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What changed in Stryker Corporation's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Stryker Corporation's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+267 added−246 removedSource: 10-K (2024-02-14) vs 10-K (2023-02-10)

Top changes in Stryker Corporation's 2023 10-K

267 paragraphs added · 246 removed · 178 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

36 edited+12 added−11 removed20 unchanged
Biggest changeOur DE&I strategy is centered around these three commitments: • Strengthen the diversity of our workforce • Advance a culture of inclusion, engagement and belonging • Maximize the power of inclusion to drive innovation and growth We are advancing our commitments through the following actions, among others: • Holding leadership accountable through transparent data, performance objectives and inclusion in our business review process • Engaging and inspiring all talent and empowering every employee to take action • Developing our people and processes by removing barriers and optimizing the power of diverse backgrounds, talents and perspectives • Attracting a diverse talent pool through focused outreach and ensuring an objective hiring process • Advancing our employee resource groups (ERGs) to expand reach through executive leadership, global presence, funding and aligned strategies • Positively impacting our customers and communities through building and strengthening external partnerships As of December 31, 2022 approximately 37.5% of our global employees were women and 27.5% of our employees in the United States identified as racially or ethnically diverse.
Biggest changeOur DE&I strategy is centered around these three commitments: • Strengthen the diversity of our workforce • Advance a culture of inclusion, engagement and belonging • Maximize the power of inclusion to drive innovation and growth We are advancing our commitments through the following actions, among others: • Increasing access to talent through strategic partnerships and campaigns • Growing and engaging talent with a range of opportunities to learn and develop • Aligning our employee resource groups to focus on creating community and belonging As of December 31, 2023 approximately 38.1% of our employees were women and 27.9% of our employees in the United States identified as racially or ethnically diverse.
The craniomaxillofacial implant offering includes cranial, maxillofacial and chest wall devices as well as dural substitutes and sealants. We are one of five leading global competitors in Instruments; the other four being Zimmer Biomet Holdings, Inc. (Zimmer), Medtronic plc., Johnson & Johnson and ConMed Linvatec, Inc. (a subsidiary of CONMED Corporation).
The craniomaxillofacial implant offering includes cranial, maxillofacial and chest wall devices as well as dural substitutes and sealants. We are one of five leading global competitors in Instruments; the other four being Zimmer Biomet Holdings, Inc. (Zimmer), Medtronic plc (Medtronic), Johnson & Johnson and ConMed Linvatec, Inc. (a subsidiary of CONMED Corporation).
Competition In each of our product lines we compete with local and global companies. The development of new and innovative products is important to our success in all areas of our business. Competition in research involving the development and improvement of new and existing products and processes is particularly significant.
Competition In each of our product lines we compete with local and global companies. The development of innovative products is important to our success in all areas of our business. Competition in research involving the development and improvement of new and existing products and processes is particularly significant.
More than 90% of our global employees participate in our annual engagement survey, which provides a valued platform for listening and allows us to take action based on the feedback collected. We supplement our annual engagement survey with targeted pulse surveys to gather feedback on topics relevant to the current climate.
More than 90% of our employees participate in our annual engagement survey, which provides a valued platform for listening and allows us to take action based on the feedback collected. We supplement our annual engagement survey with targeted pulse surveys to gather feedback on topics relevant to the current climate.
Certain of our products require extensive clinical testing, consisting of safety and efficacy studies, followed by pre-market approval (PMA) applications for specific surgical indications. Certain of our products also fall under other FDA classifications, such as drugs and Human Cells, Tissues, and Cellular and Tissue-Based Products.
Certain of our products require extensive clinical testing, consisting of safety and efficacy studies, followed by pre-market approval applications for specific surgical indications. Certain of our products also fall under other FDA classifications, such as drugs and Human Cells, Tissues, and Cellular and Tissue-Based Products.
In the United States the Medical Device Amendments of 1976 to the Federal Food, Drug and Cosmetic Act and its subsequent amendments and the regulations issued and proposed thereunder provide for federal regulation by the FDA of the design, manufacture and marketing of medical devices, including most of our products.
In the United States the Medical Device Amendments of 1976 to the Federal Food, Drug and Cosmetic Act and its subsequent amendments and the regulations issued and proposed thereunder provide for federal regulation by the United States Food and Drug Administration (FDA) of the design, manufacture and marketing of medical devices, including most of our products.
Our products are sold in over 75 countries through company-owned subsidiaries and branches as well as third-party dealers and distributors, and include surgical equipment and surgical navigation systems; endoscopic and communications systems; patient handling, emergency medical equipment and intensive care disposable products; clinical communication and workflow solutions; neurosurgical and neurovascular devices; implants used in joint replacement and trauma surgeries; Mako Robotic-Arm Assisted technology; spinal devices; as well as other products used in a variety of medical specialties.
Our products are sold in approximately 75 countries through company-owned subsidiaries and branches as well as third-party dealers and distributors, and include surgical equipment and surgical navigation systems; endoscopic and communications systems; patient handling, emergency medical equipment and intensive care disposable products; clinical communication and workflow solutions; neurosurgical and neurovascular devices; implants used in joint replacement and trauma surgeries; Mako Robotic-Arm Assisted technology; spinal devices; as well as other products used in a variety of medical specialties.
Most of our employees also have variable components to their compensation packages that reward employees based on individual, business unit and/or company-wide performance. Our proxy statement provides more detail on the competitive compensation programs we offer. Information about our Executive Officers As of January 31, 2023 Name Age Title First Became an Executive Officer Kevin A.
Most of our employees also have variable components to their compensation packages that reward employees based on individual, business unit and/or company-wide performance. Our proxy statement provides more detail on the competitive compensation programs we offer. Information about our Executive Officers As of January 31, 2024 Name Age Title First Became an Executive Officer Kevin A.
Dollar amounts in millions except per share amounts or as otherwise specified. 1 STRYKER CORPORATION 2022 FORM 10-K Orthopaedics and Spine Orthopaedics products consist primarily of implants used in total joint replacements, such as hip, knee and shoulder, and trauma and extremities surgeries.
Dollar amounts in millions except per share amounts or as otherwise specified. 1 STRYKER CORPORATION 2023 FORM 10-K Orthopaedics and Spine Orthopaedics products consist primarily of implants used in total joint replacements, such as hip, knee and shoulder, and trauma and extremities surgeries.
We encourage all employees to establish individual development plans, in partnership with their manager, to help employees gain the needed development experience to grow their careers. Employee Engagement An engaged workplace culture that drives performance and business outcomes is central to our mission. Listening to and learning from our employees forms the foundation of an engaging culture.
We encourage all employees to establish development objectives, in partnership with their manager, to help employees gain the needed development experience to grow their careers. Employee Engagement An engaged workplace culture that drives performance and business outcomes is central to our mission. Listening to and learning from our employees forms the foundation of an engaging culture.
Alongside our customers around the world, Stryker impacts more than 130 million patients annually. Our core values guide our behaviors and actions and are fundamental to how we execute our mission. Stryker was incorporated in Michigan in 1946 as the successor company to a business founded in 1941 by Dr. Homer H.
Alongside our customers around the world, we impact more than 150 million patients annually. Our core values guide our behaviors and actions and are fundamental to how we execute our mission. Stryker was incorporated in Michigan in 1946 as the successor company to a business founded in 1941 by Dr. Homer H.
Stiles 46 Group President, Orthopaedics and Spine 2021 Each of our executive officers was elected by our Board of Directors to serve in the office indicated until the first meeting of the Board of Directors following the annual meeting of shareholders in 2023 or until a successor is chosen and qualified or until his or her resignation or removal.
Stiles 47 Group President, Orthopaedics and Spine 2021 Each of our executive officers was elected by our Board of Directors to serve in the office indicated until the first meeting of the Board of Directors following the annual meeting of shareholders in 2024 or until a successor is chosen and qualified or until his or her resignation or removal.
We are required to comply with the unique regulatory requirements of each country within which we market and sell our products.
We are required to comply with the unique regulatory requirements of each country in which we market and sell our products.
We are one of four leading global competitors for joint replacement and trauma and extremities products and robotics; the other three being Zimmer, DePuy Synthes (a Johnson & Johnson company) and Smith & Nephew. We are one of five leading global competitors in Spine; the other four being Medtronic Sofamor Danek, Inc.
We are one of four leading global competitors for joint replacement and trauma and extremities products and robotics; the other three being Zimmer, DePuy Synthes (a Johnson & Johnson company) and Smith & Nephew. We are one of four leading global competitors in Spine; the other three being Medtronic Sofamor Danek, Inc. (a subsidiary of Medtronic), Globus Medical, Inc.
On December 31, 2022 we owned approximately 4,800 United States patents and approximately 7,300 patents in other countries. Seasonality Our business is generally not seasonal in nature; however, the number of orthopaedic implant surgeries is typically lower in the summer months, and sales of capital equipment are generally higher in the fourth quarter.
On December 31, 2023 we owned approximately 5,200 United States patents and approximately 7,700 patents in other countries. Seasonality Our business is generally not seasonal in nature; however, the number of orthopaedic implant surgeries is typically lower in the summer months, and sales of capital equipment are generally higher in the fourth quarter.
The European Union enacted the European Union Medical Device Regulation in May 2017 with an original effective date of May 2021 (the transition timeline is currently being reevaluated by the European Parliament), which imposes stricter requirements for the marketing and sale of medical devices, including in the areas of clinical evaluation requirements, quality systems, labeling and post-market surveillance.
The European Union enacted the European Union Medical Device Regulation in May 2017 with an original effective date of May 2021, which imposes stricter requirements for the marketing and sale of medical devices, including in the areas of clinical evaluation requirements, quality systems, labeling and post-market surveillance.
Fletcher 52 Vice President, Chief Legal Officer 2019 Viju S. Menon 55 Group President, Global Quality and Operations 2018 J. Andrew Pierce 49 Group President, MedSurg and Neurotechnology 2021 Spencer S.
Fletcher 53 Vice President, Chief Legal Officer 2019 Viju S. Menon 56 Group President, Global Quality and Operations 2018 J. Andrew Pierce 50 Group President, MedSurg and Neurotechnology 2021 Spencer S.
Additionally, we establish forums for collecting qualitative feedback to gain insights and identify actions we can take to ensure all employees feel included, engaged and able to achieve their full potential.
In addition, we establish forums for collecting qualitative feedback to gain insights and identify actions we can take so that employees feel included, engaged and able to achieve their full potential.
Available Information Our main corporate website address is www.stryker.com. Copies of our filings with the United States Securities and Exchange Commission (SEC) are available free of charge on our website within the "Investors Relations" section as soon as reasonably practicable after having been electronically filed or furnished to the SEC.
Copies of our filings with the United States Securities and Exchange Commission (SEC) are available free of charge on our website within the "Investors Relations" section as soon as reasonably practicable after having been electronically filed or furnished to the SEC. All SEC filings are also available at the SEC's website at www.sec.gov .
ITEM 1. BUSINESS. Stryker Corporation (Stryker or the Company) is one of the world's leading medical technology companies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in Medical and Surgical, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes.
ITEM 1. BUSINESS. Stryker Corporation (Stryker or the Company) is a global leader in medical technologies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in MedSurg, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes.
Net Sales by Reportable Segment 2022 2021 2020 MedSurg and Neurotechnology $ 10,611 58 % $ 9,538 56 % $ 8,345 58 % Orthopaedics and Spine 7,838 42 7,570 44 6,006 42 Total $ 18,449 100 % $ 17,108 100 % $ 14,351 100 % MedSurg and Neurotechnology MedSurg products include surgical equipment, patient and caregiver safety technologies, and navigation systems (Instruments), endoscopic and communications systems (Endoscopy), patient handling, emergency medical equipment, intensive care disposable products and clinical communication and workflow solutions (Medical), reprocessed and remanufactured medical devices, and other medical device products used in a variety of medical specialties.
Net Sales by Reportable Segment 2023 2022 2021 MedSurg and Neurotechnology $ 11,836 58 % $ 10,611 58 % $ 9,538 56 % Orthopaedics and Spine 8,662 42 7,838 42 7,570 44 Total $ 20,498 100 % $ 18,449 100 % $ 17,108 100 % MedSurg and Neurotechnology MedSurg products include surgical equipment, patient and caregiver safety technologies, and navigation systems (Instruments), endoscopic and communications systems and reprocessed and remanufactured medical devices (Endoscopy), and patient handling, emergency medical equipment, intensive care disposable products and clinical communication and workflow solutions (Medical).
Lobo 57 Chair, Chief Executive Officer and President 2011 Yin C. Becker 59 Vice President, Communications, Public Affairs and Corporate Marketing 2016 William E. Berry Jr. 57 Vice President, Chief Accounting Officer 2014 Glenn S. Boehnlein 61 Vice President, Chief Financial Officer 2016 M. Kathryn Fink 53 Vice President, Chief Human Resources Officer 2016 Robert S.
Lobo 58 Chair, Chief Executive Officer and President 2011 Yin C. Becker 60 Vice President, Chief Corporate Affairs Officer 2016 William E. Berry Jr. 58 Vice President, Chief Accounting Officer 2014 Glenn S. Boehnlein 62 Vice President, Chief Financial Officer 2016 M. Kathryn Fink 54 Vice President, Chief Human Resources Officer 2016 Robert S.
Each of our executive officers held the position above or served Stryker in various executive or administrative capacities for at least five years, except for Mr. Fletcher and Mr. Menon. Prior to joining Stryker in April 2019, Mr.
Each of our executive officers held the position above or served Stryker in various executive or administrative capacities for at least five years, except for Mr. Fletcher. Prior to joining Stryker in April 2019, Mr. Fletcher held various legal leadership roles with Johnson & Johnson for the previous 14 years, most recently as the Worldwide Vice President, Litigation.
We offer market-competitive base pay and benefits to our employees in countries around the world. We regularly evaluate our compensation and benefit offerings and levels, using recognized outside consulting firms to ensure fairness and competitiveness in our offerings.
Dollar amounts in millions except per share amounts or as otherwise specified. 3 STRYKER CORPORATION 2023 FORM 10-K We offer market-competitive base pay and benefits to our employees in countries around the world. We regularly evaluate our compensation and benefit offerings and levels, using recognized outside consulting firms to ensure internal fairness and competitiveness in our offerings.
