QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of incorporation) | (I.R.S. Employer Identification No.) | ||||||||||||||||||||||
| |||||||||||||||||||||||
(Address of principal executive offices) | (Zip Code) | ||||||||||||||||||||||
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | Emerging growth company | ||||||||||||||||||||
Non-accelerated filer | ☐ | Small reporting company |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
ITEM 1. | FINANCIAL STATEMENTS |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
Net sales | $ | $ | |||||||||
Cost of sales | |||||||||||
Gross profit | $ | $ | |||||||||
Research, development and engineering expenses | |||||||||||
Selling, general and administrative expenses | |||||||||||
Amortization of intangible assets | |||||||||||
Total operating expenses | $ | $ | |||||||||
Operating income | $ | $ | |||||||||
Other income (expense), net | ( | ( | |||||||||
Earnings before income taxes | $ | $ | |||||||||
Income taxes | |||||||||||
Net earnings | $ | $ | |||||||||
Net earnings per share of common stock: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted-average shares outstanding (in millions): | |||||||||||
Basic | |||||||||||
Effect of dilutive employee stock compensation | |||||||||||
Diluted | |||||||||||
Cash dividends declared per share of common stock | $ | $ |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
Net earnings | $ | $ | |||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Marketable securities | |||||||||||
Pension plans | ( | ||||||||||
Unrealized gains (losses) on designated hedges | ( | ||||||||||
Financial statement translation | ( | ||||||||||
Total other comprehensive income (loss), net of tax | $ | $ | ( | ||||||||
Comprehensive income | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 1 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
March 31 | December 31 | ||||||||||
2024 | 2023 | ||||||||||
(Unaudited) | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Accounts receivable, less allowance of $ | |||||||||||
Inventories: | |||||||||||
Materials and supplies | |||||||||||
Work in process | |||||||||||
Finished goods | |||||||||||
Total inventories | $ | $ | |||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | $ | $ | |||||||||
Property, plant and equipment: | |||||||||||
Land, buildings and improvements | |||||||||||
Machinery and equipment | |||||||||||
Total property, plant and equipment | $ | $ | |||||||||
Less allowance for depreciation | |||||||||||
Property, plant and equipment, net | $ | $ | |||||||||
Goodwill | |||||||||||
Other intangibles, net | |||||||||||
Noncurrent deferred income tax assets | |||||||||||
Other noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and shareholders' equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued compensation | |||||||||||
Income taxes | |||||||||||
Dividends payable | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Current maturities of debt | |||||||||||
Total current liabilities | $ | $ | |||||||||
Long-term debt, excluding current maturities | |||||||||||
Income taxes | |||||||||||
Other noncurrent liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
Shareholders' equity | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total shareholders' equity | $ | $ | |||||||||
Total liabilities and shareholders' equity | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 2 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
Common stock shares outstanding (in millions) | |||||||||||
Beginning | |||||||||||
Issuance of common stock under stock compensation and benefit plans | |||||||||||
Ending | |||||||||||
Common stock | |||||||||||
Beginning | $ | $ | |||||||||
Issuance of common stock under stock compensation and benefit plans | |||||||||||
Ending | $ | $ | |||||||||
Additional paid-in capital | |||||||||||
