity	$47,844	$42,971

See accompanying notes to Consolidated Financial Statements.


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


STRYKER CORPORATION

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS


	2025	2024	2023
Operating activities
Net earnings	$3,246	$2,993	$3,165
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	461	427	393
Amortization of intangible assets	732	623	635
Goodwill and other impairments	170	977	36
Share-based compensation	243	229	205
Sale of inventory stepped up to fair value at acquisition	173	46	—
Deferred income tax (benefit) expense	392	(370)	(206)
Changes in operating assets and liabilities:
Accounts receivable	127	(321)	(175)
Inventories	(297)	(206)	(797)
Accounts payable	94	192	77
Accrued expenses and other liabilities	318	74	516
Income taxes	(145)	(116)	(4)
Other, net	(470)	(306)	(134)
Net cash provided by operating activities	$5,044	$4,242	$3,711
Investing activities
Acquisitions, net of cash acquired	(4,960)	(1,628)	(390)
Proceeds/(Purchases) of short-term investments	750	(750)	—
Purchases of property, plant and equipment	(761)	(755)	(575)
Proceeds from the sale of the Spinal Implants business	165	—	—
Other investing, net	(60)	133	3
Net cash used in investing activities	$(4,866)	$(3,000)	$(962)
Financing activities
Proceeds (payments) on short-term borrowings, net	—	(32)	540
Proceeds from issuance of long-term debt	2,979	3,011	1,241
Payments on long-term debt	(1,400)	(2,039)	(2,058)
Payments of dividends	(1,284)	(1,219)	(1,139)
Cash paid for taxes from withheld shares	(149)	(195)	(155)
Other financing, net	(33)	(51)	(23)
Net cash provided by (used in) financing activities	$113	$(525)	$(1,594)
Effect of exchange rate changes on cash and cash equivalents	68	(36)	(28)
Change in cash and cash equivalents	$359	$681	$1,127
Cash and cash equivalents at beginning of year	3,652	2,971	1,844
Cash and cash equivalents at end of year	$4,011	$3,652	$2,971

Supplemental cash flow disclosure:
Cash paid for income taxes, net of refunds	$1,002	$989	$693
Cash paid for interest on debt	$582	$396	$356

See accompanying notes to Consolidated Financial Statements.


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


STRYKER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

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.

Recast of Certain Prior Period Information: The segment

information in this Form 8-K has been recast to conform to the

way we internally manage and monitor our business during fiscal

year 2026. The recast of prior period information had no impact

on our consolidated balance sheets, consolidated statements of

earnings, or consolidated statements of cash flows.

In the first quarter 2026 we announced a change in our

organizational structure. Our new Ortho Tech business combines

the orthopaedic instruments portfolio from our Instruments

business with the Mako and enabling technologies portfolio from

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

cutting accessories, enabling technologies and the teams behind

these products together under one business, we are simplifying

the customer experience and striving to increase our speed to

market through focused innovation.

Following this re-organization, we will continue to have two

business segments - (i) MedSurg and Neurotechnology and (ii)

Orthopaedics, each of which comprise a reportable segment. All

historical segment financial information has been recast to

conform to this new reporting structure in our financial statements

and accompanying notes. These changes primarily impacted

Note 2 – Revenue Recognition and Note 14 – Segment and

Geographic Data. The information in Note 8—Goodwill and Other

Intangible Assets has not been recast; however, recast amounts

are disclosed in our Quarterly Report on Form 10‑Q for the

quarterly period ended March 31, 2026.

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: Costs 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


Dollar amounts in millions except per share amounts or as otherwise specified.	18


STRYKER CORPORATION

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


Dollar amounts in millions except per share amounts or as otherwise specified.	19


STRYKER CORPORATION

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: Share-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


Dollar amounts in millions except per share amounts or as otherwise specified.	20


STRYKER CORPORATION

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

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.

NOTE 2 - REVENUE RECOGNITION

We disaggregate our net sales by business and geographic

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

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

cash flows are affected by economic factors.

Products and services are primarily transferred to customers at a

point in time, with some transfers of services taking place over

time. In 2025 less than 10% of our sales were recognized as

services transferred over time. Refer to Note 1 for further

discussion on our revenue recognition policies.

In the first quarter 2026 we announced a change in our

organizational structure. Our new Ortho Tech business combines

our orthopaedic instruments portfolio (Orthopaedic Instruments)

from Instruments with Other Orthopaedics. In addition, our spine

enabling technologies portfolio (Enabling Technologies) from

Other Orthopaedics was combined with the remaining

Instruments business to align with our internal reporting structure.

Ortho Tech includes sales related to Orthopaedic Instruments of


Dollar amounts in millions except per share amounts or as otherwise specified.	21


STRYKER CORPORATION

$2,110, $1,917 and $1,754 and Other Orthopaedics of $660,

$560 and $509 for 2025, 2024 and 2023. Instruments includes

sales related to Enabling Technologies of $155, $152 and $149

for 2025, 2024 and 2023. We have reflected these changes in all

historical periods presented.


Segment Net Sales
MedSurg and Neurotechnology:	2025	2024	2023
Instruments	$1,228	$1,069	$929
Endoscopy	3,807	3,389	3,068
Medical	4,204	3,852	3,459
Vascular	1,968	1,307	1,226
Neuro Cranial	2,485	2,136	1,876
	$13,692	$11,753	$10,558
Orthopaedics:
Knees	$2,656	$2,447	$2,273
Hips	1,865	1,704	1,544
Trauma and Extremities	3,948	3,507	3,147
Ortho Tech	2,770	2,477	2,263
Spinal Implants	185	707	713
	$11,424	$10,842	$9,940
Total	$25,116	$22,595	$20,498


United States Net Sales
MedSurg and Neurotechnology:	2025	2024	2023
Instruments	$1,072	$925	$800
Endoscopy	3,133	2,792	2,513
Medical	3,510	3,191	2,785
Vascular	1,048	506	483
Neuro Cranial	2,052	1,761	1,531
	$10,815	$9,175	$8,112
Orthopaedics:
Knees	$1,924	$1,788	$1,676
Hips	1,137	1,059	988
Trauma and Extremities	2,926	2,586	2,297
Ortho Tech	2,086	1,846	1,684
Spinal Implants	118	489	500
	$8,191	$7,768	$7,145
Total	$19,006	$16,943	$15,257


International Net Sales
MedSurg and Neurotechnology:	2025	2024	2023
Instruments	$156	$144	$129
Endoscopy	674	597	555
Medical	694	661	674
Vascular	920	801	743
Neuro Cranial	$433	375	345
	$2,877	$2,578	$2,446
Orthopaedics:
Knees	$732	$659	$597
Hips	728	645	556
Trauma and Extremities	1,022	921	850
Ortho Tech	684	631	579
Spinal Implants	67	218	213
	$3,233	$3,074	$2,795
Total	$6,110	$5,652	$5,241

MedSurg and Neurotechnology

MedSurg and Neurotechnology products include surgical

equipment and navigation systems (Instruments), endoscopic

and communications systems (Endoscopy), patient handling,

emergency medical equipment, intensive care disposable

products, clinical communication and artificial intelligence-

assisted virtual care platform technology (Medical), and minimally

invasive products for the treatment of acute ischemic and

hemorrhagic stroke and venous thromboembolism (Vascular), 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). Substantially all

MedSurg and Neurotechnology sales are recognized when a

purchase order has been received and control has transferred.