Composition of Orthopaedics and Spine Net Sales 2022 2021 2020 Knees $ 1,997 25 % $ 1,848 25 % $ 1,567 26 % Hips 1,413 18 1,342 18 1,206 20 Trauma and Extremities 2,807 36 2,664 35 1,722 29 Spine 1,146 15 1,167 15 1,047 17 Other 475 6 549 7 464 8 Total $ 7,838 100 % $ 7,570 100 % $ 6,006 100 % In 2022 we moved to a full commercial launch of Insignia hip stem in the United States after first clinical use in December 2021.
Composition of Orthopaedics and Spine Net Sales 2023 2022 2021 Knees $ 2,273 26 % $ 1,997 25 % $ 1,848 25 % Hips 1,544 18 1,413 18 1,342 18 Trauma and Extremities 3,147 36 2,807 36 2,664 35 Spine 1,189 14 1,146 15 1,167 15 Other 509 6 475 6 549 7 Total $ 8,662 100 % $ 7,838 100 % $ 7,570 100 % In 2023 we continued our full commercial launch of the Insignia hip stem.
The FDA's Quality System regulations set forth standards for our product design and manufacturing processes, require the maintenance of certain records and provide for inspections of our facilities by the FDA. There are also certain requirements of state, local and foreign governments that must be complied with in the manufacture and marketing of our products.
The FDA's Quality System regulations set forth standards for our product design and manufacturing processes, require the maintenance of certain records and provide for inspections of our facilities by the FDA.
Stryker is also one of five leading global competitors in Neurotechnology; the other four being Medtronic, Johnson & Johnson, Terumo Corporation and Penumbra, Inc.
We are one of five leading global competitors in Medical; the other four being Baxter International Inc., Zoll Medical Corporation, Medline Industries and Ferno-Washington, Inc. We are one of five leading global competitors in Neurotechnology; the other four being Medtronic, Johnson & Johnson, Terumo Corporation and Penumbra, Inc.
To do so, we continue to focus on creating and maintaining a great workplace. We believe in attracting the right people, maintaining and building employee engagement and developing our employees. We believe when people are able to do what they do best, they will look forward to coming to work and, in turn, will deliver great business results.
Our success depends on our ability to attract the best talent. To do so, we continue to focus on creating and maintaining a great workplace. We believe in attracting the right people, maintaining and building employee engagement and developing our employees.
Dollar amounts in millions except per share amounts or as otherwise specified. 3 STRYKER CORPORATION 2022 FORM 10-K Competitive Pay and Benefits Our compensation and benefits programs are designed to attract and retain top talent and to incentivize performance and alignment to our mission and values.
Competitive Pay and Benefits Our compensation and benefits programs are designed to attract and retain top talent and to incentivize performance and alignment to our mission and values.
It is not possible to predict at this time the long-term impact of such cost containment measures on our future business. In addition, business practices in the healthcare industry are scrutinized, particularly in the United States, by federal and state government agencies. The resulting investigations and prosecutions carry the risk of significant civil and criminal penalties.
In addition, business practices in the healthcare industry are scrutinized, particularly in the United States, by federal and state government agencies. The resulting investigations and prosecutions carry the risk of significant civil and criminal penalties. Environment We are subject to various rules and regulation in the United States and internationally related to the protection of human health and the environment.
We believe our policies, practices and procedures are properly designed to comply, in all material respects, with applicable environmental laws and regulations. We do not expect compliance with these requirements to have a material effect on purchases of property, plant and equipment, cash flows, net earnings or competitive position.
We do not expect compliance with these requirements to have a material effect on purchases of property, plant and equipment, cash flows, net earnings or competitive position. Employees On December 31, 2023 we had approximately 52,000 employees globally, with approximately 27,000 employees in the United States.
In Endoscopy we compete with Karl Storz GmbH & Co., Olympus Optical Co. Ltd., Smith & Nephew plc (Smith & Nephew), ConMed Linvatec, Arthrex, Inc. and STERIS plc. In Medical our primary competitors are Baxter/Hill-Rom, Inc., Zoll Medical Corporation, Medline Industries and Ferno-Washington, Inc.
We are one of seven leading global competitors in Endoscopy; the other six being Karl Storz GmbH & Co., Olympus Optical Co. Ltd., Smith & Nephew plc (Smith & Nephew), ConMed Linvatec, Arthrex, Inc. and STERIS plc.
Environment We are subject to various rules and regulation in the United States and internationally related to the protection of human health and the environment. Our operations involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes.
Our operations involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. We believe our policies, practices and procedures are properly designed to comply, in all material respects, with applicable environmental laws and regulations.
Composition of MedSurg and Neurotechnology Net Sales 2022 2021 2020 Instruments $ 2,279 21 % $ 2,111 22 % $ 1,863 22 % Endoscopy 2,423 23 2,141 22 1,763 21 Medical 3,031 29 2,607 27 2,524 30 Neurovascular 1,200 11 1,188 13 973 12 Neuro Cranial 1,376 13 1,214 13 972 12 Other 302 3 277 3 250 3 Total $ 10,611 100 % $ 9,538 100 % $ 8,345 100 % In 2022 Instruments launched the next generation of the System 9 total joint power tool and the CD NXT power tool with automatic depth measurement allowing for fast, accurate and consistent digital depth measurement across a variety of procedures.
Composition of MedSurg and Neurotechnology Net Sales 2023 2022 2021 Instruments $ 2,569 22 % $ 2,279 21 % $ 2,111 22 % Endoscopy 3,033 26 2,725 26 2,418 25 Medical 3,459 29 3,031 29 2,607 27 Neurovascular 1,226 10 1,200 11 1,188 13 Neuro Cranial 1,549 13 1,376 13 1,214 13 Total $ 11,836 100 % $ 10,611 100 % $ 9,538 100 % In 2023 Instruments launched the Neptune S, which is the only constantly closed low-fluid waste management system on the market.
Initiatives to limit the growth of general healthcare expenses and hospital costs are ongoing in the markets in which we do business. These initiatives are sponsored by government agencies, legislative bodies and the private sector and include price regulation and competitive pricing.
These initiatives are sponsored by government agencies, legislative bodies and the private sector and include price regulation and competitive pricing. It is not possible to predict at this time the long-term impact of such cost containment measures on our future business.
Employees On December 31, 2022 we had approximately 51,000 employees globally, with approximately 27,000 employees in the United States. Our talented employees are an integral reason for our standing as one of the world's leading medical technology companies where, together with our customers, we are driven to make healthcare better.
Our talented employees are an integral reason for our standing as a global leader in medical technologies where, together with our customers, we are driven to make healthcare better. Our company values of integrity, accountability, people and performance are a key component of that mission. Our people, as one of our core values, continue to be a key focus.
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Endoscopy expanded its product offering for the Ambulatory Surgery Center (ASC) market with the launch of a new 4K 1688 Autoclavable Camera and SDC4K image capture device. Endoscopy also launched a new line of fluorescent capable laparoscopes to improve image quality in laparoscopic procedures. Medical completed the acquisition of Vocera Communications, Inc.
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Instruments also saw continued momentum from the launch of the System 9 total joint power tool. Endoscopy expanded its product offering with the launch of the 4K 1788 Camera platform that features several enhancements for a broader range of clinical applications and specialties, including urology, neurology and ear, nose and throat.
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(Vocera), a leader in digital care coordination and communication. Vocera brings a highly complementary and innovative portfolio to Medical that is expected to enhance our Advanced Digital Healthcare offerings and further advance our focus on preventing adverse events throughout the continuum of care. In addition, Medical launched the Power Pro 2 cot, the industry’s first connected ambulance cot.
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In addition, 1788 can be used to visualize indocyanine green and Cytalux. Medical launched the Xpedition powered stair chair, designed with an integrated workflow for first responders, maintaining the same storage footprint as Stryker's Stair-PRO and enhanced user interface for ease of use. Xpedition allows caregivers to safely and ergonomically move patients over a variety of terrains.
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In 2022 Neurovascular launched the Vecta 71/74 aspiration system in Japan, Korea, Australia and New Zealand as well as the Cat 7 distal access catheter in China. We also continued the launch of the next generation of the market leading Synchro guidewire in Asia Pacific.
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Neurovascular completed the acquisition of Cerus Endovascular Limited (Cerus), a leader in the design and development of neurointerventional devices for the treatment of intracranial aneurysms. The acquisition of Cerus is highly complementary to our Neurovascular business and strengthens our hemorrhagic portfolio globally.
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(a subsidiary of Medtronic), DePuy Synthes, Nuvasive, Inc. and Globus Medical, Inc.
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Neurovascular also launched the Target Tetra coil in the United States, Japan, Korea and Europe, Middle East, Africa for the treatment of small aneurysms and the Vecta 46 Intermediate Catheter in the United States, Japan and Korea.
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United States Food and Drug Administration (FDA) approval was received in 2021, Health Canada approval was received in the fourth quarter of 2022 and Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) approval is anticipated in the second half of 2023.
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Insignia received approval in Japan from the Pharmaceuticals and Medical Devices Agency and clinical cases occurred in December 2023. With the addition of Japan, Insignia is now being used clinically in six countries worldwide (United States, Canada, Japan, New Zealand, Singapore and Hong Kong).
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Where some electronic components have had limited availability due to recent global shortages, we have worked closely with suppliers to ensure this temporary supply constraint did not have a material adverse effect on continuity of supply.
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We also saw our first clinical use of the Triathlon Hinge revision knee system in August 2023. The Hinge product helps restore patient mobility in challenging cases and we anticipate moving towards full commercial launch in 2024. In 2023 we celebrated the 10th anniversary of the Triathlon Tritanium Baseplate.
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Additionally, as a result of the exit of the United Kingdom from the European Union (Brexit), new medical device regulations were released by the United Kingdom, which became effective January 1, 2021.
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Since its introduction in 2013, Triathlon Cementless, which includes the Triathlon Tritanium Baseplate, has delivered a decade of positive patient impact, demonstrated impressive survivorship data and has become a trusted solution for surgeons across the globe. In 2023 we celebrated the 10-year anniversary of the Mako Surgical Corp. acquisition and the Mako SmartRobotics™ technology.
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A gap analysis against the prior Medical Device Directive (MDD) has Dollar amounts in millions except per share amounts or as otherwise specified. 2 STRYKER CORPORATION 2022 FORM 10-K been completed and a plan is being executed for both the European Union and United Kingdom regulations to ensure compliance and minimize business disruption.
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Over the past ten years, this groundbreaking technology has transformed the orthopaedics landscape, resulting in tremendous patient impact for surgeons and their patients. Additionally, we reached the milestone of 1 million Mako SmartRobotics™ procedures performed globally.
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Our company values of integrity, accountability, people and performance are a key component of that mission. Our people, as one of our core values, continue to be a key focus. Our success is dependent on our ability to attract the best talent that reflects our diverse communities.
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There are also certain requirements of Dollar amounts in millions except per share amounts or as otherwise specified. 2 STRYKER CORPORATION 2023 FORM 10-K state, local and foreign governments that must be complied with in the manufacture and marketing of our products.
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Fletcher held various legal leadership roles with Johnson & Johnson for the previous 14 years, most recently as the Worldwide Vice President, Litigation. Prior to joining Stryker in April 2018, Mr. Menon held various senior supply chain leadership roles with Verizon Communications Inc. during the previous eight years, most recently as the Chief Supply Chain Officer.
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Extended transition timelines were published in 2023 which range from May 2026 through December 2028 depending on the type of device and our implementation is on track to meet these timelines. Initiatives to limit the growth of general healthcare expenses and hospital costs are ongoing in the markets we do business.
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All SEC filings are also available at the SEC's website at www.sec.gov .
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We believe when people are able to do what they do best, they will look forward to coming to work and, in turn, will deliver great business results.
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Available Information Our main corporate website address is www.stryker.com. The information on our website is not incorporated by reference into this report.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

71 edited+38 added−20 removed36 unchanged
Biggest changeOur global operations are subject to risks and potential costs, including changes in reimbursement, changes in regulatory requirements (such as the implementation timeline for the European Union Medical Device Regulation (MDR) enacted by the European Union in May 2017 and originally effective in May 2021), differing local product preferences and product requirements, diminished protection of intellectual property in some countries, tariffs and other trade protection measures, international trade disputes and import or export requirements, difficulty in staffing and managing foreign operations, introduction of new internal business structures and programs, political and economic instability, such as the United Kingdom's exit from the European Union (Brexit), and disruptions of transportation due to military conflicts, a global pandemic of contagious diseases like COVID-19 or otherwise, such as reduced availability of transportation, port closures, increased border controls or closures, increased transportation costs and increased security threats to our supply chain.
Biggest changeOur global operations are subject to risks and costs related to, among other things, changes in reimbursement; changes in regulatory requirements (such as the staggered phase-in period for manufacturers to comply with the European Union Medical Device Regulation (MDR) through December 2028); differing local product preferences and product requirements; diminished protection of intellectual property in some countries; tariffs and other trade protection measures, as well as increasing localization and protectionism policies in certain jurisdictions; international trade disputes and import or export requirements; difficulty in staffing and managing foreign operations; introduction of new internal business structures and programs; political and economic instability; current or potential geopolitical conflicts, such as the tensions between China and Taiwan and the wars in Ukraine and the Middle East, and related sanctions and other developments; disruptions of transportation, including port closures, increased border controls or border closures or reduced transportation availability, due to military conflicts, a global pandemic of contagious diseases like COVID-19 or otherwise; increased energy or transportation costs; fluctuations in currency exchange rates and financial markets; and increased security threats to our supply chain.
An inability to successfully manage the implementation of our new commercial global enterprise resource planning (ERP) system could adversely affect our operations and operating results: We are in the process of implementing a new commercial global ERP system. This system will replace many of our existing operating and financial systems.
An inability to successfully manage the implementation of our new commercial global enterprise resource planning (ERP) system could adversely affect our operations and operating results: We are in the process of implementing a new commercial ERP system. This system will replace many of our existing operating and financial systems.
Regardless of outcome, such claims are expensive to defend and divert management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringement against us could result in payment of significant monetary damages and/or royalty payments or negatively impact our ability to sell current or future products in the affected category.
Regardless of the outcome, such claims are expensive to defend and divert management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringement against us could result in payment of significant monetary damages and/or royalty payments or negatively impact our ability to sell current or future products in the affected category.
The implementation is a major undertaking, both financially and from a management and personnel perspective. Any disruptions, delays or deficiencies in the design and implementation of our new ERP system could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.