Beginning | $ | $ | |||||||||
Issuance of common stock under stock compensation and benefit plans | ( | ( | |||||||||
Share-based compensation | |||||||||||
Ending | $ | $ | |||||||||
Retained earnings | |||||||||||
Beginning | $ | $ | |||||||||
Net earnings | |||||||||||
Cash dividends declared | ( | ( | |||||||||
Ending | $ | $ | |||||||||
Accumulated other comprehensive income (loss) | |||||||||||
Beginning | $ | ( | $ | ( | |||||||
Other comprehensive income (loss) | ( | ||||||||||
Ending | $ | ( | $ | ( | |||||||
Total shareholders' equity | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 3 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
Operating activities | |||||||||||
Net earnings | $ | $ | |||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation | |||||||||||
Amortization of intangible assets | |||||||||||
Asset impairments | |||||||||||
Share-based compensation | |||||||||||
Deferred income tax (benefit) expense | ( | ( | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | |||||||||||
Inventories | ( | ( | |||||||||
Accounts payable | ( | ( | |||||||||
Accrued expenses and other liabilities | ( | ( | |||||||||
Income taxes | |||||||||||
Other, net | ( | ( | |||||||||
Net cash provided by operating activities | $ | $ | |||||||||
Investing activities | |||||||||||
Acquisitions, net of cash acquired | ( | ||||||||||
Purchases of marketable securities | ( | ( | |||||||||
Proceeds from sales of marketable securities | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Other investing, net | |||||||||||
Net cash used in investing activities | $ | ( | $ | ( | |||||||
Financing activities | |||||||||||
Proceeds (payments) on short-term borrowings, net | ( | ( | |||||||||
Payments on long-term debt | ( | ||||||||||
Payments of dividends | ( | ( | |||||||||
Cash paid for taxes from withheld shares | ( | ( | |||||||||
Other financing, net | ( | ||||||||||
Net cash provided by (used in) financing activities | $ | ( | $ | ( | |||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
Change in cash and cash equivalents | $ | ( | $ | ( | |||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 4 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Net Sales by Business | |||||||||||
Three Months | |||||||||||
2024 | 2023 | ||||||||||
MedSurg and Neurotechnology: | |||||||||||
Instruments | $ | $ | |||||||||
Endoscopy | |||||||||||
Medical | |||||||||||
Neurovascular | |||||||||||
Neuro Cranial | |||||||||||
$ | $ | ||||||||||
Orthopaedics and Spine: | |||||||||||
Knees | $ | $ | |||||||||
Hips | |||||||||||
Trauma and Extremities | |||||||||||
Spine | |||||||||||
Other | |||||||||||
$ | $ | ||||||||||
Total | $ | $ |
Net Sales by Geography | |||||||||||||||||
Three Months 2024 | Three Months 2023 | ||||||||||||||||
United States | International | United States | International | ||||||||||||||
MedSurg and Neurotechnology: | |||||||||||||||||
Instruments | $ | $ | $ | $ | |||||||||||||
Endoscopy | |||||||||||||||||
Medical | |||||||||||||||||
Neurovascular | |||||||||||||||||
Neuro Cranial | |||||||||||||||||
$ | $ | $ | $ | ||||||||||||||
Orthopaedics and Spine: | |||||||||||||||||
Knees | $ | $ | $ | $ | |||||||||||||
Hips | |||||||||||||||||
Trauma and Extremities | |||||||||||||||||
Spine | |||||||||||||||||
Other | |||||||||||||||||
$ | $ | $ | $ | ||||||||||||||
Total | $ | $ | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 5 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
March 31 | |||||
2024 | |||||
Beginning contract liabilities | $ | ||||
Revenue recognized from beginning of year contract liabilities | ( | ||||
Net advance consideration received during the period | |||||
Ending contract liabilities | $ |
Three Months 2024 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||||
Beginning | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||
OCI | |||||||||||||||||