For certain Endoscopy, Instruments and Medical services, we

may recognize sales over time as we satisfy performance

obligations that may include an obligation to complete installation,

provide training and perform ongoing services, generally

performed within one year.

Orthopaedics

Orthopaedics products include implants and surgical equipment

such as navigation systems and robotics used in total joint

replacements, such as hip, knee and shoulder, ankle and trauma

and extremities surgeries. Substantially all Orthopaedics sales

are recognized when we have a purchase order and appropriate

notification the product has been used or implanted. For certain

Orthopaedic products in the Ortho Tech business, we recognize

sales at a point in time, as well as over time for performance

obligations that may include an obligation to complete installation

and provide training and ongoing services. Performance

obligations are generally satisfied within one year.

Costs to Obtain or Fulfill a Contract

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

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

our products and services. Our costs to obtain contracts are

typically in the form of sales commissions paid to employees or

third-party agents. Certain sales commissions paid to employees

prior to recognition of sales are recorded as deferred contract

costs. We expense sales commissions associated with obtaining

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

amortization period is generally less than one year. These costs

have been presented within selling, general and administrative

expenses. On December 31, 2025 and 2024 deferred contract

costs recorded in our Consolidated Balance Sheets were not

significant.

Contract Assets and Liabilities

Our contract assets primarily relate to conditional rights to

consideration for work completed but not billed at the reporting

date. On December 31, 2025 and 2024 contract assets recorded

in our Consolidated Balance Sheets were not significant.

Our contract liabilities arise as a result of consideration received

from customers at inception of contracts for certain businesses or

where the timing of billing for services precedes satisfaction of

our performance obligations. This occurs primarily when payment

is received upfront for certain multi-period extended warranty

service contracts. Our contract liabilities of $1,024 and $978 on

December 31, 2025 and 2024 are classified within accrued

expenses and other liabilities and other noncurrent liabilities in

our Consolidated Balance Sheets based on the timing of when

we expect to complete our performance obligations. Changes in

contract liabilities during the year were as follows:


	2025	2024
Beginning contract liabilities	$978	$860
Revenue recognized from beginning of year contract liabilities	(546)	(553)
Net advance consideration received during the period	592	671
Ending contract liabilities	$1,024	$978

Transfers and Servicing of Financial Assets

We sell certain customer lease agreements and the related

leased assets to third-party financial institutions to accelerate our

cash collection cycle. The lease receivables are sold without

recourse and are derecognized from our Consolidated Balance

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

we collect lease payments on behalf of the financial institutions


Dollar amounts in millions except per share amounts or as otherwise specified.	22


STRYKER CORPORATION

but maintain no other form of continuing involvement. Sales of

these lease agreements are classified as operating activities in

our Consolidated Statements of Cash Flows. Fees earned for our

servicing activities are immaterial. Revenue related to customer

lease agreements sold under these arrangements represented

less than 4% of our total revenue for 2025, 2024 and 2023.

NOTE 3 - FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date. Financial

assets and liabilities carried at fair value are classified in their

entirety based on the lowest level of input and disclosed in one of

the following three categories:


Level 1	Quoted market prices in active markets for identical assets or liabilities.
Level 2	Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3	Unobservable inputs reflecting our assumptions or external inputs from active markets.

Use of observable market data, when available, is required in

making fair value measurements. When inputs used fall within

different levels of the hierarchy, the level within which the fair

value measurement is categorized is based on the lowest level

input that is significant to the fair value measurement. We

determine fair value for Level 1 instruments using exchange-

traded prices for identical instruments. We determine fair value of

Level 2 instruments using exchange-traded prices of similar

instruments, where available, or utilizing other observable inputs

that take into account our credit risk and that of our

counterparties. Foreign currency exchange contracts and interest

rate hedges, when outstanding, are included in Level 2 and are

primarily valued using standard calculations and models that use

readily observable market data as their basis. Our Level 3

liabilities comprise contingent consideration arising from recently

completed acquisitions. We determine fair value of these Level 3

liabilities using a discounted cash flow technique. Significant

unobservable inputs were used in our assessment of fair value,

including assumptions regarding future business results, discount

rates, discount periods and probability assessments based on the

likelihood of reaching various targets. We remeasure the fair

value of our assets and liabilities each reporting period. We

record the changes in fair value within selling, general and

administrative expense.

In 2025 we assumed contingent consideration liabilities with a fair

value of $90 related to previous acquisitions made by Inari

Medical Inc. (Inari). Refer to Note 6 for further information on the

acquisition of Inari.

In 2024 we recorded $208 of contingent consideration related to

various acquisitions described in Note 6.

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

fair value hierarchy in 2025.


Assets Measured at Fair Value
	2025	2024
Cash and cash equivalents	$4,011	$3,652
Short-term investments	—	750
Trading marketable securities	307	259
Level 1 - Assets	$4,318	$4,661
Available-for-sale marketable securities:
Corporate and asset-backed debt securities	$52	$53
United States agency debt securities	—	1
United States treasury debt securities	37	34
Certificates of deposit	—	3
Total available-for-sale marketable securities	$89	$91
Foreign currency exchange forward contracts	46	225
Level 2 - Assets	$135	$316
Total assets measured at fair value	$4,453	$4,977


Liabilities Measured at Fair Value
	2025	2024
Deferred compensation arrangements	$307	$259
Level 1 - Liabilities	$307	$259
Foreign currency exchange forward contracts	$170	$77
Level 2 - Liabilities	$170	$77
Contingent consideration:
Beginning	$452	$289
Additions	123	208
Change in estimate and foreign exchange	24	8
Settlements	(81)	(53)
Ending	$518	$452
Level 3 - Liabilities	$518	$452
Total liabilities measured at fair value	$995	$788


Fair Value of Available for Sale Securities by Maturity
	2025	2024
Due in one year or less	$41	$47
Due after one year through three years	$48	$44

On December 31, 2025 the aggregate difference between the

cost and fair value of available-for-sale marketable securities was

nominal. Interest income on cash and cash equivalents, short-

term investments and marketable securities income was $121,

$139 and $75 in 2025, 2024 and 2023, which was recorded in

other income.

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

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

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

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

investments before recovery of their amortized cost basis, which

may be maturity.

NOTE 4 - DERIVATIVE INSTRUMENTS

We use operational and economic hedges, foreign currency

exchange forward contracts, net investment hedges (both

derivative and non-derivative financial instruments) and interest

rate derivative instruments to manage the impact of currency

exchange and interest rate fluctuations on earnings, cash flow

and equity. We do not enter into derivative instruments for

speculative purposes. We are exposed to potential credit loss in

the event of nonperformance by counterparties on our

outstanding derivative instruments but do not anticipate

nonperformance by any of our counterparties. Should a

counterparty default, our maximum loss exposure is the asset

balance of the instrument.