The implementation is a major undertaking, both financially and from a management and personnel perspective. Any material disruptions, delays or deficiencies in the design and implementation of our new ERP system could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.
We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that affect the likelihood that actual results will differ from those contained in the forward-looking statements.
We expressly disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that affect the likelihood that actual results will differ from those contained in the forward-looking statements.
We have principal manufacturing and distribution facilities in the United States in Arizona, California, Florida, Illinois, Indiana, Michigan, Minnesota, New Jersey, Puerto Rico, Tennessee, Texas, Utah, Virginia and Washington, and outside the United States in China, France, Germany, Ireland, Mexico, the Netherlands, Switzerland and Turkey.
We have principal manufacturing and distribution facilities in the United States in Arizona, California, Florida, Illinois, Indiana, Michigan, Minnesota, New Jersey, Puerto Rico, Tennessee, Texas, Utah, Virginia and Washington, and outside the United States in China, France, Germany, Ireland, Mexico, the Netherlands, Poland, Switzerland and Turkey.
If our IT systems are damaged or cease to function properly, the networks or service providers we rely upon fail to function properly, or we or one of our third-party providers suffer a loss or disclosure of our business or stakeholder information due to any number of causes ranging from catastrophic events or power outages to improper data handling or security breaches and our business continuity plans do not effectively address these failures on a timely basis, we may be exposed to reputational, competitive and business harm as well as litigation and regulatory action.
If our IT systems are damaged or cease to function properly, the networks or service providers we rely upon fail to function properly, or we or one of our third-party providers suffer a loss or disclosure of our business or stakeholder information due to any number of causes ranging from catastrophic events or power outages to improper data handling or security breaches or unauthorized access and our business continuity plans do not effectively address these failures on a timely basis, we may be exposed to reputational, competitive and business harm as well as litigation and regulatory action.
Such developments could result in increased compliance costs and adverse impacts on raw material sourcing, manufacturing operations and the distribution of our products, which could adversely affect our operations and operating results.
Such developments could result in increased compliance costs and adverse impacts on raw material availability and sourcing, manufacturing operations and the distribution of our products, which could adversely affect our operations and operating results.
In addition, a greater number of our employees working remotely has exposed us, and may continue to expose us, to greater risks related to cybersecurity and cyber-liability.
In addition, a significant number of our employees working remotely has exposed us, and may continue to expose us, to greater risks related to cybersecurity and cyber-liability.
In addition, we have experienced, and could continue to experience, loss of sales and profits due to delayed payments or insolvency of healthcare professionals, hospitals and other customers and suppliers facing liquidity issues due to the current macroeconomic environment, type and number of conditions being treated or for other reasons.
In addition, we have experienced, and could in the future experience, loss of sales and profits due to delayed payments or insolvency of healthcare professionals, hospitals and other customers and suppliers facing liquidity issues due to the current macroeconomic environment, type and number of conditions being treated or for other reasons.
In the event of a significant interruption, we may experience lengthy delays in resuming production of affected products due to the need for regulatory approvals, and we may experience loss of market share, additional expense and harm to our reputation.
In the event of a significant interruption, we may experience lengthy delays in resuming production or distribution of affected products due to the need for regulatory approvals, and we may experience loss of market share, additional expense and harm to our reputation.
We are continuing to evaluate the impact of tax reform in the countries in which we operate as new guidance and regulations are published. In addition, further changes in the tax laws could arise, including as a result of the base erosion and profit shifting (BEPS) project undertaken by the Organisation for Economic Cooperation and Development (OECD).
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).
In this regard, the accelerated development and production of products and services to address medical and other requirements could increase the risk of regulatory enforcement actions, product defects or related claims.
In this regard, the accelerated development and production of products and services to address medical and other requirements could increase the risk of regulatory enforcement actions, product defects or related claims or reputational harm.
ITEM 1A. RISK FACTORS. This report contains statements that are not historical facts and are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current projections about operations, industry conditions, financial condition and liquidity.
ITEM 1A. RISK FACTORS. This report contains statements that are not historical facts and are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current projections about operations, industry conditions, financial condition and liquidity.
New business models, products and surgical procedures are introduced on an ongoing basis and our present or future products could be rendered obsolete or uneconomical by technological advances by us, as we continue to innovate to address physician and patient needs, or by our existing competitors and new market entrants.
New business models, products and surgical procedures are introduced on an ongoing basis and our present or future products could be rendered obsolete or uneconomical by internal or external technological advances, as we continue to innovate to address physician and patient needs, or by our existing competitors and new market entrants.
The process of obtaining licenses, regulatory clearances and/or approvals to market and sell our products can be costly and time consuming and the clearances and/or approvals might not be granted timely.
In addition, the process of obtaining licenses, regulatory clearances and/or approvals to market and sell our products can be costly and time consuming and the clearances and/or approvals might not be granted timely.
BUSINESS AND OPERATIONAL RISKS We use a variety of raw materials, components, devices and third-party services in our global supply chains, production and distribution processes; significant shortages, price increases or unavailability of third-party services could increase our operating costs, require significant capital expenditures, or adversely impact the competitive position of our products: Our reliance on certain suppliers to secure raw materials, components and finished devices, and on certain third-party service providers, such as sterilization service providers, exposes us to product shortages and unanticipated increases in prices, whether due to inflationary pressure, regulatory changes, litigation exposure or otherwise.
BUSINESS AND OPERATIONAL RISKS We use a variety of raw materials, components, devices and third-party services in our global supply chains, production and distribution processes; significant shortages, price increases or unavailability of third-party services have in the past increased, and could in the future increase, our operating costs and could require significant capital expenditures or adversely impact the competitive position of our products: Our reliance on certain suppliers to secure raw materials, components and finished devices, and on certain third-party service providers, such as sterilization service providers, exposes us to product shortages and unanticipated increases in prices, whether due to inflationary pressure, regulatory changes, litigation exposure, geopolitical tensions or otherwise.
Inflation in the United States and in many of the countries where we conduct business has resulted in, and may continue to result in, higher interest rates and increased capital, shipping and labor costs, weakening exchange rates against the United States Dollar and other similar effects.
Inflation in the United States and in many of the countries where we conduct business has resulted in, and may continue to result in, higher interest rates and increased capital, energy, shipping and labor costs, weakening or strengthening exchange rates against the United States Dollar and other similar effects.
In the event of an interruption in manufacturing, we may be unable to move quickly to alternate means of producing affected products to meet customer demand.
In the event of an interruption in manufacturing, we may be unable to move quickly to alternate means of producing and distributing affected products to meet customer demand.
If we fail to comply with applicable regulatory requirements, we may be subject to a range of sanctions, including substantial fines, warning letters that require corrective action, product seizures, recalls, the suspension of product manufacturing, revocation of approvals, exclusion from future participation in government healthcare programs, substantial fines and criminal prosecution.
If we fail to comply with applicable regulatory requirements, we may be subject to a range of sanctions, including substantial fines, warning letters that require corrective action, product seizures, recalls, import restrictions, the suspension of product manufacturing or sales, revocation of approvals, exclusion from future participation in government healthcare programs, substantial fines and criminal prosecution.
MARKET RISKS We have exposure to exchange rate fluctuations on cross border transactions and translation of local currency results into United States Dollars: We report our financial results in United States Dollars and approximately 30% of our net sales are denominated in foreign currencies, including the Australian Dollar, British Pound, Canadian Dollar, Chinese Yuan, Euro and Japanese Yen.
MARKET RISKS We have exposure to exchange rate fluctuations on cross border transactions and translation of local currency results into United States Dollars: We report our financial results in United States Dollars and approximately 25% of our net sales are denominated in foreign currencies, including the Australian Dollar, British Pound, Canadian Dollar, Euro and Japanese Yen.
Moreover, the increasing attention to corporate ESG initiatives could also result in reduced demand for our products, reduced profits and increased investigations and litigation. If we are unable to satisfy evolving criteria, investors may conclude that our policies and/or actions with respect to ESG matters are inadequate.
Moreover, the increasing attention to corporate responsibility initiatives could also result in reduced demand for our products, reduced profits and increased investigations and litigation. If we are unable to satisfy evolving criteria, investors and other stakeholders may conclude that our policies and/or actions with respect to corporate responsibility matters are inadequate.
In addition, increased public concern over climate change could result in new legal or regulatory requirements designed to mitigate the effects of climate change, which could include the adoption of more stringent environmental laws and regulations or stricter enforcement of existing laws and regulations.
In addition, increased public concern over climate change has resulted in certain, and could result in additional, new legal or regulatory requirements designed to mitigate the effects of climate change, which could include the adoption of more stringent environmental laws and regulations or stricter enforcement of existing laws and regulations.
Although we have made investments seeking to address these threats, including monitoring of networks and systems, hiring of experts, employee training and security policies for employees and third-party providers, the techniques used in these attacks change frequently and may be difficult to detect for periods of time and we may face difficulties in anticipating and implementing adequate preventative measures.
Although we have made investments and expect to continue to make investments seeking to address these threats, including monitoring of networks and systems, use of artificial intelligence, hiring of experts, employee training and security policies for employees and third-party providers, the techniques used in these attacks change frequently and may be difficult to detect for periods of time and we may face difficulties in anticipating and implementing adequate preventative measures.
Income tax authorities regularly perform audits of our income tax filings. Income tax audits associated with the allocation of income and other complex issues, including inventory transfer pricing and cost sharing, product royalty and foreign branch arrangements, may require an extended period to resolve and may result in significant income tax adjustments.
Income tax audits associated with the allocation of income and other complex issues, including inventory transfer pricing and cost sharing, product royalty and foreign branch arrangements, may require an extended period to resolve and may result in significant income tax adjustments.
It is not possible to predict whether elective medical procedures will again be suspended or reduced in the future and, to the extent individuals and customers are required to delay or cancel elective procedures as a result of a resurgence of the COVID-19 pandemic or otherwise, our business, cash flows, financial condition and results of operations could be negatively affected.
It is not possible to predict whether elective medical procedures will again be suspended or reduced in the future and, to the extent individuals and customers are required to delay or cancel elective procedures, our business, cash flows, financial condition and results of operations could be negatively affected.
Our existing competitors and new market entrants may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater access to clinical information to support ongoing product position in the market, have greater financial, marketing and other resources or be more successful in attracting potential customers, employees and strategic partners.
Our existing competitors and new market entrants may respond more quickly to or integrate new or emerging technologies such as robotics, artificial intelligence and machine learning in their product offerings, undertake more extensive marketing campaigns, have greater access to clinical information to support ongoing product position in the market, have greater financial, marketing and other resources or be more successful in attracting potential customers, employees and strategic partners.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) RISKS We could be negatively impacted by ESG and sustainability-related matters: Governments, investors, customers, employees and other stakeholders are increasingly focusing on corporate ESG practices and disclosures, and expectations in this area are rapidly evolving. On occasion, we announce new initiatives, including goals, under our Corporate Responsibility framework.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE RISKS We could be negatively impacted by corporate responsibility and sustainability-related matters: Governments, investors, customers, employees and other stakeholders have been increasingly focused on corporate responsibility practices and disclosures, and expectations in this area continue to rapidly evolve. On occasion, we announce new initiatives, including goals, under our corporate responsibility framework.
Our business could be adversely impacted if we are unable to successfully manage these and other risks of global operations in an increasingly volatile environment.
Many of these risks are rapidly evolving and subject to an accelerating pace of change. Our business could be adversely impacted if we are unable to successfully manage these and other risks of global operations in an increasingly volatile environment.
We cannot predict what other healthcare programs and regulations will ultimately be implemented at the federal or state level or the effect that any future legislation or regulation in the United States may have on our business.
We cannot predict what healthcare programs and regulations could ultimately be implemented at the federal or state level or the effect that any future legislation or regulation in the United States may have on our business. Similarly, we cannot predict the impact that healthcare reform legislation in other countries where we sell our products may have on our business.
We are subject to federal, state and foreign healthcare regulations, including anti-bribery, anti-corruption, anti-kickback and false claims laws, globally and could face substantial penalties if we fail to comply with such regulations and laws: The relationships that we, and third parties that market and/or sell our products, have with healthcare professionals, such as physicians, hospitals, healthcare organizations and others, are subject to scrutiny under various state and federal laws often referred to collectively as healthcare fraud and abuse laws.
Dollar amounts in millions except per share amounts or as otherwise specified. 8 STRYKER CORPORATION 2023 FORM 10-K We are subject to federal, state and foreign healthcare regulations, including anti-bribery, anti-corruption, anti-kickback and false claims laws, globally and could face substantial penalties if we fail to comply with such regulations and laws: The relationships that we, and third parties that market and/or sell our products, have with healthcare professionals, such as physicians, hospitals, healthcare organizations and others, are subject to scrutiny under various state and federal laws often referred to collectively as healthcare fraud and abuse laws.
Violations or alleged violations of these laws could result in litigation and we may be subject to criminal or civil penalties and sanctions, including substantial fines, imprisonment of current or former employees and exclusion from participation in governmental healthcare programs.
Violations or alleged violations of these laws could result in litigation and we may be subject to criminal or civil penalties and sanctions, including substantial fines, imprisonment of current or former employees and exclusion from participation in governmental healthcare programs. In 2013 and 2018 we settled claims brought by the SEC related to the FCPA.
The criteria by which our ESG practices are assessed may change due to the quickly evolving landscape, which could result in greater regulatory requirements or expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.
We cannot guarantee that we will achieve our announced corporate responsibility goals and initiatives. The criteria by which our corporate responsibility practices are assessed may change due to the quickly evolving landscape, which could result in greater regulatory requirements or expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.
In addition, our products in certain divisions, such as Medical, have experienced, and could continue to experience, higher demand as our customers have focused on treating COVID-19 patients and preparing for future public health emergencies.
In addition, during the COVID-19 pandemic our products in certain divisions, such as Medical, experienced higher demand as our customers were focused on treating COVID-19 patients and preparing for future public health emergencies.
Inflation may also cause our customers to reduce or delay orders for our products and services, which could have a material adverse impact on our sales and results of operations.
Inflation, higher interest rates or interest rate volatility may also cause our customers to reduce or delay orders for our products and services. Any of the foregoing could have a material adverse impact on our sales, profitability and results of operations.
In certain cases, we may not be able to establish additional or replacement suppliers for such materials or service providers for such services in a timely or cost-effective manner, largely as a result of FDA and other regulations that require, among other things, validation of materials, components and services prior to Dollar amounts in millions except per share amounts or as otherwise specified. 4 STRYKER CORPORATION 2022 FORM 10-K their use in or with our products.