Income taxes | ( | ( | ( | ||||||||||||||
Reclassifications to: | |||||||||||||||||
Cost of sales | ( | ( | |||||||||||||||
Other (income) expense, net | ( | ( | ( | ||||||||||||||
Income taxes | |||||||||||||||||
Net OCI | $ | $ | $ | $ | $ | ||||||||||||
Ending | $ | $ | ( | $ | $ | ( | $ | ( |
Three Months 2023 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||||
Beginning | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||
OCI | ( | ( | |||||||||||||||
Income taxes | ( | ( | |||||||||||||||
Reclassifications to: | |||||||||||||||||
Cost of sales | ( | ( | |||||||||||||||
Other (income) expense, net | ( | ( | ( | ( | |||||||||||||
Income taxes | |||||||||||||||||
Net OCI | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||
Ending | $ | ( | $ | $ | $ | ( | $ | ( |
March 2024 | Cash Flow | Net Investment | Non-Designated | Total | ||||||||||
Gross notional amount | $ | $ | $ | $ | ||||||||||
Maximum term in years | ||||||||||||||
Fair value: | ||||||||||||||
Other current assets | $ | $ | $ | $ | ||||||||||
Other noncurrent assets | ||||||||||||||
Other current liabilities | ( | ( | ( | |||||||||||
Other noncurrent liabilities | ( | ( | ( | |||||||||||
Total fair value | $ | $ | $ | $ |
December 2023 | Cash Flow | Net Investment | Non-Designated | Total | ||||||||||
Gross notional amount | $ | $ | $ | $ | ||||||||||
Maximum term in years | ||||||||||||||
Fair value: | ||||||||||||||
Other current assets | $ | $ | $ | $ | ||||||||||
Other noncurrent assets | ||||||||||||||
Other current liabilities | ( | ( | ( | |||||||||||
Other noncurrent liabilities | ( | ( | ( | |||||||||||
Total fair value | $ | $ | $ | ( | $ |
Three Months | ||||||||||||||
Derivative Instrument | Recognized in: | 2024 | 2023 | |||||||||||
Cash Flow | Cost of sales | $ | $ | |||||||||||
Net Investment | Other income (expense), net | |||||||||||||
Non-Designated | Other income (expense), net | ( | ||||||||||||
Total | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 6 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Assets Measured at Fair Value | March 31 | December 31 | |||||||||
2024 | 2023 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Trading marketable securities | |||||||||||
Level 1 - Assets | $ | $ | |||||||||
Available-for-sale marketable securities: | |||||||||||
Corporate and asset-backed debt securities | $ | $ | |||||||||
United States agency debt securities | |||||||||||
United States treasury debt securities | |||||||||||
Certificates of deposit | |||||||||||
Total available-for-sale marketable securities | $ | $ | |||||||||
Foreign currency exchange forward contracts | |||||||||||
Level 2 - Assets | $ | $ | |||||||||
Total assets measured at fair value | $ | $ |
Liabilities Measured at Fair Value | March 31 | December 31 | |||||||||
2024 | 2023 | ||||||||||
Deferred compensation arrangements | $ | $ | |||||||||
Level 1 - Liabilities | $ | $ | |||||||||
Foreign currency exchange forward contracts | $ | $ | |||||||||
Level 2 - Liabilities | $ | $ | |||||||||
Contingent consideration: | |||||||||||
Beginning | $ | $ | |||||||||
Additions | |||||||||||
Change in estimate and foreign exchange | ( | ( | |||||||||
Settlements | ( | ( | |||||||||
Ending | $ | $ | |||||||||
Level 3 - Liabilities | $ | $ | |||||||||
Total liabilities measured at fair value | $ | $ |
Fair Value of Available for Sale Securities by Maturity | |||||||||||
March 31 | December 31 | ||||||||||
2024 | 2023 | ||||||||||
Due in one year or less | $ | $ | |||||||||
Due after one year through three years | $ | $ |
Leases | March 31 | December 31 | |||||||||
2024 | 2023 | ||||||||||
Right-of-use assets | $ | $ | |||||||||
Lease liabilities, current | $ | $ | |||||||||
Lease liabilities, non-current | $ | $ | |||||||||
Other information: | |||||||||||
Weighted-average remaining lease term (years) | |||||||||||