Dollar amounts in millions except per share amounts or as otherwise specified.	23


STRYKER CORPORATION

Foreign Currency Hedges


2025	Cash Flow	Net Investment	Non- Designated	Total
Gross notional amount	$1,738	$2,647	$4,391	$8,776
Maximum term in years				8.7
Fair value:
Other current assets	$33	$—	$11	$44
Other noncurrent assets	2	—	—	2
Other current liabilities	(10)	(71)	(21)	(102)
Other noncurrent liabilities	(2)	(66)	—	(68)
Total fair value	$23	$(137)	$(10)	$(124)
2024	Cash Flow	Net Investment	Non- Designated	Total
Gross notional amount	$1,588	$2,338	$5,164	$9,090
Maximum term in years				9.7
Fair value:
Other current assets	$43	$24	$119	$186
Other noncurrent assets	4	35	—	39
Other current liabilities	(29)	—	(41)	(70)
Other noncurrent liabilities	(3)	(4)	—	(7)
Total fair value	$15	$55	$78	$148

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

forward currency contracts designated as net investment hedges,

for which the maximum term is 8.7 years, to hedge a portion of

our investments in certain of our entities with functional

currencies denominated in Euros. In addition to these derivative

financial instruments designated as net investment hedges, we

had €5.0 billion at December 31, 2025 and 2024 of senior

unsecured notes designated as net investment hedges to

selectively hedge portions of our investment in certain

international subsidiaries. The currency effects of our Euro-

denominated senior unsecured notes are reflected in AOCI within

shareholders' equity where they offset gains and losses recorded

on our net investment in international subsidiaries.

The total after-tax gain (loss) recognized in OCI related to

designated net investment hedges was ($715) in 2025.


Currency Exchange Rate Gains (Losses) Recognized in Net Earnings
Derivative Instrument	Recognized in:	2025	2024	2023
Cash Flow	Cost of sales	$25	$31	$39
Net Investment	Other income	44	35	34
Non-Designated	Other income	33	40	25
	Total	$102	$106	$98

Pretax gains (losses) on derivatives designated as cash flow

hedges of $39 and net investment hedges of $38 recorded in

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

income in earnings within 12 months of December 31, 2025. This

cash flow hedge reclassification is primarily due to the sale of

inventory that includes previously hedged purchases. A

component of the AOCI amounts related to net investment

hedges is reclassified over the life of the hedge instruments as

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

the spot-forward difference from the effectiveness assessment.

Interest Rate Hedges

Pretax gains of $5 recorded in AOCI related to interest rate

hedges closed in conjunction with debt issuances are expected to

be reclassified to interest expense in earnings within 12 months

of December 31, 2025. The cash flow effect of interest rate

hedges is recorded in cash flow from operations.

NOTE 5 - ACCUMULATED OTHER COMPREHENSIVE (LOSS)

INCOME (AOCI)


	Pension Plans	Hedges	Financial Statement Translation	Total
2023	$(28)	$39	$(427)	$(416)
OCI	43	26	236	305
Income taxes	(11)	(7)	(110)	(128)
Reclassifications to:
Cost of sales	—	(31)	—	(31)
Interest expense	—	(4)	—	(4)
Other income	—	—	(35)	(35)
Income taxes	—	8	8	16
Net OCI	$32	$(8)	$99	$123
2024	$4	$31	$(328)	$(293)
OCI	93	37	(562)	(432)
Income taxes	(27)	(4)	125	94
Reclassifications to:
Cost of sales	—	(25)	—	(25)
Interest expense	—	(3)		(3)
Other income	—	—	(44)	(44)
Income taxes	—	6	10	16
Net OCI	$66	$11	$(471)	$(394)
2025	$70	$42	$(799)	$(687)

NOTE 6 - ACQUISITIONS

We acquire stock in companies and various assets that continue

to support our capital deployment and product development

strategies. Cash paid for acquisitions, net of cash acquired was

$4,960 and $1,628 in 2025 and 2024.

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

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

acquired. Inari's product portfolio includes minimally invasive

products for the treatment of venous thromboembolism. Inari is

part of our Peripheral Vascular business within MedSurg and

Neurotechnology. The purchase price allocation for Inari is based

on preliminary valuations, primarily related to developed

technologies and customer relationships. Goodwill attributable to

the acquisition reflects the strategic benefits of expanding our

market presence, diversifying our product portfolio and advancing

innovations. This goodwill is not deductible for tax purposes.

Share-based awards for Inari employees vested upon our

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

and administrative expenses in 2025.

In 2024 we completed various acquisitions for total consideration

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

and $400 contingent upon the achievement of certain commercial

or clinical milestones. The combined acquisition-date fair values

of the contingent milestone payments totaled $208. The acquired

companies expand the product portfolios of our Instruments,

Endoscopy, Medical and Neuro Cranial businesses within

MedSurg and Neurotechnology and our Trauma and Extremities

and Joint Replacement businesses within Orthopaedics. Goodwill

attributable to the acquisitions reflects the strategic benefits of

expanding our market presence, diversifying our product portfolio

and advancing innovations. This goodwill is not deductible for tax

purposes.


Dollar amounts in millions except per share amounts or as otherwise specified.	24


STRYKER CORPORATION		2025 FORM 10-K

The purchase price allocations for Inari and the acquisitions

completed in the full year 2024 are:


Purchase Price Allocation of Acquired Net Assets
	2025	2024
	Inari	Total
Tangible assets acquired:
Accounts receivable	$78	$40
Inventory	215	99
Deferred income tax assets	59	49
Other assets	84	26
Debt	—	(32)
Deferred income tax liabilities	(486)	(204)
Other liabilities	(191)	(107)
Intangible assets:
Developed technologies	1,458	596
Customer relationships	330	215
Patents	—	6
Trademarks	—	2
Other intangibles	72	—
Goodwill	3,191	1,146
Purchase price, net of cash acquired of $64 and $56	$4,810	$1,836
Weighted-average amortization period at acquisition (years):
Developed technologies	13	12
Customer relationships	13	14
Patents	—	12
Trademarks	—	5
Other intangibles	9	—

NOTE 7 - CONTINGENCIES AND COMMITMENTS

We are involved in various ongoing proceedings, legal actions

and claims arising in the normal course of business, including

proceedings related to product, labor, tax, intellectual property

and other matters, the 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.

Previously we were contacted by the United States Securities

and Exchange Commission (SEC), United States Department of

Justice (DOJ) and certain other regulatory authorities regarding

whether certain business activities in certain foreign countries

violated provisions of the FCPA and analogous local laws. We

have completed our investigation into these matters. During 2025

we were informed by the SEC and DOJ that each agency had

closed its inquiry. We are currently responding to inquiries by

certain foreign authorities arising in the normal course of

business. We do not expect these matters to have a material

effect, if any, on our financial statements.

We have conducted voluntary recalls of certain products,

including our Rejuvenate and ABG II Modular-Neck hip stems

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

V40 Femoral Heads. Additionally, we are responsible for certain

product liability claims, primarily related to certain hip products

sold by Wright prior to its 2014 divestiture of the OrthoRecon

business.