In certain cases, we may not be able to establish additional or replacement suppliers for such materials or service providers for such services in a timely or cost-effective manner, often as a result of FDA and other regulations that require, among other things, validation of materials, components and services prior to their use in or with our products.
If sole-source suppliers or service providers are acquired or were unable or unwilling to deliver these materials or services, we may not be able to manufacture or have available one or more products during such period of unavailability and our business could suffer.
If sole-source suppliers or service providers are unable or unwilling to deliver these materials or services as a result of financial difficulties, acquisition by a third party, natural disasters or otherwise, we may not be able to manufacture or have available one or more products during such period of unavailability and our business could suffer.
Other governmental authorities around the world are imposing similar types of laws and regulations, data breach reporting and penalties for non-compliance and increasing security requirements.
Various U.S. states and other governmental authorities around the world have imposed or are considering similar types of laws and regulations, data breach reporting and penalties for non-compliance and increasing security requirements.
For example, China has implemented a volume-based procurement process designed to decrease prices for medical devices and other products. This has already impacted our joint replacement and spine businesses on a national level, and our trauma and certain neurovascular products on a provincial level, and we expect further adoption of volume-based procurement provincially or nationally in China in 2023.
This has already impacted our joint replacement and spine businesses on a national level, and our trauma and certain neurovascular products on a provincial level, and we expect further adoption of volume-based procurement provincially or nationally in China in 2024.
Additional capital that we may require in the future may not be available to us or may only be available to us on unfavorable terms, which could negatively affect our liquidity: Our future capital requirements will depend on many factors, including operating requirements, current and future acquisitions and the need to refinance existing debt.
Additional capital that we may require in the future may not be available to us or may only be available to us on unfavorable terms, which could negatively affect our liquidity: Our future capital requirements will depend on many factors, including operating requirements, current and future Dollar amounts in millions except per share amounts or as otherwise specified. 9 STRYKER CORPORATION 2023 FORM 10-K acquisitions and the need to refinance existing debt.
If we fail or are perceived to have failed to achieve previously announced initiatives or goals or to accurately disclose our progress, our reputation, business, financial condition and results of operations could be adversely impacted.
If we fail or are perceived to have failed to achieve previously announced initiatives or goals, comply with corporate responsibility laws and regulations, meet evolving expectations or accurately disclose our progress, we could face legal and regulatory proceedings and our reputation, business, financial condition and results of operations could be adversely impacted.
Our ability to continue to market, distribute and sell our products may be at risk if the indirect channels become insolvent, choose to sell competitive products, choose to stop selling medical technology or are subject to new or additional government regulation. We are subject to risks associated with our extensive global operations: We develop, manufacture and distribute our products globally.
Our ability to continue to market, distribute and sell our products may be at risk if the indirect channels become insolvent, choose to sell competitive products, choose to stop selling medical technology, fail to adhere to Stryker requirements or are subject to new or additional government regulation.
We may be unable to attract and retain key employees: Our sales, technical and other key personnel play an integral role in the development, marketing and selling of new and existing products.
We may be unable to attract, develop and retain executives and key employees: Our sales, technical and other key personnel play an integral role in the development, marketing and selling of new and existing products. Our future performance also depends in large part on the continued services of our senior management.
Further, in November 2020 the European Parliament voted in favor of the European Representative Actions Directive (the Collective Redress Directive), which mandates a class action regime in each member state to facilitate domestic and cross-border class actions in a wide range of areas, including product liability claims with medical devices.
These matters are subject to uncertainties and outcomes are not predictable. Further, the European Representative Actions Directive (the Collective Redress Directive), which became effective in 2023, mandates a class action regime in each EU member state to facilitate domestic and cross-border class actions in a wide range of areas, including product liability claims with medical devices.
Dollar amounts in millions except per share amounts or as otherwise specified. 8 STRYKER CORPORATION 2022 FORM 10-K Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products: The medical device industry is characterized by extensive intellectual property litigation and, from time to time, we are the subject of claims of infringement or misappropriation.
Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products: The medical device industry is characterized by extensive intellectual property litigation and, from time to time, we are the subject of claims of infringement or misappropriation.
In 2013 and 2018 we settled claims brought by the United States Securities and Exchange Commission (SEC) related to the FCPA. Pursuant to these settlements, we paid fines and penalties and retained an independent compliance consultant. We continue to implement recommendations that resulted from the independent compliance consultant’s review of our commercial practices to enhance our commercial business practices.
Pursuant to these settlements, we paid fines and penalties and retained an independent compliance consultant. We continue to implement recommendations that resulted from the independent compliance consultant’s review of our commercial practices to enhance our commercial business practices.
Some of our products and services, and information technology systems, contain or use open-source software, which poses particular risks, including potential security vulnerabilities, licensing compliance issues and quality issues.
Some of our products and services, and information technology systems, contain or use open-source software, which poses particular risks, including potential security vulnerabilities, licensing compliance issues and quality issues. We, our customers and third-party hosting services have experienced, and expect to continue to experience, security breaches of, or unauthorized access to, products or systems.
The Collective Redress Directive will take effect in 2023 after a 24-month implementation period. The Collective Redress Directive, when implemented, could result in additional litigation risks and significant legal expenses for us. In addition, we may incur significant legal expenses for product liability claims regardless of whether we are found to be liable.
The Collective Redress Directive could result in additional litigation risks and significant legal expenses. In addition, we may incur significant legal expenses or reputational damage for product liability claims regardless of whether we are found to be liable.
Elective medical procedures were suspended or reduced at various times since the beginning of the COVID-19 pandemic in many of the markets where our products are marketed and sold, which negatively affected our business, cash flows, financial condition and results of operations.
Elective medical procedures were suspended or reduced at various times during the COVID-19 pandemic in many of the markets where our products are marketed and sold, which negatively affected Dollar amounts in millions except per share amounts or as otherwise specified. 7 STRYKER CORPORATION 2023 FORM 10-K our business, cash flows, financial condition and results of operations.
We operate in a highly competitive industry in which competition in the development and improvement of new and existing products is significant: The markets in which we compete are highly competitive.
We operate in a highly competitive industry in which competition in the development and improvement of new and existing products is significant: The markets in which we compete are highly competitive, and a significant element of our strategy is to increase revenue growth by focusing on innovation and new product development.
The extent of the pandemic’s continuing effect on our business and industry will depend on future developments, including future resurgences and/or the spread of variants, and the successful development, distribution and acceptance of vaccines for those variants, all of which are uncertain and difficult to predict.
The extent of any future pandemic or public health emergency’s effect on our business and industry will depend on, among other things, the severity of the disease, the successful development, distribution and acceptance of vaccines for diseases, future resurgences and/or the spread of disease variants, all of which are uncertain and difficult to predict.
In addition, during 2022 the market experienced increasing inflationary pressures in part due to global supply chain disruptions, labor shortages and other impacts following the COVID-19 pandemic. We expect these inflationary pressures will continue.
Any of the foregoing risks could have a material adverse impact on our profitability and results of operations. In addition, since 2022 the market has experienced increasing inflationary pressures in part due to global supply chain disruptions, labor shortages and other impacts following the COVID-19 pandemic. We expect these inflationary pressures will continue.
We are subject to cost containment measures in the United States and other countries resulting in pricing pressures: Initiatives to limit the growth of general healthcare expenses and hospital costs are ongoing in the markets in which we do business. These initiatives are sponsored by government agencies, legislative bodies and the private sector and include price regulation and competitive pricing.
We are subject to pricing pressures as a result of cost containment measures in the United States and other countries and other factors: Initiatives to limit the growth of general healthcare expenses and hospital costs are ongoing in the markets in which we do business.
We manage a portion of our exposure to Dollar amounts in millions except per share amounts or as otherwise specified. 6 STRYKER CORPORATION 2022 FORM 10-K self-insured losses through a wholly-owned captive insurance company. Insurance coverage limits provided by third-party insurers and/or our captive insurance company may not be sufficient to fully cover unanticipated losses.
We manage a portion of our exposure to self-insured losses through a wholly-owned captive insurance company. Insurance coverage limits provided by third-party insurers and/or our captive insurance company may not be sufficient to fully cover certain losses we may experience.
Some important factors that could cause our actual results to differ from our expectations in any forward-looking statements include the risks discussed below. Our operations and financial results are subject to various risks and uncertainties discussed below that could materially and adversely affect our business, cash flows, financial condition and results of operations.
Our operations and financial results are subject to various risks and uncertainties discussed below that could materially and adversely affect our business, cash flows, financial condition and results of operations.
When cybersecurity incidents occur, we follow our incident response protocols and address them in accordance with applicable governmental regulations and other legal requirements. Our response to these incidents and our investments to protect our information technology infrastructure and data may not shield us from significant losses and potential liability or prevent any future interruption or breach of our systems.
Our response to these incidents and our investments to protect our product offerings and information technology infrastructure and data may not shield us from significant losses and potential liability or prevent any future interruption or breach of our systems.
Ongoing inflationary pressures and other macroeconomic factors could also increase the cost of labor and harm our ability to recruit, hire and retain talented employees. In addition, if we are unable to maintain an inclusive culture that aligns our diverse workforce with our mission and values, this could adversely impact our ability to recruit, hire, develop and retain key talent.
Additionally, if we are unable to maintain an inclusive culture that aligns our diverse workforce with our mission and values, it could adversely impact our ability to recruit, hire, develop and retain key talent.
We have experienced, and could continue to experience, delays and shortages in the supply of components or materials and delays in delivering our products that may result in our inability to satisfy consumer demand for our products in a timely manner or at all, which could harm our reputation, future sales and profitability.
We have as a result experienced, and could in the future experience, delays in, or the suspension of, our manufacturing operations, sales activities, research and product development activities, regulatory work streams, clinical development programs and other important commercial functions, which may result in our inability to satisfy consumer demand for our products in a timely manner or at all and which could harm our reputation, future sales and profitability.
We could be negatively impacted by future changes in the allocation of income to each of the income tax jurisdictions in which we operate: We operate in multiple income tax jurisdictions both in the United States and internationally. Accordingly, our management must determine the appropriate allocation of income to each jurisdiction based on current interpretations of complex income tax regulations.
These changes, and any additional contemplated changes, could increase tax expense. We could be negatively impacted by future changes in the allocation of income to each of the income tax jurisdictions in which we operate: We operate in multiple income tax jurisdictions both in the United States and internationally.
We rely on indirect distribution channels and major distributors that are independent of Stryker: In many markets we rely on indirect distribution channels to market, distribute and sell our products. These indirect channels often are the main point of contact for the healthcare professionals and healthcare organization customers who buy and use our products.
These indirect channels often are the main point of contact for the healthcare professionals and healthcare organization customers who buy and use our products.
We have experienced, and may continue to experience, inflationary increases in manufacturing costs and operating expenses, as well as negative impacts from weakening exchange rates against the United States Dollar, and we may not be able to pass these cost increases on to our customers in a timely manner, which could have a material adverse impact on our profitability and results of operations.
We have experienced, and may continue to experience, inflationary increases in manufacturing costs and operating expenses, as well as negative impacts from weakening or strengthening exchange rates against the United States Dollar.
Such investments are inherently risky, and we cannot guarantee that any acquisition will be successful or will not have a material unfavorable impact on us.
We may be unable to capitalize on previous or future acquisitions: In addition to internally developed products, we invest in new products and technologies through acquisitions, including our acquisition of Cerus in 2023. Such investments are inherently risky, and we cannot guarantee that any acquisition will be successful or will not have a material unfavorable impact on us.
This framework is aligned with our areas of interest, which include environment and sustainability, social impact, diversity, equity and inclusion and supply chain management, among others.
This framework is aligned with our areas of interest, which include environment and sustainability, social impact, diversity, equity and inclusion and supply chain management, among others. Implementation of these goals and initiatives involves risks and uncertainties, requires investments and depends in part on third-party performance or data that is outside our control.
A prolonged or reemerging impact of COVID-19 (or other pandemics in the future) also could heighten many of the other risks described in this report.
The COVID-19 pandemic materially impacted us, and any future pandemic or public health emergency could materially impact us and would heighten many of the other risks described in this report.
If the shortage persists, we may not be able to obtain electronic components from our suppliers on a timely basis, or at all, or identify any alternative suppliers to provide the electronic components we need to produce our products.
For example, in the past we experienced limited product availability due to an electronic components shortage in certain product lines. If a similar shortage occurs in the future with respect to other raw materials or components, we may not be able to obtain them from our suppliers on a timely basis, or at all, or identify alternative suppliers.
Further, the remote or hybrid work environment that has become commonplace as a result of the COVID-19 pandemic could harm our culture and/or decrease employee engagement, which could adversely impact our ability to recruit, hire, develop and retain a talented, competitive workforce.
Further, our remote and hybrid work practices, ability to provide flexible and alternative work arrangements, and our practices relating to corporate responsibility may not meet the needs or expectations of our employees, including senior management or other key employees, which could negatively impact our ability to attract and retain highly skilled employees, or may harm our culture and/or decrease employee engagement, which could adversely impact our ability to recruit, hire, develop and retain a talented, competitive workforce.
Dollar amounts in millions except per share amounts or as otherwise specified. 5 STRYKER CORPORATION 2022 FORM 10-K We may be unable to capitalize on previous or future acquisitions: In addition to internally developed products, we invest in new products and technologies through acquisitions, including our acquisition of Vocera.
If we are unable to develop and launch Dollar amounts in millions except per share amounts or as otherwise specified. 5 STRYKER CORPORATION 2023 FORM 10-K new products, our ability to maintain or expand our market position in the markets in which we participate may be negatively impacted.
A significant number of our customers, global suppliers, distributors and manufacturing facilities are located in regions that were affected by the pandemic and those operations have been, and could continue to be, materially affected by restrictive measures implemented in response to the pandemic.
Our customers, global suppliers, distributors and manufacturing facilities have in the past been, and could in the future be, materially affected by restrictive measures implemented in response to a pandemic or public health emergency, which has in the past caused and could in the future cause them to be unable to hire and retain employees, distribute or use our products or provide required services.
We could experience a failure of a key information technology system, process or site or a breach of information security, including a cybersecurity breach or failure of one or more key information technology systems, networks, processes, associated sites or service providers: We rely extensively on information technology (IT) systems to conduct business.