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

associated with the defense and settlement of claims and

lawsuits. Based on the information that has been received related

to the matters discussed above, our accrual for these matters

was $144 at December 31, 2025, representing our best estimate

of probable loss. The final outcomes of these matters are

dependent on many factors that are difficult to predict.

Accordingly the ultimate cost related to these matters may be

materially different than the amount of our current estimate and

accruals and could have a material adverse effect on our results

of operations and cash flows.

Leases

We lease various manufacturing, warehousing and distribution

facilities, administrative and sales offices as well as equipment

under operating leases. We evaluate our contracts to identify

leases, which is generally if there is an identified asset and we

have the right to direct the use of and obtain substantially all of

the economic benefit from the use of the identified asset. Certain

of our lease agreements contain rent escalation clauses

(including index-based escalations), rent holidays, capital

improvement funding or other lease incentives. We recognize our

minimum rental expense on a straight-line basis over the term of

the lease beginning with the date of initial control of the asset.

Right-of-use assets are recorded in other noncurrent assets on

our Consolidated Balance Sheets. Current and noncurrent lease

liabilities are recorded in accrued expenses and other liabilities

and other noncurrent liabilities, respectively.

We have made certain significant assumptions and judgments

when recording leases. For all asset classes, we do not

recognize a right-of-use asset and lease liability for short-term

leases. We also do not separate non-lease components from

lease components to which they relate and account for the

combined lease and non-lease components as a single lease

component. The determination of the discount rate used in a

lease is our incremental borrowing rate which is based on what

we would normally pay to borrow on a collateralized basis over a

similar term an amount equal to the lease payments.


	2025	2024
Right-of-use assets	$519	$516
Lease liabilities, current	$153	$144
Lease liabilities, noncurrent	$348	$379

Other information:
Weighted-average remaining lease term (years)	5.0	5.1
Weighted-average discount rate	3.77%	3.87%

Operating lease expense totaled $205, $190 and $172 in 2025,

2024 and 2023.

Future Obligations

We lease various manufacturing, warehousing and distribution

facilities, administrative and sales offices as well as equipment

under operating leases. Refer to Note 10 for more information on

the debt obligations.


	2026	2027	2028	2029	2030	Thereafter
Debt repayments	$1,000	$1,382	$2,606	$1,691	$2,565	$6,729
Minimum lease payments	$164	$125	$87	$55	$38	$55


Dollar amounts in millions except per share amounts or as otherwise specified.	25


STRYKER CORPORATION		2025 FORM 10-K

Other Contractual Obligations and Commitments

We participate in a supplier financing program that enables our

suppliers, at their sole discretion, to sell their Stryker receivables

to a financial institution on a non-recourse basis in order to be

paid earlier than our payment terms provide. Under this program,

we agree to pay participating banks the stated amount of

confirmed invoices from its designated suppliers on the original

maturity dates of the invoices, generally within 90 days of the

invoice date. We or the banks may agree to terminate the

agreements with advance notice. Separately, the banks may

have arrangements with the suppliers that provide them the

option to request early payment from the bank for invoices

confirmed by us. Our outstanding balances of confirmed invoices

in the programs were $75 and $71 on December 31, 2025 and

2024 and are included within accounts payable on our

Consolidated Balance Sheets.


	2025	2024
Beginning confirmed obligations	$71	$51
Additions	420	392
Settlements	(416)	(372)
Ending confirmed obligations	$75	$71

NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

In our annual impairment test of goodwill as of October 31, 2024

we performed a quantitative assessment of the Spine reporting

unit using a discounted cash flow analysis to estimate the fair

value. The carrying value of the Spine reporting unit exceeded its

fair value and a charge of $273 was recognized in goodwill and

other impairments in the Consolidated Statements of Earnings.

The impairment charge for the Spine reporting unit was driven by

a decrease in future product demand due to the competitive

environment and an increase in the Spine reporting unit’s

weighted average cost of capital. Subsequent to the annual

goodwill impairment test management committed to a plan to sell

certain assets associated with the Spinal Implants business

(disposal group). Goodwill was allocated to the disposal group

based on the relative fair values of the disposal group and the

portion of the Spine reporting unit that will be retained. Goodwill

allocated to the disposal group was tested for impairment which

resulted in an impairment charge of $183 recognized in goodwill

and other impairments in the Consolidated Statements of

Earnings. Refer to Note 16 for additional information on the sale

of the Spinal Implants business.

In our annual impairment test as of October 31, 2025 we

performed a quantitative impairment test for our Peripheral

Vascular reporting unit and determined that its fair value

exceeded its carrying amount by 12%. At October 31, 2025,

goodwill attributable to the Peripheral Vascular reporting unit was

$3,203. The fair value of this reporting unit was determined using

a discounted cash flow analysis, which is a form of the income

approach. Significant inputs to the analysis included assumptions

for future revenue growth, operating margin and the rate used to

discount the estimated future cash flows to their present value,

based on the reporting unit’s estimated weighted average cost of

capital.

For our other reporting units, we considered qualitative indicators

of impairment as it was considered more likely than not that the

fair values of those reporting units exceeded their respective

carrying values. No impairment was identified for those reporting

units in 2025 or 2024.

Future changes in the judgments, assumptions and estimates

that are used in our impairment testing for goodwill, including

discount and tax rates and future cash flow projections, could

result in different estimates of the fair values. A significant

reduction in the estimated fair values could result in impairment

charges that could materially affect our results of operations.

In 2024 goodwill of $117 previously reported within Orthopaedics

was reclassified to MedSurg and Neurotechnology to reflect the

reclassification of the Interventional Spine reporting unit from

Orthopaedics to MedSurg and Neurotechnology to align with

certain updates in our internal reporting structure.


Changes in the Net Carrying Value of Goodwill by Segment
	MedSurg and Neurotechnology	Orthopaedics	Total
2023	$8,270	$6,973	$15,243
Goodwill impairment	—	(456)	(456)
Additions and adjustments	852	300	1,152
Foreign exchange and other	86	(170)	(84)
2024	$9,208	$6,647	$15,855
Additions and adjustments	3,275	(1)	3,274
Foreign exchange and other	73	89	162
2025	$12,556	$6,735	$19,291


Summary of Other Intangible Assets
	Gross Carrying Amount	Less Accumulated Amortization	Net Carrying Amount
Developed technologies
2025	$7,273	$3,430	$3,843
2024	5,698	2,931	2,767
Customer relationships
2025	$3,425	$1,844	$1,581
2024	3,055	1,636	1,419
Patents
2025	$157	$144	$13
2024	153	136	17
Trademarks
2025	$420	$281	$139
2024	413	256	157
In-process research and development
2025	$34	$—	$34
2024	34	—	34
Other
2025	$132	$61	$71
2024	63	62	1
Total
2025	$11,441	$5,760	$5,681
2024	9,416	5,021	4,395


Estimated Amortization Expense
2026	2027	2028	2029	2030
$699	$711	$631	$616	$597

NOTE 9 - CAPITAL STOCK

The aggregate number of shares of all classes of stock which we

are authorized to issue is up to 1,000,500,000, divided into two

classes consisting of 500,000 shares of $1 par value preferred

stock and 1,000,000,000 shares of common stock with a par

value of $0.10. No shares of preferred stock were outstanding on

December 31, 2025.

We made no repurchases of shares in 2025. The manner, timing

and amount of repurchases are determined by management

based on an evaluation of market conditions, stock price and

other factors and are subject to regulatory considerations.

Purchases are made from time-to-time in the open market, in

privately negotiated transactions or otherwise. On December 31,

2025 the total dollar value of shares of our common stock that

could be purchased under our authorized repurchase program

was $1,033.


Dollar amounts in millions except per share amounts or as otherwise specified.	26


STRYKER CORPORATION		2025 FORM 10-K

Shares reserved for future compensation grants of our common

stock were 31 million and 18 million on December 31, 2025 and

2024.

Stock Options

We measure the cost of employee stock options based on the

grant-date fair value and recognize that cost using the straight-

line method over the period in which a recipient is required to

provide services in exchange for the options, typically the vesting

period. The weighted-average fair value per share of options is

estimated on the date of grant using the Black-Scholes option

pricing model.


Option Value and Assumptions
	2025	2024	2023
Weighted-average fair value per share	$141.40	$118.22	$83.59
Assumptions:
Risk-free interest rate	4.4%	4.3%	4.0%
Expected dividend yield	0.9%	1.1%	1.2%
Expected stock price volatility	29.1%	29.9%	29.0%
Expected option life (years)	6.4	6.3	6.2

The risk-free interest rate for periods within the expected life of

options granted is based on the United States Treasury yield

curve in effect at the time of grant. Expected stock price volatility

is based on the historical volatility of our stock. The expected

option life, representing the period of time that options granted

are expected to be outstanding, is based on historical option

exercise and employee termination data.


2025 Stock Option Activity
	Shares (in millions)	Weighted- Average Exercise Price	Weighted- Average Remaining Term (in years)	Aggregate Intrinsic Value
Outstanding January 1	10.8	$214.87
Granted	1.0	392.36
Exercised	(1.2)	158.83
Canceled or forfeited	(0.2)	313.05
Outstanding December 31	10.4	$234.56	5.0	$1,246.1
Exercisable December 31	6.9	$195.53	3.7	$1,073.4
Options expected to vest	3.3	$309.91	7.5	$166.7

The aggregate intrinsic value of options, which represents the

cumulative difference between the fair market value of the

underlying common stock and the option exercise prices,

exercised was $260, $362 and $318 in 2025, 2024 and 2023.

Exercise prices for options outstanding ranged from $96.64 to

$392.39 on December 31, 2025. On December 31, 2025 there

was $160 of unrecognized compensation cost related to

nonvested stock options granted under the long-term incentive

plans. That cost is expected to be recognized as expense over

the weighted-average period of approximately 1.5 years.


Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) Activity
	Shares (in millions)		Weighted-Average Grant Date Fair Value
	RSUs	PSUs	RSUs	PSUs
Nonvested on January 1	0.7	0.2	$290.58	$287.51
Granted	0.3	0.1	385.68	334.24
Vested	(0.3)	(0.1)	277.40	254.47
Canceled or forfeited	(0.1)	—	337.17	—
Nonvested on December 31	0.6	0.2	$344.25	$333.06

On December 31, 2025 there was $100 of unrecognized

compensation cost related to nonvested RSUs. That cost is

expected to be recognized as expense over the weighted-

average period of approximately one year. The weighted-average

grant date fair value per share of RSUs granted was $385.68 and

$332.64 in 2025 and 2024. The fair value of RSUs and PSUs

vested in 2025 was $91 and $26. On December 31, 2025 there

was $26 of unrecognized compensation cost related to

nonvested PSUs. That cost is expected to be recognized as

expense over the weighted-average period of approximately one

year.

Employee Stock Purchase Plans (ESPP)

Employees may participate in our ESPP provided they meet

certain eligibility requirements. The purchase price for our

common stock under the terms of the ESPP is defined as 95% of

the closing stock price on the last trading day of a purchase

period. We issued 178,090 and 173,708 shares under the ESPP

in 2025 and 2024.

NOTE 10 - 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

December 31, 2025.

In February 2025 we entered into a new revolving credit

agreement that replaces our previous agreement dated October

2021. The primary changes included increasing the aggregate

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

the maturity date to February 25, 2030. On December 31, 2025

there were no borrowings outstanding under our revolving credit

facility or our commercial paper program which allows for

maturities up to 397 days from the date of issuance. The

maximum amount of our commercial paper that can be

outstanding at any time is $3,000.

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

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

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

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

unsecured notes due February 10, 2035. In June 2025 we repaid

$650 of 1.150% senior unsecured notes. In November 2025 we

repaid $750 of 3.375% senior unsecured notes. The following

table summarizes our total debt at December 31:


Dollar amounts in millions except per share amounts or as otherwise specified.	27


STRYKER CORPORATION		2025 FORM 10-K


Summary of Total Debt
	Rate	Due	2025	2024
Senior unsecured notes:
	1.150%	June 15, 2025	$—	$649
	3.375%	November 1, 2025	—	750
	3.500%	March 15, 2026	1,000	998
	4.550%	February 10, 2027	498	—
	2.125%	November 30, 2027	881	777
	4.700%	February 10, 2028	697	—
	3.650%	March 7, 2028	599	598
	4.850%	December 8, 2028	597	596
	3.375%	December 11, 2028	704	621
	0.750%	March 1, 2029	939	828
	4.250%	September 11, 2029	744	743
	4.850%	February 10, 2030	794	—
	1.950%	June 15, 2030	995	993
	2.625%	November 30, 2030	759	669
	1.000%	December 3, 2031	876	772
	3.375%	September 11, 2032	934	824
	4.625%	September 11, 2034	741	740
	5.200%	February 10, 2035	990	—
	3.625%	September 11, 2036	695	613
	4.100%	April 1, 2043	393	393
	4.375%	May 15, 2044	396	396
	4.625%	March 15, 2046	984	984
	2.900%	June 15, 2050	643	643
Other			—	10
Total debt			$15,859	$13,597
Less current maturities			1,000	1,409
Total long-term debt			$14,859	$12,188

Unamortized debt issuance costs			$70	$63
Borrowing capacity on existing facilities			$2,911	$2,160
Fair value of senior unsecured notes			$15,344	$12,780

The fair value of the senior unsecured notes was estimated using

quoted interest rates, maturities and amounts of borrowings

based on quoted active market prices and yields that took into

account the underlying terms of the debt instruments.

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

value hierarchy.

Interest expense on outstanding debt and credit facilities,

including required fees incurred totaled $582, $396 and $356 in

2025, 2024 and 2023.

NOTE 11 - INCOME TAXES

On January 1, 2025 we prospectively adopted ASU 2023-09

(Topic 740): Income Taxes: Improvements to Income Tax

Disclosures which expands the existing rules on income tax

disclosures. This update requires entities to disclose specific

categories in the tax rate reconciliation, provide additional

information for reconciling items that meet a quantitative

threshold and disclose additional information about income taxes

paid on an annual basis. In determining the reconciling items we

considered the effect of tax rulings as part of the statutory tax

rate.