In addition, we cannot be certain that the businesses we acquire will become or remain profitable. We, our business partners or our third-party vendors could experience a material failure or breach of a key information technology system, network, process or site: We rely extensively on information technology (IT) systems to conduct business.
In response, various governmental authorities and private enterprises implemented, and may continue to implement or reimplement, numerous measures, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns.
Pandemics and public health emergencies, and the fear thereof, have in the past materially adversely affected and could in the future materially adversely affect, our operations, supply chain, manufacturing, product distribution, customers and other business activities: In connection with COVID-19, governmental authorities and private enterprises implemented, and may in the future implement in connection with another pandemic or public health emergency (or in response to the fear thereof), measures, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns.
A security breach, whether of our products, of our customers’ network security and systems or of third-party hosting services, could impact the use of such products and the security of information stored therein.
While such breaches or unauthorized access have not been material to date, we cannot guarantee that any future breach or unauthorized access will not be material and any breach or unauthorized access could impact the use of such products and systems and the security of information stored therein.
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For example, certain of our products contain electronic components and we have experienced, and could continue to experience, limited product availability due to the electronic components shortage in certain product lines.
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Some important factors that could cause our actual results to differ from our expectations in any forward-looking statements include: • weakening of economic conditions, or the anticipation thereof, that could adversely affect the level of demand for our products; • geopolitical risks, including from international conflicts and upcoming elections in the United States and other countries, which could, among other things, lead to increased market volatility; • pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; • changes in foreign currency exchange markets; • legislative and regulatory actions; • unanticipated issues arising in connection with clinical studies and otherwise that affect approval of new products by the FDA and foreign regulatory agencies; • inflationary pressures; • increased interest rates or interest rate volatility; • supply chain disruptions; • changes in labor markets; • changes in reimbursement levels from third-party payors; • a significant increase in product liability claims; • the ultimate total cost with respect to recall-related and other regulatory and quality matters; • the impact of investigative and legal proceedings and compliance risks; • resolution of tax audits; • changes in tax laws and regulations; • the impact of legislation to reform the healthcare system in the United States or other countries; • costs to comply with medical device regulations; • changes in financial markets; • changes in our credit ratings; • changes in the competitive environment; • our ability to integrate and realize the anticipated benefits of acquisitions in full or at all or within the expected timeframes; • our ability to realize anticipated cost savings; • potential negative impacts resulting from climate change or other environmental, social and governance and sustainability related matters; • the impact on our operations and financial results of any public health emergency and any related policies and actions by governments or other third parties; • breaches or failures of our or our vendors’ or customers’ information technology systems or products, including by cyber-attack, data leakage, unauthorized access or theft; and • other risks detailed in our filings with the SEC.
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The ongoing war between Russia and Ukraine, and the global response to it, may adversely affect our business and results of operations: The war between Russia and Ukraine has resulted in the implementation of sanctions by the United States and other governments against Russia and has caused significant volatility and disruptions to the global markets.
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While we believe that the assumptions underlying such forward-looking statements are reasonable, there can be no assurance that future events or developments will not cause such statements to be inaccurate.
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It is not possible to predict the short- and long-term implications of this war, which could include but are not limited to further sanctions, economic and political instability, increases in inflation rate and energy prices, supply chain challenges and adverse effects on currency exchange rates and financial markets.
Added
All forward-looking statements Dollar amounts in millions except per share amounts or as otherwise specified. 4 STRYKER CORPORATION 2023 FORM 10-K contained in this report are qualified in their entirety by this cautionary statement.
Removed
In addition, the United States government reported that United States sanctions against Russia in response to the conflict could lead to an increased threat of cyberattacks against United States companies. These increased threats could pose risks to the security of our information technology systems, networks and product offerings, as well as the confidentiality, availability and integrity of our data.
Added
If any of the risks discussed below or other risks actually occur or continue to occur, our business, financial condition, operating results or cash flows could be materially adversely affected. Accordingly, you should carefully consider the following risk factors, as well as other information contained in or incorporated by reference in this report.
Removed
Further, if the war expands beyond Ukraine or further intensifies, it could have an adverse impact on our operations in Poland or other areas. We are continuing to monitor the situation in Ukraine and globally as well as assess its potential impact on our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. We have approximately 27 company-owned and 322 leased locations worldwide including 48 manufacturing locations. We believe that our properties are in good operating condition and adequate for the manufacture and distribution of our products. We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.
Biggest changeITEM 2. PROPERTIES. We have approximately 28 company-owned and 294 leased locations worldwide including 43 manufacturing locations. We believe that our properties are in good operating condition and adequate for the manufacture and distribution of our products. We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.
Removed
Dollar amounts in millions except per share amounts or as otherwise specified. 9 STRYKER CORPORATION 2022 FORM 10-K

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCompany / Index 2017 2018 2019 2020 2021 2022 Stryker Corporation $ 100.00 $ 102.43 $ 138.62 $ 163.81 $ 180.56 $ 167.16 S&P 500 Index $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 S&P 500 Health Care Index $ 100.00 $ 106.47 $ 128.64 $ 145.93 $ 184.07 $ 180.47 Dollar amounts in millions except per share amounts or as otherwise specified. 10 STRYKER CORPORATION 2022 FORM 10-K
Biggest changeCompany / Index 2018 2019 2020 2021 2022 2023 Stryker Corporation $ 100.00 $ 135.33 $ 159.91 $ 176.26 $ 163.19 $ 202.03 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P 500 Health Care Index $ 100.00 $ 120.82 $ 137.07 $ 172.89 $ 169.51 $ 173.00 Dollar amounts in millions except per share amounts or as otherwise specified. 11 STRYKER CORPORATION 2023 FORM 10-K
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is traded on the New York Stock Exchange under the symbol SYK. Our Board of Directors considers payment of cash dividends at its quarterly meetings. On January 31, 2023 there were 2,523 shareholders of record of our common stock.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is traded on the New York Stock Exchange under the symbol SYK. Our Board of Directors considers payment of cash dividends at its quarterly meetings. On January 31, 2024 there were 2,501 shareholders of record of our common stock.
We did not repurchase any shares in the three months ended December 31, 2022 and the total dollar value of shares that could be acquired under our authorized repurchase program at December 31, 2022 was $1,033. In the fourth quarter 2022 we issued 48 shares of our common stock as performance incentive awards to employees.
We did not repurchase any shares in the three months ended December 31, 2023 and the total dollar value of shares that could be acquired under our authorized repurchase program at December 31, 2023 was $1,033. In the fourth quarter 2023 we issued 5 shares of our common stock as performance incentive awards to employees.
The graph assumes $100 (not in millions) invested on December 31, 2017 in our common stock and each of the indices.
The graph assumes $100 (not in millions) invested on December 31, 2018 in our common stock and each of the indices.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeStatement of Earnings Data 2022 2021 2020 2019 2018 Net sales $ 18,449 $ 17,108 $ 14,351 $ 14,884 $ 13,601 Cost of sales 6,871 6,140 5,294 5,188 4,663 Gross profit $ 11,578 $ 10,968 $ 9,057 $ 9,696 $ 8,938 Research, development and engineering expenses 1,454 1,235 984 971 862 Selling, general and administrative expenses 6,455 6,427 5,361 5,356 5,099 Recall charges, net (15) 103 17 192 23 Amortization of intangible assets 627 619 472 464 417 Goodwill impairment 216 — — — — Total operating expenses $ 8,737 $ 8,384 $ 6,834 $ 6,983 $ 6,401 Operating income $ 2,841 $ 2,584 $ 2,223 $ 2,713 $ 2,537 Other income (expense), net (158) (303) (269) (151) (181) Earnings before income taxes $ 2,683 $ 2,281 $ 1,954 $ 2,562 $ 2,356 Income taxes 325 287 355 479 (1,197) Net earnings $ 2,358 $ 1,994 $ 1,599 $ 2,083 $ 3,553 Net earnings per share of common stock: Basic $ 6.23 $ 5.29 $ 4.26 $ 5.57 $ 9.50 Diluted $ 6.17 $ 5.21 $ 4.20 $ 5.48 $ 9.34 Dividends declared per share of common stock $ 2.835 $ 2.585 $ 2.355 $ 2.135 $ 1.930 Balance Sheet Data Cash, cash equivalents and current marketable securities $ 1,928 $ 3,019 $ 3,024 $ 4,425 $ 3,699 Accounts receivable, net 3,565 3,022 2,701 2,893 2,332 Inventories 3,995 3,314 3,494 2,980 2,955 Property, plant and equipment, net 2,970 2,833 2,752 2,567 2,291 Total assets $ 36,884 $ 34,631 $ 34,330 $ 30,167 $ 27,229 Accounts payable 1,413 1,129 810 675 646 Total debt 13,048 12,479 13,991 11,090 9,859 Shareholders’ equity $ 16,616 $ 14,877 $ 13,084 $ 12,807 $ 11,730 Cash Flow Data Net cash provided by operating activities $ 2,624 $ 3,263 $ 3,277 $ 2,191 $ 2,610 Purchases of property, plant and equipment 588 525 487 649 572 Depreciation 371 371 340 314 306 Acquisitions, net of cash acquired 2,563 339 4,222 802 2,451 Amortization of intangible assets 627 619 472 464 417 Payments of dividends 1,051 950 863 778 703 Repurchase of common stock — — — 307 300 Other Data Number of shareholders of record 2,533 2,551 2,597 2,636 2,732 Approximate number of employees 51,000 46,000 43,000 40,000 36,000 Dollar amounts in millions except per share amounts or as otherwise specified. 11 STRYKER CORPORATION 2022 FORM 10-K
Biggest changeStatement of Earnings Data 2023 2022 2021 2020 2019 Net sales $ 20,498 $ 18,449 $ 17,108 $ 14,351 $ 14,884 Cost of sales 7,440 6,871 6,140 5,294 5,188 Gross profit $ 13,058 $ 11,578 $ 10,968 $ 9,057 $ 9,696 Research, development and engineering expenses 1,388 1,454 1,235 984 971 Selling, general and administrative expenses 7,129 6,455 6,427 5,361 5,356 Recall charges, net 18 (15) 103 17 192 Amortization of intangible assets 635 627 619 472 464 Goodwill impairment — 216 — — — Total operating expenses $ 9,170 $ 8,737 $ 8,384 $ 6,834 $ 6,983 Operating income $ 3,888 $ 2,841 $ 2,584 $ 2,223 $ 2,713 Other income (expense), net (215) (158) (303) (269) (151) Earnings before income taxes $ 3,673 $ 2,683 $ 2,281 $ 1,954 $ 2,562 Income taxes 508 325 287 355 479 Net earnings $ 3,165 $ 2,358 $ 1,994 $ 1,599 $ 2,083 Net earnings per share of common stock: Basic $ 8.34 $ 6.23 $ 5.29 $ 4.26 $ 5.57 Diluted $ 8.25 $ 6.17 $ 5.21 $ 4.20 $ 5.48 Dividends declared per share of common stock $ 3.050 $ 2.835 $ 2.585 $ 2.355 $ 2.135 Balance Sheet Data Cash, cash equivalents and current marketable securities $ 3,053 $ 1,928 $ 3,019 $ 3,024 $ 4,425 Accounts receivable, net 3,765 3,565 3,022 2,701 2,893 Inventories 4,843 3,995 3,314 3,494 2,980 Property, plant and equipment, net 3,215 2,970 2,833 2,752 2,567 Total assets $ 39,912 $ 36,884 $ 34,631 $ 34,330 $ 30,167 Accounts payable 1,517 1,413 1,129 810 675 Total debt 12,995 13,048 12,479 13,991 11,090 Shareholders’ equity $ 18,593 $ 16,616 $ 14,877 $ 13,084 $ 12,807 Cash Flow Data Net cash provided by operating activities $ 3,711 $ 2,624 $ 3,263 $ 3,277 $ 2,191 Purchases of property, plant and equipment 575 588 525 487 649 Depreciation 393 371 371 340 314 Acquisitions, net of cash acquired 390 2,563 339 4,222 802 Amortization of intangible assets 635 627 619 472 464 Payments of dividends 1,139 1,051 950 863 778 Repurchase of common stock — — — — 307 Other Data Number of shareholders of record 2,518 2,533 2,551 2,597 2,636 Approximate number of employees 52,000 51,000 46,000 43,000 40,000 Dollar amounts in millions except per share amounts or as otherwise specified. 12 STRYKER CORPORATION 2023 FORM 10-K

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+39 added−35 removed34 unchanged
Biggest changeReconciliation of the Most Directly Comparable GAAP Financial Measure to Non-GAAP Financial Measure 2022 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other Income (Expense), Net Net Earnings Effective Tax Rate Diluted EPS Reported $ 11,578 $ 6,455 $ 1,454 $ 2,841 $ (158) $ 2,358 12.1 % $ 6.17 Acquisition and integration-related costs: Inventory stepped-up to fair value 12 — — 12 — 9 — 0.02 Other acquisition and integration-related — (138) — 138 — 104 0.5 0.27 Amortization of purchased intangible assets — — — 627 — 495 1.7 1.30 Restructuring-related and other charges 56 (206) (87) 349 — 283 0.7 0.74 Goodwill impairment — — — 216 — 216 (1.1) 0.57 Medical device regulations 3 — (137) 140 — 115 0.2 0.30 Recall-related matters — — — (15) — (12) — (0.03) Regulatory and legal matters — (76) — 76 — 69 (0.2) 0.18 Tax matters — — — — (75) (66) 0.1 (0.18) Adjusted $ 11,649 $ 6,035 $ 1,230 $ 4,384 $ (233) $ 3,571 14.0 % $ 9.34 2021 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other Income (Expense), Net Net Earnings Effective Tax Rate Diluted EPS Reported $ 10,968 $ 6,427 $ 1,235 $ 2,584 $ (303) $ 1,994 12.6 % $ 5.21 Acquisition and integration-related costs: Inventory stepped-up to fair value 266 — — 266 — 203 1.0 0.53 Other acquisition and integration-related — (319) — 319 — 244 1.2 0.64 Amortization of purchased intangible assets — — — 619 — 489 1.6 1.28 Restructuring-related and other charges 28 (358) — 386 11 345 (0.3) 0.90 Goodwill impairment — — — — — — — — Medical device regulations 5 — (102) 107 — 90 — 0.24 Recall-related matters — — — 103 — 89 — 0.23 Regulatory and legal matters — 2 — (2) (7) (12) 0.2 (0.02) Tax matters — — — — — 32 (1.4) 0.08 Adjusted $ 11,267 $ 5,752 $ 1,133 $ 4,382 $ (299) $ 3,474 14.9 % $ 9.09 Dollar amounts in millions except per share amounts or as otherwise specified. 16 STRYKER CORPORATION 2022 FORM 10-K 2020 Gross Profit Selling, General & Administrative Expenses Research, Development & Engineering Expenses Operating Income Other Income (Expense), Net Net Earnings Effective Tax Rate Diluted EPS Reported $ 9,057 $ 5,361 $ 984 $ 2,223 $ (269) $ 1,599 18.2 % $ 4.20 Acquisition and integration-related costs: Inventory stepped-up to fair value 48 — — 48 — 36 0.3 0.10 Other acquisition and integration-related — (194) — 194 — 157 0.7 0.41 Amortization of purchased intangible assets — — — 472 — 381 1.6 1.00 Restructuring-related and other charges 53 (406) — 458 — 397 0.2 1.04 Goodwill impairment — — — — — — — — Medical device regulations 2 — (79) 81 — 63 0.4 0.17 Recall-related matters — — — 17 — 13 0.1 0.03 Regulatory and legal matters — (6) — 6 — 8 (0.1) 0.02 Tax matters — — — — 4 173 (8.8) 0.46 Adjusted $ 9,160 $ 4,755 $ 905 $ 3,499 $ (265) $ 2,827 12.6 % $ 7.43 FINANCIAL CONDITION AND LIQUIDITY Net cash provided by (used in): 2022 2021 2020 Operating activities $ 2,624 $ 3,263 $ 3,277 Investing activities (2,924) (859) (4,701) Financing activities (749) (2,365) (11) Effect of exchange rate changes (51) (38) 41 Change in cash and cash equivalents $ (1,100) $ 1 $ (1,394) 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.