Our effective tax rate was 28.1%, 14.3% and 13.8% for 2025,

2024 and 2023. The effective income tax rate for 2025 increased

from 2024 due to the 2025 tax effect of transfers of intellectual

property between tax jurisdictions and the 2024 tax effect of the

sale of the Spinal Implants business. The effective income tax

rate for 2024 increased from 2023 due to the 2023 tax effect of

transfers of intellectual property between tax jurisdictions offset

by the 2024 tax effect of the sale of the Spinal Implants business.


Effective Income Tax Rate Reconciliation
	2025
	Amount	Percent
United States federal statutory rate	$948	21.0%
State and Local Income Taxes, Net of Federal Income Tax Effect(1)	173	3.8
Foreign Tax Effects
Ireland
Statutory tax rate difference	(177)	(3.9)
Other	17	0.4
Puerto Rico
Statutory tax rate difference	(49)	(1.1)
Withholding Tax	60	1.3
Expiration of credits carryforward	78	1.7
Change in valuation allowance	(78)	(1.7)
Other	(4)	(0.1)
Other foreign jurisdictions	20	0.4
Effect of changes in tax laws or rates enacted in the current period	—	—
Effect of Cross-Border Tax Laws
Direct foreign tax credits	(90)	(2.0)
Global intangible low-taxed income	70	1.6
Tax Credits
Research and development tax credits	(53)	(1.2)
Changes in Valuation Allowances	—	—
Nontaxable or Nondeductible Items
Spinal Implants divestiture	(51)	(1.1)
Transfers of intellectual property	405	9.0
Changes in unrecognized Tax Benefits	17	0.4
Other Adjustments	(18)	(0.4)
Effective Tax Rate	$1,268	28.1%

(1) State taxes in Pennsylvania, New York, Illinois, Florida, California, Michigan,

Indiana, and Tennessee accounted for the majority (greater than 50%) of the tax

effect in this category.


Effective Income Tax Rate Reconciliation
	2024	2023
United States federal statutory rate	21.0%	21.0%
United States state and local income taxes, less federal deduction	1.1	1.1
Foreign income tax at rates other than 21%	(4.1)	(6.8)
Tax related to repatriation of foreign earnings	0.3	1.2
United States research and development credits	(1.4)	(1.2)
Intellectual property transfers	—	(3.3)
Goodwill impairment	2.8	—
Outside basis difference related to the anticipated sale of the Spinal Implants business	(4.9)	—
Other	(0.5)	1.8
Effective income tax rate	14.3%	13.8%


Cash paid for income taxes (net of refunds received)
	2025
United States - Federal	533
United States - State	71
Foreign
Ireland	175
Other	223
Subtotal	398
Total	$1,002


Dollar amounts in millions except per share amounts or as otherwise specified.	28


STRYKER CORPORATION		2025 FORM 10-K


Earnings Before Income Taxes
	2025	2024	2023
United States	$1,434	$523	$701
International	3,080	2,969	2,972
Total	$4,514	$3,492	$3,673


Components of Income Tax Expense (Benefit)
Current income tax expense (benefit):	2025	2024	2023
United States federal	$414	$490	$236
United States state and local	149	90	48
International	313	289	430
Total current income tax expense	$876	$869	$714
Deferred income tax expense (benefit):
United States federal	$186	$(462)	$(212)
United States state and local	78	(76)	(20)
International	128	168	26
Total deferred income tax expense (benefit)	$392	$(370)	$(206)
Total income tax expense	$1,268	$499	$508

Interest included in interest expense was $18, $13, and $1 in

2025, 2024 and 2023. The United States federal deferred income

tax expense (benefit) includes the utilization of net operating loss

carryforwards of $32, $9 and $189 in 2025, 2024 and 2023.


Deferred Income Tax Assets and Liabilities
Deferred income tax assets:	2025	2024
Inventories	$553	$551
Other accrued expenses	401	207
Depreciation and amortization	546	715
State income taxes	90	167
Share-based compensation	117	100
Research and development capitalization	40	408
International interest expense carryforwards	56	52
Net operating loss and credit carryforwards	315	410
Outside basis difference related to the anticipated sale of the Spinal Implants business	—	170
Other	352	310
Total deferred income tax assets	$2,470	$3,090
Less valuation allowances	(148)	(228)
Net deferred income tax assets	$2,322	$2,862
Deferred income tax liabilities:
Depreciation and amortization	$(1,222)	$(1,141)
Undistributed earnings	(139)	(61)
Total deferred income tax liabilities	$(1,361)	$(1,202)
Net deferred income tax assets	$961	$1,660
Reported as:
Noncurrent deferred income tax assets	$1,098	$1,742
Noncurrent liabilities—Other liabilities	(137)	(82)
Total	$961	$1,660

Accrued interest was $96 and $71 on December 31, 2025 and

2024 which was reported in accrued expenses and other

liabilities and other noncurrent liabilities.

United States federal loss carryforwards of $271, with $57 of

associated deferred tax asset and with $2 being subject to a

valuation allowance, begin to expire in 2026. United States state

loss carryforwards of $1,606, with $64 associated deferred tax

asset and with $33 being subject to a valuation allowance, begin

to expire in 2026. International loss carryforwards of $309, with

$67 of associated deferred tax asset and with $61 being subject

to a valuation allowance, begin to expire in 2026; however, some

have no expiration. We also have tax credit carryforwards of

$141 with $4 being subject to a full valuation allowance. The

credits with a full valuation allowance begin to expire in 2026.

We recorded deferred income tax on undistributed earnings of

foreign subsidiaries not determined to be indefinitely reinvested.

The amount of undistributed earnings of foreign subsidiaries

determined to be indefinitely reinvested at December 31, 2025

was approximately $11.7 billion. Determination of the total

amount of unrecognized deferred income tax on undistributed

earnings of foreign subsidiaries is not practicable.


Uncertain Income Tax Positions
	2025	2024
Beginning uncertain tax positions	$349	$371
Increases related to current year income tax positions	19	18
Increases related to prior year income tax positions	12	—
Decreases related to prior year income tax positions	—	(4)
Settlements of income tax audits	—	(21)
Statute of limitations expirations and other	(4)	(3)
Foreign currency translation	27	(12)
Ending uncertain tax positions	$403	$349
Reported as:
Noncurrent liabilities—Income taxes	$403	$349

Our income tax expense would have been reduced by $279 and

$224 in 2025 and 2024 had our uncertain income tax positions

been favorably resolved. It is reasonably possible that the

amount of unrecognized tax benefits will significantly change due

to one or more of the following events in the next 12 months:

expiring statutes, audit activity, tax payments, competent

authority proceedings related to transfer pricing or final decisions

in matters that are the subject of controversy in various taxing

jurisdictions in which we operate, including inventory transfer

pricing, cost sharing, product royalty and foreign branch

arrangements. We are not able to reasonably estimate the

amount or the future periods in which changes in unrecognized

tax benefits may be resolved. Interest incurred associated with

uncertain tax positions is included in interest expense.

Income tax authorities in various jurisdictions globally conduct

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

with our interpretations of income tax regulations. Any audit

assessment, draft audit assessment, or final audit report received

is reviewed for new information and evaluated for proper financial

statement treatment. We received a final audit report and

assessments from the German Federal Central Tax Office

(FCTO) related to the years 2010 through 2017 of $754 and

expect to receive additional assessments of $11 based on the

final audit report. We intend to defend our filing positions through

the FCTO independent appeals process and/or litigation as

necessary. If the resolution of this matter results in additional

German income taxes, we expect to pursue a claim for

associated foreign tax credits. Our unrecognized tax benefits

associated with this matter remain unchanged from 2024.

Income tax years are open from 2019 through 2025 for the

United States federal jurisdiction and are open for other major

jurisdictions from 2010 through 2025.

NOTE 12 - RETIREMENT PLANS

Defined Contribution Plans

We provide certain employees with defined contribution plans

and other types of retirement plans. A portion of our retirement

plan expense under the defined contribution plans is funded with

Stryker common stock. The use of Stryker common stock

represents a non-cash operating activity that is not reflected in

our Consolidated Statements of Cash Flows.


	2025	2024	2023
Plan expense	$399	$376	$327
Expense funded with Stryker common stock	72	62	57
Stryker common stock held by plan:
Dollar amount	$763	$781	$649
Shares (in millions)	2.2	2.2	2.2
Value as a percentage of total plan assets	8%	10%	10%


Dollar amounts in millions except per share amounts or as otherwise specified.	29


STRYKER CORPORATION		2025 FORM 10-K

Defined Benefit Plans

Certain of our subsidiaries have both funded and unfunded

defined benefit pension plans covering some or all of their

employees. The majority of our defined benefit pension plans

have projected benefit obligations in excess of plan assets.

Discount Rate

The discount rates were selected using a hypothetical portfolio of

high quality bonds on December 31 that would provide the

necessary cash flows to match our projected benefit payments.

Expected Return on Plan Assets

The expected return on plan assets is determined by applying the

target allocation in each asset category of plan investments to the

anticipated return for each asset category based on historical and

projected returns.


Components of Net Periodic Pension Cost
Net periodic benefit cost:	2025	2024	2023
Service cost	$(42)	$(39)	$(32)
Interest cost	(24)	(21)	(23)
Expected return on plan assets	22	19	18
Amortization of prior service credit	2	1	1
Recognized actuarial gain (loss)	(2)	(1)	4
Net periodic benefit cost	$(44)	$(41)	$(32)
Changes in assets and benefit obligations recognized in OCI:
Net actuarial gain (loss)	$93	$43	$(67)
Recognized net actuarial (gain) loss	2	1	(4)
Prior service credit and transition amount	(2)	(1)	(1)
Total recognized in other comprehensive income (loss)	$93	$43	$(72)
Total recognized in net periodic benefit cost and OCI	$49	$2	$(104)
Weighted-average rates used to determine net periodic benefit cost:
Discount rate	2.9%	2.8%	3.3%
Expected return on plan assets	4.1%	4.3%	4.2%
Rate of compensation increase	2.9%	3.0%	3.0%
Weighted-average discount rate used to determine projected benefit obligations	3.6%	2.9%	2.8%

The actuarial gain (loss) for all pension plans was primarily

related to a change in the discount rate used to measure the

benefit obligations of those plans.

Investment Strategy

The investment strategy for our defined benefit pension plans is

to meet the liabilities of the plans as they fall due and to

maximize the return on invested assets within appropriate risk

tolerances.


	2025	2024
Fair value of plan assets	$560	$492
Benefit obligations	(829)	(782)
Funded status	$(269)	$(290)
Reported as:
Noncurrent assets—other assets	$72	$48
Current liabilities—accrued compensation	(5)	(3)
Noncurrent liabilities—other liabilities	(336)	(335)
Pre-tax amounts recognized in AOCI:
Unrecognized net actuarial gain (loss)	101	6
Unrecognized prior service credit	8	8
Total	$109	$14


Change in Benefit Obligations
	2025	2024
Beginning projected benefit obligations	$782	$826
Service cost	42	39
Interest cost	24	21
Foreign exchange impact and other	114	(52)
Employee contributions	9	7
Actuarial (gains) losses	(116)	(40)
Benefits paid	(26)	(19)
Ending projected benefit obligations	$829	$782
Ending accumulated benefit obligations	$786	$748


Change in Plan Assets
	2025	2024
Beginning fair value of plan assets	$492	$485
Actual return	(3)	22
Employer contributions	23	23
Employee contributions	9	7
Foreign exchange impact	60	(31)
Benefits paid	(21)	(14)
Ending fair value of plan assets	$560	$492


Allocation of Plan Assets
	2026 Target	2025 Actual	2024 Actual
Equity securities	26%	32%	28%
Debt securities	41	39	40
Other	33	29	32
Total	100%	100%	100%


Valuation of Plan Assets
2025	Level 1	Level 2	Level 3	Total
Cash and cash equivalents	$16	$—	$—	$16
Equity securities	9	162	—	171
Debt securities	2	230	—	232
Other	4	83	54	141
Total	$31	$475	$54	$560

2024	Level 1	Level 2	Level 3	Total
Cash and cash equivalents	$17	$—	$—	$17
Equity securities	8	125	—	133
Debt securities	2	203	—	205
Other	4	76	57	137
Total	$31	$404	$57	$492

Our Level 3 pension plan assets primarily include guaranteed

investment contracts with insurance companies. The insurance

contracts guarantee us principal repayment and a fixed rate of

return. The $3 decrease in Level 3 pension plan assets is

primarily driven by the change in the corresponding pension

liability. We expect to contribute $24 to our defined benefit

pension plans in 2026.


Estimated Future Benefit Payments
2026	2027	2028	2029	2030	2031-2035
$29	$32	$33	$34	$38	$223


Dollar amounts in millions except per share amounts or as otherwise specified.	30


STRYKER CORPORATION		2025 FORM 10-K

NOTE 13 - SUMMARY OF QUARTERLY DATA (UNAUDITED)


2025 Quarters	Mar 31	Jun 30	Sep 30	Dec 31
Net sales	$5,866	$6,022	$6,057	$7,171
Gross profit	3,744	3,841	3,852	4,628
Earnings before income taxes	764	1,016	1,029	1,705
Net earnings	654	884	859	849
Net earnings per share of common stock:
Basic	$1.71	$2.32	$2.25	$2.21
Diluted	$1.69	$2.29	$2.22	$2.20
Dividends declared per share of common stock	$0.84	$0.84	$0.84	$0.88

2024 Quarters	Mar 31	Jun 30	Sep 30	Dec 31
Net sales	$5,243	$5,422	$5,494	$6,436
Gross profit	3,333	3,416	3,517	4,174
Earnings before income taxes	923	998	1,043	528
Net earnings	788	825	834	546
Net earnings per share of common stock:
Basic	$2.07	$2.17	$2.18	$1.43
Diluted	$2.05	$2.14	$2.16	$1.41
Dividends declared per share of common stock	$0.80	$0.80	$0.80	$0.84

NOTE 14 - SEGMENT AND GEOGRAPHIC DATA

We segregate our operations into two reportable business

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

Orthopaedics which aligns to our internal reporting structure and

how our Chief Operating Decision Maker (CODM) assesses

performance and allocates resources. The CODM is the Chief

Executive Officer. The CODM makes decisions on resource

allocation, assesses performance of the business, and monitors

budget versus actual results using segment operating income.