Biggest changeReconciliation of the Most Directly Comparable GAAP Financial Measure to Non-GAAP Financial Measure 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 $ 7,129 $ 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 (166) (1) 206 — 47 159 0.5 0.42 Goodwill impairment — — — — — — — — — Medical device regulations (c) 2 — (94) 96 — 22 74 0.2 0.19 Recall-related matters (d) — — — 18 — 4 14 — 0.04 Regulatory and legal matters (e) — (92) — 92 — 29 63 0.4 0.16 Tax matters (f) — — — — (8) (51) 43 (1.2) 0.11 Adjusted $ 13,099 $ 6,851 $ 1,293 $ 4,955 $ (223) $ 666 $ 4,066 14.1 % $ 10.60 2022 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 $ 11,578 $ 6,455 $ 1,454 $ 2,841 $ (158) $ 325 $ 2,358 12.1 % $ 6.17 Acquisition and integration-related costs: Inventory stepped-up to fair value 12 — — 12 — 3 9 — 0.02 Other acquisition and integration-related (a) — (138) — 138 — 34 104 0.5 0.27 Amortization of purchased intangible assets — — — 627 — 132 495 1.7 1.30 Structural optimization and other special charges (b) 56 (206) (87) 349 — 66 283 0.7 0.74 Goodwill impairment — — — 216 — — 216 (1.1) 0.57 Medical device regulations (c) 3 — (137) 140 — 25 115 0.2 0.30 Recall-related matters (d) — — — (15) — (3) (12) — (0.03) Regulatory and legal matters (e) — (76) — 76 — 7 69 (0.2) 0.18 Tax matters (f) — — — — (75) (9) (66) 0.1 (0.18) Adjusted $ 11,649 $ 6,035 $ 1,230 $ 4,384 $ (233) $ 580 $ 3,571 14.0 % $ 9.34 Dollar amounts in millions except per share amounts or as otherwise specified. 17 STRYKER CORPORATION 2023 FORM 10-K 2021 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 $ 10,968 $ 6,427 $ 1,235 $ 2,584 $ (303) $ 287 $ 1,994 12.6 % $ 5.21 Acquisition and integration-related costs: Inventory stepped-up to fair value 266 — — 266 — 63 203 1.0 0.53 Other acquisition and integration-related (a) — (319) — 319 — 75 244 1.2 0.64 Amortization of purchased intangible assets — — — 619 — 130 489 1.6 1.28 Structural optimization and other special charges (b) 28 (358) — 386 11 52 345 (0.3) 0.90 Goodwill impairment — — — — — — — — — Medical device regulations (c) 5 — (102) 107 — 17 90 — 0.24 Recall-related matters (d) — — — 103 — 14 89 — 0.23 Regulatory and legal matters (e) — 2 — (2) (7) 3 (12) 0.2 (0.02) Tax matters (f) — — — — — (32) 32 (1.4) 0.08 Adjusted $ 11,267 $ 5,752 $ 1,133 $ 4,382 $ (299) $ 609 $ 3,474 14.9 % $ 9.09 (a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including: 2023 2022 2021 Termination of sales relationships $ 5 $ 21 $ 154 Employee retention and workforce reductions 6 33 90 Changes in the fair value of contingent consideration (1) (135) — Manufacturing integration costs 2 32 16 Stock compensation payments upon a change in control — 132 — Other integration-related activities 8 55 59 Adjustments to Operating Income $ 20 $ 138 $ 319 Charges for acquisition-related tax provisions (30) — — Other income taxes related to acquisition and integration-related costs 5 34 75 Adjustments to Income Taxes $ (25) $ 34 $ 75 Adjustments to Net Earnings $ 45 $ 104 $ 244 (b) Structural optimization and other special charges represent the costs associated with: 2023 2022 2021 Employee retention and workforce reductions $ 69 $ 74 $ 39 Closure/transfer of manufacturing and other facilities 50 83 52 Product line exits 32 80 61 Certain long-lived and intangible asset write-offs and impairments 28 96 203 Other charges 27 16 31 Adjustments to Operating Income $ 206 $ 349 $ 386 Adjustments to Other Income (Expense), Net $ — $ — $ 11 Adjustments to Income Taxes $ 47 $ 66 $ 52 Adjustments to Net Earnings $ 159 $ 283 $ 345 (c) 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.
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 and intellectual property, and other matters that are more fully described in Note 7 to our Consolidated Financial Statements.
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, intellectual property, and other matters that are more fully described in Note 7 to our Consolidated Financial Statements.
These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, selling, general and administrative expenses, research, development and engineering expenses, operating income, other income (expense), net, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures.
These 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.
There were no share repurchases in 2022, 2021 or 2020. 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 capital.
There were no share repurchases in 2023, 2022 or 2021. 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 capital.
In 2021 charges were primarily due to the previously disclosed Rejuvenate and ABGII Modular-Neck hip stems and LFIT Anatomic CoCr V40 Femoral Heads voluntary recalls. Refer to Note 7 to our Consolidated Financial Statements for further information. Amortization of Intangible Assets Amortization of intangible assets was $627, $619 and $472 in 2022, 2021 and 2020.
Charges in 2021 were primarily due to the previously disclosed Rejuvenate and ABGII Modular-Neck hip stems and LFIT Anatomic CoCr V40 Femoral Heads voluntary recalls. Refer to Note 7 to our Consolidated Financial Statements for further information. Amortization of Intangible Assets Amortization of intangible assets was $635, $627 and $619 in 2023, 2022 and 2021.
The effective income tax rate for 2022 decreased due to the effective settlement of the United States federal income tax audit for years 2014 through 2018 of $162 and the reversal of deferred income tax on undistributed earnings of foreign subsidiaries.
The effective income tax rate for 2022 decreased from 2021 due to the 2022 effective settlement of the United States federal income tax audit for years 2014 through 2018 and the 2022 reversal of deferred income tax on undistributed earnings of foreign subsidiaries.
In addition, the effective income tax rates for 2022, 2021 and 2020 reflect the continued lower effective income tax rates as a result of our European operations, the tax effect related to the transfers of intellectual property between tax jurisdictions, the tax effect of future remittances of the undistributed earnings of foreign subsidiaries and certain discrete tax items.
The effective income tax rates for 2023, 2022 and 2021 reflect the continued lower effective income tax rates as a result of our European operations, the tax effect related to the transfers of intellectual property between tax jurisdictions, the tax effect of future remittances of the undistributed earnings of foreign subsidiaries and certain discrete tax items.
The decrease from 2021 was primarily due to higher costs for certain electronic components and pre-buying of critical raw materials to manage supply chain delays as well as higher accounts receivable as a result of sales occurring near the end of the year, partially offset by increased net earnings.
The decrease in 2022 compared to 2021 was due to higher costs for certain electronic components and pre-buying of critical raw materials to manage supply chain delays as well as higher accounts receivable as a result of sales occurring near the end of the year, partially offset by increased net earnings.
The weighted-average diluted shares outstanding used in the calculation of non-GAAP net earnings per diluted share are the same as those used in the calculation of reported net earnings per diluted share for the respective period.
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.
Alongside our customers around the world, Stryker impacts more than 130 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.
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.
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.
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.
As further described in Note 12 to our Consolidated Financial Statements, on December 31, 2022 our defined benefit pension plans were underfunded by $253, of which approximately $250 related to plans outside the United States.
As further described in Note 12 to our Consolidated Financial Statements, on December 31, 2023 our defined benefit pension plans were underfunded by $341, of which approximately $337 related to plans outside the United States.
The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology products. Orthopaedics and Spine Net Sales Orthopaedics and Spine net sales in 2022 increased 3.5% as reported and 7.0% in constant currency, as foreign currency exchange rates negatively impacted net sales by 3.5%.
The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology products. Orthopaedics and Spine Net Sales Orthopaedics and Spine net sales in 2023 increased 10.5% as reported and 11.1% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.6%.
Net sales in constant currency increased by 9.9% from increased unit volume partially offset by 2.9% due to lower prices. The unit volume increase was primarily due to higher shipments across most Orthopaedics and Spine products.
Net sales in constant currency increased by 11.9% from increased unit volume partially offset by 0.8% due to lower prices. The unit volume increase was due to higher shipments across all Orthopaedics and Spine products.
Excluding the 1.3% impact of acquisitions and divestitures, net sales in constant currency increased by 10.6% from increased unit volume partially offset by 0.9% due to lower prices. The unit volume increase was primarily due to higher shipments across all MedSurg and Neurotechnology products and most Orthopaedics and Spine products.
Excluding the 0.3% impact of acquisitions and divestitures, net sales in constant currency increased by 10.2% 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 products.
Refer to Note 10 to our Consolidated Financial Statements for further information. 2022 2021 2020 Dividends paid per common share $ 2.78 $ 2.52 $ 2.30 Total dividends paid to common shareholders $ 1,051 $ 950 $ 863 Liquidity Cash, cash equivalents and marketable securities were $1,928 and $3,019, and our current assets exceeded current liabilities by $3,972 and $5,468 on December 31, 2022 and 2021.
Refer to Note 10 to our Consolidated Financial Statements for further information. 2023 2022 2021 Dividends paid per common share $ 3.00 $ 2.78 $ 2.52 Total dividends paid to common shareholders $ 1,139 $ 1,051 $ 950 Liquidity Cash, cash equivalents and marketable securities were $3,053 and $1,928, and our current assets exceeded current liabilities by $4,597 and $3,972 on December 31, 2023 and 2022.
The decrease in net expense in 2022 was primarily due to favorable investment returns and the reversal of accrued interest of $50 related to the effective settlement of the United States federal income tax audit for years 2014 through 2018. Refer to Note 11 to our Consolidated Financial Statements for further information.
The increase in net expense in 2023 compared to 2022 was primarily due to the release of accrued interest of $50 in 2022 related to the effective settlement of the United States federal income tax audit for years 2014 through 2018. Refer to Note 11 to our Consolidated Financial Statements for further information.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. About Stryker Stryker is one of the world's leading medical technology companies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in Medical and Surgical, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. About Stryker Stryker is a global leader in medical technologies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in MedSurg, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes.
Costs related to integrating recently acquired businesses (e.g., costs associated with the termination of sales relationships, workforce reductions and other integration-related activities), changes in the fair value of contingent consideration and specific costs (e.g., inventory step-up and deal costs) related to the consummation of the acquisition process. 2. Amortization of purchased intangible assets .
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.
MedSurg and Neurotechnology net sales in 2021 increased 14.3% as reported and 13.3% in constant currency, as foreign currency exchange rates positively impacted net sales by 1.0%. Excluding the 0.2% impact of acquisitions and divestitures, net sales in constant currency increased by 13.6% from increased unit volume partially offset by 0.5% due to lower prices.
MedSurg and Neurotechnology net sales in 2022 increased 11.2% as reported and 14.1% in constant currency, as foreign currency exchange rates negatively impacted net sales by 2.9%. Excluding the 2.3% impact of acquisitions and divestitures, net sales in constant currency increased by 11.2% from increased unit volume and 0.6% due to higher prices.
Refer to Note 8 to our Consolidated Financial Statements for further information. Operating Income Operating income increased as a percentage of sales to 15.4% in 2022 from 15.1% in 2021.
Refer to Note 8 to our Consolidated Financial Statements for further information. Operating Income Operating income was $3,888, $2,841 and $2,584 in 2023, 2022 and 2021. Operating income increased as a percentage of sales to 19.0% in 2023 from 15.4% in 2022 and from 15.1% in 2021.
Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing Dollar amounts in millions except per share amounts or as otherwise specified. 18 STRYKER CORPORATION 2022 FORM 10-K 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.
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.
For indefinite-lived intangible assets and goodwill, we perform a qualitative assessment when it is unlikely that an asset or reporting unit is impaired. For our goodwill impairment test, we periodically corroborate our qualitative assessment with quantitative information. When necessary, we determine the fair value of our indefinite-lived intangible assets and reporting units using an income approach.
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.
The following are examples of the types of adjustments that may be included in a period: 1. Acquisition and integration-related costs .
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 .
Charges represent the impact of accounting for certain significant and discrete tax items. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
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.
Orthopaedics and Spine net sales in 2021 increased 26.0% as reported and 24.8% in constant currency, as foreign currency exchange rates positively impacted net sales by 1.2%. Excluding the 12.8% impact of acquisitions and divestitures, net sales in constant currency increased by 13.2% from increased unit volume partially offset by 1.2% due to lower prices.