Information about total assets by segment is not disclosed

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

our CODM.

The Corporate and Other category shown in the table below

includes corporate and administration, corporate initiatives and

share-based compensation, which includes compensation related

to employee stock options, restricted stock units and

performance stock unit grants and director stock options and

restricted stock unit grants.


Segment Results	2025	2024	2023
MedSurg and Neurotechnology	$13,692	$11,753	$10,558
Orthopaedics	$11,424	10,842	9,940
Net sales	$25,116	$22,595	$20,498
MedSurg and Neurotechnology	$5,253	$4,748	$4,338
Orthopaedics	$3,248	3,030	2,834
Cost of sales	$8,501	$7,778	$7,172
MedSurg and Neurotechnology	$890	$739	$663
Orthopaedics	$615	621	578
Segment research, development and engineering expenses	$1,505	$1,360	$1,241
MedSurg and Neurotechnology	$3,618	$2,912	$2,667
Orthopaedics	$3,291	3,250	3,066
Segment selling, general and administrative expenses	$6,909	$6,162	$5,733
MedSurg and Neurotechnology	$231	$211	$195
Orthopaedics	478	489	422
Segment depreciation and amortization	$709	$700	$617
Corporate and Other	125	109	98
Amortization of intangible assets	732	623	635
Total depreciation and amortization	$1,566	$1,432	$1,350
MedSurg and Neurotechnology	$3,700	$3,143	$2,695
Orthopaedics	3,792	3,452	3,040
Segment operating income	$7,492	$6,595	$5,735
Items not allocated to segments:
Corporate and Other	$(889)	$(880)	$(780)
Inventory stepped up to fair value	(173)	(46)	—
Acquisition and integration-related charges	(335)	(108)	(20)
Amortization of intangible assets	(732)	(623)	(635)
Structural optimization and other special charges	(191)	(138)	(170)
Goodwill and other impairments	(170)	(977)	(36)
Medical device regulation	(38)	(58)	(96)
Recall-related matters	(58)	(40)	(18)
Regulatory and legal matters	(17)	(36)	(92)
Consolidated operating income	$4,889	$3,689	$3,888


Segment Capital Spending
Purchases of property, plant and equipment:	2025	2024	2023
Orthopaedics	$351	$340	$225
MedSurg and Neurotechnology	165	166	137
Total segment purchases of property, plant and equipment	$516	$506	$362
Corporate and Other	245	249	213
Total purchases of property, plant and equipment	$761	$755	$575

We measure the financial results of our reportable segments

using an internal performance measure that excludes acquisition

and integration-related charges, structural optimization and other

special charges, goodwill and other impairments, reserves for

certain product recall matters and reserves for certain legal and

regulatory matters. Identifiable assets are those assets used

exclusively in the operations of each business segment or

allocated when used jointly. Corporate assets are principally

property, plant and equipment and noncurrent assets.

The countries in which we have local revenue generating

operations have been combined into the following geographic

areas: the United States; Europe, Middle East, Africa; Asia

Pacific; and other foreign countries, which include Canada and

countries in the Latin American region. Net sales are reported

based on the geographic area of the Stryker location where the

sales to the customer originated.


Dollar amounts in millions except per share amounts or as otherwise specified.	31


STRYKER CORPORATION		2025 FORM 10-K


Geographic Information
	Net Sales			Net Property, Plant and Equipment
	2025	2024	2023	2025	2024
United States	$19,006	$16,943	$15,257	$2,084	$1,997
Europe, Middle East, Africa	3,181	2,897	2,618	1,562	1,260
Asia Pacific	2,164	2,020	1,946	97	75
Other countries	765	735	677	133	116
Total	$25,116	$22,595	$20,498	$3,876	$3,448

NOTE 15 - ASSET IMPAIRMENTS

During 2025, 2024 and 2023 we recorded impairment charges of

$109, $159 and $36 to write off long-lived and intangible assets

excluding long-lived assets held for sale which included charges

related to certain product line exits.

NOTE 16 - SALE OF SPINAL IMPLANTS BUSINESS

During the fourth quarter 2024 management committed to a plan

to sell certain assets associated with the Spinal Implants

business (disposal group) and such assets were classified as

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

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

fair value less cost to sell within goodwill and other impairments

in our Consolidated Statements of Earnings.

In April 2025 we completed the sale of the disposal group to the

Viscogliosi Brothers, LLC. In the first half of 2025 we recognized

immaterial impairment charges to record the disposal group at its

fair value less cost to sell within goodwill and other impairments

in our Consolidated Statements of Earnings. The fair value of the

disposal group and consideration received was measured using a

discounted cash flow analysis based upon the selling price and

unobservable inputs, such as market conditions and the rate

used to discount the estimated future cash flows to their present

value based on factors including the disposal group’s cost of

equity and market yield rates, which are Level 3 inputs.

Consideration could increase by up to $57 or decrease by up to

$245 based on the amount received.

The assets associated with the disposal group are reported in our

Orthopaedics segment at December 31, 2024. The assets and

liabilities held for sale at December 31, 2024 are classified within

prepaid expenses and other current assets and accrued

expenses and other liabilities in our Consolidated Balance

Sheets. The assets and liabilities of the disposal group at the

date of sale and at December 31, 2024 were as follows:


		Held for Sale
	Date of Sale	December 31
	2025	2024
Accounts receivable, net	$56	$62
Total inventories	195	183
Prepaid expenses and other current assets	27	10
Property, plant and equipment, net	53	51
Other intangibles, net	323	326
Noncurrent deferred income tax assets	9	9
Other noncurrent assets	179	171
Valuation allowance	(395)	(362)
Total assets	$447	$450

Accounts payable	$41	$28
Accrued compensation	20	26
Accrued expenses and other liabilities	24	29
Other noncurrent liabilities	27	21
Total liabilities	$112	$104


	PART II
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Item 8.	Financial Statements and Supplementary Data	11
Item 15.	Financial Statement Schedules	32


(a) 2.	Financial Statement Schedules
	The Consolidated Financial Statement schedule of Stryker Corporation and its subsidiaries is:
	SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
			Additions	Deductions
	Description	Balance at Beginning of Period	Charged to Costs & Expenses	Uncollectible Amounts Written Off, Net of Recoveries	Effect of Changes in Foreign Currency Exchange Rates	Balance at End of Period
	DEDUCTED FROM ASSET ACCOUNTS
	Allowance for Doubtful Accounts:
	Year ended December 31, 2025	$213	$95	$91	$1	$216
	Year ended December 31, 2024	$182	$69	$36	$2	$213
	Year ended December 31, 2023	$154	$69	$40	$1	$182

	All other schedules for which provision is made in the applicable accounting regulation of the United States Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.