Consolidated net sales in 2022 increased 7.8% as reported and 11.0% in constant currency, as foreign currency exchange rates negatively impacted net sales by 3.2%. Excluding the 1.3% impact of acquisitions and divestitures, net sales in constant currency increased by 10.6% from increased unit volume partially offset by 0.9% due to lower prices.
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 $2,624, $3,263 and $3,277 in 2022, 2021 and 2020.
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 $3,711, $2,624 and $3,263 in 2023, 2022 and 2021. The increase from 2022 was primarily due to higher net earnings and increased collections on accounts receivable.
No impairment was identified for those reporting units in 2022. Future changes in the judgments, assumptions and estimates that are used in our impairment testing for goodwill and indefinite-lived intangible assets, including discount and tax rates and future cash flow projections, could result in significantly different estimates of the fair values.
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 significantly 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.
Consolidated net sales in 2021 increased 19.2% as reported and 18.1% in constant currency. Excluding the 5.5% impact of acquisitions and divestitures, net sales in constant currency increased by 13.4% from increased unit volume partially offset by 0.8% due to lower prices. The unit volume increase was primarily due to higher shipments across all product lines.
Excluding the 0.1% impact of acquisitions and divestitures, net sales in constant currency increased by 10.9% from increased unit volume and 0.6% due to higher prices. The unit volume increase was primarily due to higher shipments across all product lines.
Financing Activities Cash provided by (used in) financing activities was ($749), ($2,365) and ($11) in 2022, 2021 and 2020. Cash used in 2022 was primarily driven by dividend payments of $1,051 and repayments of debt, including $650 of payments on the $1,500 term loan used to fund the acquisition of Vocera.
Financing Activities Cash used in financing activities was $1,594, $749 and $2,365 in 2023, 2022 and 2021. Cash used in 2023 was primarily driven by dividend payments of $1,139 and repayments of debt, including $850 to pay off the $1,500 term loan used to fund the acquisition of Vocera and $1,208 to pay off maturing senior unsecured notes.
Dollar amounts in millions except per share amounts or as otherwise specified. 12 STRYKER CORPORATION 2022 FORM 10-K CONSOLIDATED RESULTS OF OPERATIONS Percent Net Sales Percentage Change 2022 2021 2020 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Net sales $ 18,449 $ 17,108 $ 14,351 100.0 % 100.0 % 100.0 % 7.8 % 19.2 % Gross profit 11,578 10,968 9,057 62.8 64.1 63.1 5.6 21.1 Research, development and engineering expenses 1,454 1,235 984 7.9 7.2 6.9 17.7 25.5 Selling, general and administrative expenses 6,455 6,427 5,361 35.0 37.6 37.4 0.4 19.9 Recall charges, net (15) 103 17 (0.1) 0.6 0.1 nm nm Amortization of intangible assets 627 619 472 3.4 3.6 3.3 1.3 31.1 Goodwill impairment 216 — — 1.2 — — nm nm Other income (expense), net (158) (303) (269) (0.9) (1.8) (1.9) (47.9) 12.6 Income taxes 325 287 355 nm nm nm 13.2 (19.2) Net earnings $ 2,358 $ 1,994 $ 1,599 12.8 % 11.7 % 11.1 % 18.3 % 24.7 % Net earnings per diluted share $ 6.17 $ 5.21 $ 4.20 18.4 % 24.0 % Adjusted net earnings per diluted share (1) $ 9.34 $ 9.09 $ 7.43 2.8 % 22.3 % Geographic and Segment Net Sales Percentage Change 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 As Reported Constant Currency As Reported Constant Currency Geographic: United States $ 13,638 $ 12,321 $ 10,455 10.7 % 10.7 % 17.9 % 17.9 % International 4,811 4,787 3,896 0.5 11.7 22.8 18.8 Total $ 18,449 $ 17,108 $ 14,351 7.8 % 11.0 % 19.2 % 18.1 % Segment: MedSurg and Neurotechnology $ 10,611 $ 9,538 $ 8,345 11.2 % 14.1 % 14.3 % 13.3 % Orthopaedics and Spine 7,838 7,570 6,006 3.5 7.0 26.0 24.8 Total $ 18,449 $ 17,108 $ 14,351 7.8 % 11.0 % 19.2 % 18.1 % Supplemental Net Sales Growth Information Percentage Change 2022 vs. 2021 2021 vs. 2020 United States International United States International 2022 2021 2020 As Reported Constant Currency As Reported As Reported Constant Currency As Reported Constant Currency As Reported As Reported Constant Currency MedSurg and Neurotechnology: Instruments $ 2,279 $ 2,111 $ 1,863 8.0 % 10.4 % 10.6 % (0.9) % 10.0 % 13.4 % 12.5 % 11.3 % 20.9 % 16.6 % Endoscopy 2,423 2,141 1,763 13.2 15.9 14.6 8.2 20.8 21.5 20.8 18.6 32.7 29.4 Medical 3,031 2,607 2,524 16.2 18.6 20.6 1.5 11.7 3.3 2.2 5.1 (2.4) (6.6) Neurovascular 1,200 1,188 973 1.1 7.2 (0.9) 2.3 12.2 22.0 19.5 18.3 24.4 20.3 Neuro Cranial 1,376 1,214 972 13.3 15.4 14.9 6.1 17.5 24.9 24.3 23.4 32.4 28.6 Other 302 277 250 9.2 9.3 8.9 25.3 29.9 10.4 10.3 10.0 48.9 40.8 $ 10,611 $ 9,538 $ 8,345 11.2 % 14.1 % 14.2 % 3.0 % 13.8 % 14.3 % 13.3 % 13.0 % 18.1 % 14.0 % Orthopaedics and Spine: Knees $ 1,997 $ 1,848 $ 1,567 8.0 % 11.2 % 10.6 % 1.0 % 12.9 % 18.0 % 16.9 % 15.4 % 25.5 % 21.3 % Hips 1,413 1,342 1,206 5.3 10.1 9.1 (0.6) 11.5 11.2 9.9 5.8 21.1 17.2 Trauma and Extremities 2,807 2,664 1,722 5.4 8.7 9.0 (3.2) 8.0 54.6 53.0 63.8 36.8 32.3 Spine 1,146 1,167 1,047 (1.8) 1.1 0.6 (7.7) 2.4 11.5 10.5 8.7 19.1 15.2 Other 475 549 464 (13.3) (10.3) (16.9) (0.9) 12.8 18.2 18.0 10.1 58.8 57.4 $ 7,838 $ 7,570 $ 6,006 3.5 % 7.0 % 6.0 % (2.2) % 9.3 % 26.0 % 24.8 % 25.0 % 28.6 % 24.5 % Total $ 18,449 $ 17,108 $ 14,351 7.8 % 11.0 % 10.7 % 0.5 % 11.7 % 19.2 % 18.1 % 17.9 % 22.8 % 18.8 % nm - not meaningful Consolidated Net Sales Consolidated net sales increased 7.8% as reported and 11.0% in constant currency, as foreign currency exchange rates negatively impacted net sales by 3.2%.
CONSOLIDATED RESULTS OF OPERATIONS Percent Net Sales Percentage Change 2023 2022 2021 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Net sales $ 20,498 $ 18,449 $ 17,108 100.0 % 100.0 % 100.0 % 11.1 % 7.8 % Gross profit 13,058 11,578 10,968 63.7 62.8 64.1 12.8 5.6 Research, development and engineering expenses 1,388 1,454 1,235 6.8 7.9 7.2 (4.5) 17.7 Selling, general and administrative expenses 7,129 6,455 6,427 34.8 35.0 37.6 10.4 0.4 Recall charges, net 18 (15) 103 0.1 (0.1) 0.6 nm nm Amortization of intangible assets 635 627 619 3.1 3.4 3.6 1.3 1.3 Goodwill impairment — 216 — — 1.2 — nm nm Other income (expense), net (215) (158) (303) (1.0) (0.9) (1.8) 36.1 (47.9) Income taxes 508 325 287 nm nm nm 56.3 13.2 Net earnings $ 3,165 $ 2,358 $ 1,994 15.4 % 12.8 % 11.7 % 34.2 % 18.3 % Net earnings per diluted share $ 8.25 $ 6.17 $ 5.21 33.7 % 18.4 % Adjusted net earnings per diluted share (1) $ 10.60 $ 9.34 $ 9.09 13.5 % 2.8 % nm - not meaningful Dollar amounts in millions except per share amounts or as otherwise specified. 13 STRYKER CORPORATION 2023 FORM 10-K Geographic and Segment Net Sales Percentage Change 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 As Reported Constant Currency As Reported Constant Currency Geographic: United States $ 15,257 $ 13,638 $ 12,321 11.9 % 11.9 % 10.7 % 10.7 % International 5,241 4,811 4,787 8.9 10.9 0.5 11.7 Total $ 20,498 $ 18,449 $ 17,108 11.1 % 11.6 % 7.8 % 11.0 % Segment: MedSurg and Neurotechnology $ 11,836 $ 10,611 $ 9,538 11.5 % 12.1 % 11.2 % 14.1 % Orthopaedics and Spine 8,662 7,838 7,570 10.5 11.1 3.5 7.0 Total $ 20,498 $ 18,449 $ 17,108 11.1 % 11.6 % 7.8 % 11.0 % Supplemental Net Sales Growth Information Percentage Change 2023 vs. 2022 2022 vs. 2021 United States International United States International 2023 2022 2021 As Reported Constant Currency As Reported As Reported Constant Currency As Reported Constant Currency As Reported As Reported Constant Currency MedSurg and Neurotechnology: Instruments $ 2,569 $ 2,279 $ 2,111 12.7 % 13.0 % 13.3 % 10.4 % 11.8 % 8.0 % 10.4 % 10.6 % (0.9) % 10.0 % Endoscopy 3,033 2,725 2,418 11.3 11.7 12.1 7.6 9.9 12.7 15.2 13.8 8.3 20.9 Medical 3,459 3,031 2,607 14.1 14.4 15.0 10.8 12.3 16.2 18.6 20.6 1.5 11.7 Neurovascular 1,226 1,200 1,188 2.1 4.0 8.1 (1.4) 1.5 1.1 7.2 (0.9) 2.3 12.2 Neuro Cranial 1,549 1,376 1,214 12.6 13.0 11.9 16.1 18.4 13.3 15.4 14.9 6.1 17.5 $ 11,836 $ 10,611 $ 9,538 11.5 % 12.1 % 13.0 % 7.0 % 9.1 % 11.2 % 14.1 % 14.2 % 3.0 % 13.8 % Orthopaedics and Spine: Knees $ 2,273 $ 1,997 $ 1,848 13.9 % 14.4 % 12.2 % 18.8 % 20.9 % 8.0 % 11.2 % 10.6 % 1.0 % 12.9 % Hips 1,544 1,413 1,342 9.2 10.4 10.1 7.7 10.7 5.3 10.1 9.1 (0.6) 11.5 Trauma and Extremities 3,147 2,807 2,664 12.1 12.2 12.9 10.1 10.5 5.4 8.7 9.0 (3.2) 8.0 Spine 1,189 1,146 1,167 3.8 4.0 5.7 (1.6) (0.9) (1.8) 1.1 0.6 (7.7) 2.4 Other 509 475 549 7.1 8.8 (2.0) 33.8 40.9 (13.3) (10.3) (16.9) (0.9) 12.8 $ 8,662 $ 7,838 $ 7,570 10.5 % 11.1 % 10.2 % 11.2 % 13.0 % 3.5 % 7.0 % 6.0 % (2.2) % 9.3 % Total $ 20,498 $ 18,449 $ 17,108 11.1 % 11.6 % 11.9 % 8.9 % 10.9 % 7.8 % 11.0 % 10.7 % 0.5 % 11.7 % Note: Beginning in the first quarter 2023 we consolidated Other MedSurg and Neurotechnology into Endoscopy as Other MedSurg and Neurotechnology (primarily Sustainability Solutions) has been fully integrated into our Endoscopy business.
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. We perform our annual impairment test for goodwill as of October 31 each year.
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.
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.
The undiscounted cash flows expected to be generated by the related assets are estimated over their useful life based on updated projections.
To measure earnings performance on a consistent and comparable basis, we exclude certain items that affect the comparability of operating results and the trend of earnings.
To measure 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.
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.
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.
Our best estimate of the minimum of the range of probable loss to resolve the Rejuvenate, LFIT V40, Wright legacy hip products and other product recalls. 7. Regulatory and legal matters . Our best estimate of the minimum of the range of probable loss to resolve certain regulatory matters and other legal settlements. 8. Tax 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 .
Compared to 2020, the increases in 2022 and 2021 were due to the first quarter 2022 and fourth quarter 2020 acquisitions of Vocera and Wright. Refer to Notes 6 and 8 to our Consolidated Financial Statements for further information. Goodwill Impairment In 2022 we recorded a goodwill impairment charge of $216 related to our Spine business.
These amounts include amortization related to intangible assets acquired in the second quarter 2023 from Cerus and in the first quarter 2022 from Vocera. Refer to Notes 6 and 8 to our Consolidated Financial Statements for further information. Goodwill Impairment In 2022 we recorded a goodwill impairment charge of $216 related to our Spine business.
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. 6. Recall-related matters .
Costs specific to updating our Dollar amounts in millions except per share amounts or as otherwise specified. 16 STRYKER CORPORATION 2023 FORM 10-K 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 .
As further described in Note 11 to our Consolidated Financial Statements, on December 31, 2022 we had a reserve for uncertain income tax positions of $286.
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, 2023 we had a reserve for uncertain income tax positions of $371.
(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.
We subsequently issued $600 of 4.850% senior unsecured notes due December 8, 2028 and €600 of 3.375% senior unsecured notes due December 11, 2028. (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.
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. In October 2021 we entered into a new revolving credit agreement that replaces our previous agreement dated August 19, 2016.
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 October 2026 with an aggregate principal amount of $2,250.
In the fourth quarter of 2022 we determined that our Spine reporting unit’s carrying value was in excess of its estimated fair value and recognized an impairment charge of $216. The fair value of the Spine reporting unit was determined using a discounted cash flow analysis, which is a form of the income approach.
In our quantitative impairment tests, the fair value of our Spine reporting unit was determined using a discounted cash flow analysis, which is a form of the income approach.
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.
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.
Both 2022 and 2021 included charges related to certain asset impairments. Refer to Note 15 to our Consolidated Financial Statements for further information.
Selling, general and administrative expenses as a percentage of net sales in 2022 decreased to 35.0% from 37.6% in 2021. Both 2022 and 2021 included charges related to certain asset impairments. Refer to Note 15 to our Consolidated Financial Statements for further information.
Macroeconomic Environment The global economy is experiencing increased inflationary pressures in part due to global supply chain disruptions, labor shortages and other impacts of the COVID-19 pandemic and current macroeconomic environment which we anticipate will continue. Higher interest rates and capital costs, higher shipping costs, increased costs of labor and weakening foreign currency exchange rates are creating additional economic challenges.
Macroeconomic Environment The global economy continues to experience increased inflationary pressures in part due to global supply chain disruptions, labor shortages and other impacts of the macroeconomic environment which we anticipate will continue.
Excluding the impact of the items noted below, gross profit decreased to 63.1% from 65.9% in 2021 primarily due to increased costs from purchases of electronic components at premium prices on the spot market and other inflationary pressures, primarily related to labor, steel and transportation, as well as inefficiencies from supply chain disruptions and unfavorable product mix.
Gross profit as a percentage of net sales decreased to 62.8% in 2022 from 64.1% in 2021 due to higher manufacturing and supply chain costs primarily due to increased costs from purchases of electronic components at premium prices on the spot market and other inflationary pressures, primarily related to labor, steel and transportation, as well as inefficiencies from supply chain disruptions partially offset by favorable volume and lower amortization of inventory stepped up to fair value.
Significant inputs to the analysis included assumptions for future revenue growth, operating margin and the weighted average cost of capital. A hypothetical 1% increase in our estimate of the rate used to discount the estimated future cash flows to their present value would result in an additional impairment charge of $220.
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. Our assumptions for revenue growth and operating margin considered several operating factors, including surgery volumes, increased costs and our competitive environment.
These conditions may cause our customers to decrease or delay orders for our products and services, and we expect the higher interest rates to impact demand for our capital products.
These conditions may cause our customers to decrease or delay orders for our products and services, and the higher interest rates may impact deal mix for our capital products. Overview of 2023 In 2023 we achieved reported net sales growth of 11.1%. Excluding the impact of acquisitions and divestitures, sales grew 11.5% in constant currency.
A significant reduction in the estimated fair values could result in impairment charges that could materially affect our results of operations. 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.
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.
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.
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.
Contractual Obligations Total 2023 2024 - 2025 2026 - 2027 After 2027 Total debt $ 12,958 $ 1,208 $ 3,700 $ 1,750 $ 6,300 Interest payments 3,193 290 524 397 1,982 Unconditional purchase obligations 1,845 1,595 121 115 14 Operating leases 466 126 169 95 76 United States Tax Cuts and Jobs Act Transition Tax 463 109 354 — — Other 175 12 16 12 135 Total $ 19,100 $ 3,340 $ 4,884 $ 2,369 $ 8,507 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.
Contractual Obligations Total 2024 2025 - 2026 2027 - 2028 After 2028 Debt repayments $ 13,080 $ 2,097 $ 2,400 $ 3,582 $ 5,001 Interest payments 3,163 348 560 453 1,802 Unconditional purchase obligations 2,750 2,349 296 85 20 Minimum lease payments 520 150 195 97 78 United States Tax Cuts and Jobs Act Transition Tax 354 158 196 — — Other 68 13 20 16 19 Total $ 19,935 $ 5,115 $ 3,667 $ 4,233 $ 6,920 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.
The unit volume increase was due to higher shipments across all Orthopaedics and Spine products. Gross Profit Gross profit as a percentage of net sales decreased to 62.8% in 2022 from 64.1% in 2021.
The unit volume increase was due to higher shipments across most Orthopaedics and Spine products. Gross Profit Gross profit was $13,058, $11,578 and $10,968 in 2023, 2022, and 2021.
MedSurg and Neurotechnology Net Sales MedSurg and Neurotechnology net sales in 2022 increased 11.2% as reported and 14.1% in constant currency, as foreign currency exchange rates negatively impacted net sales by 2.9%.
Orthopaedics and Spine net sales in 2022 increased 3.5% as reported and 7.0% in constant currency, as foreign currency exchange rates negatively impacted net sales by 3.5%. Net sales in constant currency increased by 9.9% from increased unit volume partially offset by 2.9% due to lower prices.
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.
We believe these accounting Dollar amounts in millions except per share amounts or as otherwise specified. 19 STRYKER CORPORATION 2023 FORM 10-K 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.
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 36% and 26% on December 31, 2022 and 2021.
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.
The increase in net expense in 2021 compared to 2020 was primarily due to increased interest expense driven by the additional debt from the bond offerings completed in June 2020 and November 2020 related to the Wright acquisition. Income Taxes Our effective tax rate was 12.1%, 12.6% and 18.2% for 2022, 2021 and 2020.
The decrease in net expense in 2022 compared to 2021 was primarily due to the aforementioned release of accrued interest and higher interest income in 2022. Income Taxes Our effective tax rate was 13.8%, 12.1% and 12.6% for 2023, 2022 and 2021.
The final outcome of these matters is dependent on many variables that Dollar amounts in millions except per share amounts or as otherwise specified. 17 STRYKER CORPORATION 2022 FORM 10-K are difficult to predict.
Dollar amounts in millions except per share amounts or as otherwise specified. 21 STRYKER CORPORATION 2023 FORM 10-K
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.
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.
Net Earnings Net earnings increased to $2,358 or $6.17 per diluted share from $1,994 or $5.21 per diluted share in 2021 and $1,599 or $4.20 per diluted share in 2020. Adjusted net earnings per diluted share (1) was $9.34 in 2022 compared to $9.09 in 2021 and $7.43 in 2020.
Net Earnings Net earnings for 2023 increased to $3,165 or $8.25 per diluted share from $2,358 or $6.17 per diluted share in 2022 and $1,994 or $5.21 per diluted share in 2021. Refer to the comments above for discussion of the primary drivers of the change.
Percent Net Sales 2022 2021 2020 2022 2021 2020 Reported $ 2,358 $ 1,994 $ 1,599 12.8 % 11.7 % 11.1 % Inventory stepped up to fair value 9 203 36 — 1.2 0.3 Other acquisition and integration-related 104 244 157 0.6 1.4 1.1 Amortization of intangible assets 495 489 381 2.7 2.9 2.6 Restructuring-related and other charges 283 345 397 1.5 2.0 2.8 Goodwill impairment 216 — — 1.3 — — Medical device regulations 115 90 63 0.6 0.5 0.4 Recall-related matters (12) 89 13 (0.1) 0.5 0.1 Regulatory and legal matters 69 (12) 8 0.4 (0.1) 0.1 Tax matters (66) 32 173 (0.4) 0.2 1.2 Adjusted $ 3,571 $ 3,474 $ 2,827 19.4 % 20.3 % 19.7 % Non-GAAP Financial Measures We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; percentage organic sales growth; adjusted gross profit; adjusted selling, general and administrative expenses; adjusted research, development and engineering expenses; adjusted operating income; adjusted other income (expense), net; adjusted effective income tax rate; adjusted net earnings; adjusted net earnings per diluted share (Diluted EPS); free cash flow; and free cash flow conversion.
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).
Excluding the impact of certain items, we achieved adjusted net earnings (1) of $3,571 and adjusted net earnings per diluted share (1) of $9.34 representing growth of 2.8%. We continued our capital allocation strategy by investing $2,563 in acquisitions and paying $1,051 in dividends to our shareholders.
We reported net earnings of $3,165 and net earnings per diluted share of $8.25. Excluding the impact of certain items, we achieved adjusted net earnings (1) of $4,066 and adjusted net earnings per diluted share (1) of $10.60 representing growth of 13.5%.
Dollar amounts in millions except per share amounts or as otherwise specified. 13 STRYKER CORPORATION 2022 FORM 10-K Excluding the 2.3% impact of acquisitions and divestitures, net sales in constant currency increased by 11.2% from increased unit volume and 0.6% due to higher prices. The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology products.
The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology products and most Orthopaedics and Spine products. MedSurg and Neurotechnology Net Sales MedSurg and Neurotechnology net sales in 2023 increased 11.5% as reported and 12.1% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.6%.
Refer to Note 8 to our Consolidated Financial Statements for further discussion and the factors that contributed to these impairment charges. 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.
We did not identify any factors in 2023 or 2022 that would lead us to believe that those reporting units are 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.
Removed
Our operations have been adversely impacted by the inflationary pressures primarily related to labor, steel and transportation costs as well as the impact of purchasing electronic components at premium prices on the spot market.
Added
Higher interest rates and capital costs, higher shipping costs, increased costs of labor, fluctuating foreign currency exchange rates and the military conflicts in Russia and Ukraine and the Middle East create additional economic challenges and uncertainties.
Removed
Sales growth in certain products has been constrained by the continuing supply chain challenges and electronic component shortages, especially impacting the capital products in our MedSurg businesses, although the supply chain constraints eased somewhat in the fourth quarter.
Added
We continued our capital allocation strategy by investing $390 in acquisitions and paying $1,139 in dividends to our shareholders. In May 2023 we acquired Cerus for net cash consideration of $289 and up to $225 in future milestone payments. Cerus designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke.
Removed
Russia and Ukraine Conflict The military conflict in Russia and Ukraine and the sanctions imposed by the United States government and other nations in response to this conflict have caused significant volatility and disruptions to the global markets. Given that we provide life-saving and life-enhancing products, we plan to continue operating in Russia provided we can safely do so.
Added
Cerus is part of our Neurovascular business within MedSurg and Neurotechnology. Refer to Note 6 to our Consolidated Financial Statements for further information. During 2023 we made payments of $850 to extinguish the remaining balance on the $1.5 billion term loan scheduled to mature February 22, 2025.
Removed
In 2022 net sales in Russia were approximately 0.3% of our revenues. Although Russia does not constitute a material portion of our business, there is uncertainty around the impact it will have on the global economy, supply chains and fuel and energy prices generally, and therefore our business.
Added
In August 2023 we issued €500 of floating rate senior notes due November 16, 2024. The notes bear interest at a rate based on the three-month Euro Interbank Offered Rate (EURIBOR) plus 0.3%. The notes are callable at February 16, 2024, May 16, 2024 or October 16, 2024 either by us or at the option of the notes holders.
Removed
China Volume-Based Procurement and Import Purchase Evaluation The government in China has launched regional and national programs for volume-based procurement (VBP) of high-value medical consumables to reduce healthcare costs. Each VBP program has specific requirements to award contracts to the lowest bidders who are able to satisfy the quality and quantity requirements.
Added
In November 2023 we repaid the outstanding €550 principal amount of 1.125% senior unsecured notes due November 30, 2023 and in December 2023 we repaid the outstanding $600 principal amount of 0.600% senior unsecured notes due December 1, 2023.
Removed
The successful bidders may be guaranteed sales volume for certain products, while unsuccessful bidders may lose unit sales volume. We have been a winning bidder in certain national and regional VBP programs, including those for joint replacement and trauma products in 2021 and certain neurovascular products in the fourth quarter of 2022.
Added
Endoscopy includes sales related to Other of $343, $302 and $277 for 2023, 2022 and 2021. We have reflected these changes in all historical periods presented. Consolidated Net Sales Consolidated net sales in 2023 increased 11.1% as reported and 11.6% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.5%.
Removed
The prices required for a successful bid have negatively impacted the commercial operations of joint replacement, trauma and certain neurovascular products in China. We were unsuccessful in our bids in the VBP program for spine products that took place in the third quarter of 2022 and as a result we are exiting the spine business in China.
Added
The key components of the change were: Dollar amounts in millions except per share amounts or as otherwise specified. 14 STRYKER CORPORATION 2023 FORM 10-K Gross Profit Percent Net Sales 2021 64.1 % Sales pricing (30) bps Volume and mix 110 bps Manufacturing and supply chain costs (360) bps Inventory stepped up to fair value 150 bps 2022 62.8 % Sales pricing 20 bps Volume and mix 100 bps Manufacturing and supply chain costs (40) bps Inventory stepped up to fair value 10 bps 2023 63.7 % Gross profit as a percentage of net sales increased to 63.7% in 2023 from 62.8% in 2022 due to higher sales pricing and favorable volume offset by higher manufacturing and supply chain costs primarily due to higher raw material costs in the first six months of 2023 and supply chain inefficiencies.
Removed
To date our other businesses have not been significantly impacted, but may be in the future as a result of additional VBP programs. China has also issued national guiding standards for Import Purchase Evaluation (IPE) which has increased the purchase of locally sourced equipment in China's public hospitals and is impacting our MedSurg business in China.
Added
While segment mix was not a significant driver of the change in gross profit as a percent of net sales between 2023, 2022 and 2021, 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 and Spine segment.
Removed
Our business in China represented approximately 2.4% our revenues in 2022. Overview of 2022 In 2022 we achieved reported net sales growth of 7.8%. Excluding the impact of acquisitions and divestitures, sales grew 9.7% in constant currency. We reported net earnings of $2,358 and net earnings per diluted share of $6.17.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−1 removed2 unchanged
Biggest changeOur operating results are primarily exposed to changes in exchange rates among the United States Dollar, Australian Dollar, British Pound, Canadian Dollar, Chinese Yuan, Euro and Japanese Yen.
Biggest changeOur operating results are primarily exposed to changes in exchange rates among the United States Dollar, Australian Dollar, British Pound, Canadian Dollar, Euro and Japanese Yen. We develop and manufacture products in the United States, Canada, China, Costa Rica, France, Germany, India, Ireland, Mexico, Switzerland, Turkey and the United Kingdom and incur costs in the applicable local currencies.
A hypothetical 10% change in foreign currencies relative to the United States Dollar would change the December 31, 2022 fair value of these instruments by approximately $388. Dollar amounts in millions except per share amounts or as otherwise specified. 20 STRYKER CORPORATION 2022 FORM 10-K
A hypothetical 10% change in foreign currencies relative to the United States Dollar would change the December 31, 2023 fair value of these instruments by approximately $389. Dollar amounts in millions except per share amounts or as otherwise specified. 22 STRYKER CORPORATION 2023 FORM 10-K
Removed
We develop and manufacture products in the United States, Canada, China, Dollar amounts in millions except per share amounts or as otherwise specified. 19 STRYKER CORPORATION 2022 FORM 10-K Costa Rica, France, Germany, India, Ireland, Mexico, Switzerland, Turkey and United Kingdom and incur costs in the applicable local currencies.

Other SYK 10-K year-over-year comparisons