Weighted-average discount rate | % | % |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
Operating lease cost | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 7 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Purchase Price Allocation of Acquired Net Assets | |||||
2023 | Cerus | ||||
Tangible assets acquired: | |||||
Accounts receivable | $ | ||||
Inventory | |||||
Deferred income tax assets | |||||
Other assets | |||||
Deferred income tax liabilities | ( | ||||
Other liabilities | ( | ||||
Intangible assets: | |||||
Developed technology | |||||
Goodwill | |||||
Purchase price, net of cash acquired of $ | $ | ||||
Weighted average amortization period at acquisition (years): | |||||
Developed technologies | |||||
Consolidated Estimated Amortization Expense | ||||||||||||||
Remainder of 2024 | 2025 | 2026 | 2027 | 2028 | ||||||||||
$ | $ | $ | $ | $ |
Summary of Total Debt | March 31 | December 31 | ||||||||||||||||||
2024 | 2023 | |||||||||||||||||||
Rate | Due | |||||||||||||||||||
Senior unsecured notes: | ||||||||||||||||||||
May 15, 2024 | $ | $ | ||||||||||||||||||
Floating | November 16, 2024 | |||||||||||||||||||
December 3, 2024 | ||||||||||||||||||||
June 15, 2025 | ||||||||||||||||||||
November 1, 2025 | ||||||||||||||||||||
March 15, 2026 | ||||||||||||||||||||
November 30, 2027 | ||||||||||||||||||||
March 7, 2028 | ||||||||||||||||||||
December 8, 2028 | ||||||||||||||||||||
December 11, 2028 | ||||||||||||||||||||
March 1, 2029 | ||||||||||||||||||||
June 15, 2030 | ||||||||||||||||||||
November 30, 2030 | ||||||||||||||||||||
December 3, 2031 | ||||||||||||||||||||
April 1, 2043 | ||||||||||||||||||||
May 15, 2044 | ||||||||||||||||||||
March 15, 2046 | ||||||||||||||||||||
June 15, 2050 | ||||||||||||||||||||
Total debt | $ | $ | ||||||||||||||||||
Less current maturities | ||||||||||||||||||||
Total long-term debt | $ | $ | ||||||||||||||||||
March 31 | December 31 | |||||||||||||||||||
2024 | 2023 | |||||||||||||||||||
Unamortized debt issuance costs | $ | $ | ||||||||||||||||||
Borrowing capacity on existing facilities | $ | $ | ||||||||||||||||||
Fair value of senior unsecured notes | $ | $ |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
MedSurg and Neurotechnology | $ | $ | |||||||||
Orthopaedics and Spine | |||||||||||
Net sales | $ | $ | |||||||||
MedSurg and Neurotechnology | $ | $ | |||||||||
Orthopaedics and Spine | |||||||||||
Segment operating income | $ | $ | |||||||||
Items not allocated to segments: | |||||||||||
Corporate and other | $ | ( | $ | ( | |||||||
Acquisition and integration-related costs | ( | ||||||||||
Amortization of intangible assets | ( | ( | |||||||||
Structural optimization and other special charges | ( | ( | |||||||||
Medical device regulations | ( | ( | |||||||||
Recall-related matters | ( | ||||||||||
Regulatory and legal matters | ( | ( | |||||||||
Consolidated operating income | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 8 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
CONSOLIDATED RESULTS OF OPERATIONS | |||||||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||||||
Percent Net Sales | Percentage | ||||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | Change | |||||||||||||||||||||||||
Net sales | $ | 5,243 | $ | 4,778 | 100.0 | % | 100.0 | % | 9.7 | % | |||||||||||||||||||
Gross profit | 3,333 | 3,016 | 63.6 | 63.1 | 10.5 | ||||||||||||||||||||||||
Research, development and engineering expenses | 368 | 339 | 7.0 | 7.1 | 8.6 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 1,840 | 1,781 | 35.1 | 37.3 | 3.3 | ||||||||||||||||||||||||
Amortization of intangible assets | 153 | 161 | 2.9 | 3.4 | (5.0) | ||||||||||||||||||||||||
Other income (expense), net | (49) | (56) | (0.9) | (1.2) | (12.5) | ||||||||||||||||||||||||
Income taxes | 135 | 87 | nm | nm | 55.2 | ||||||||||||||||||||||||
Net earnings | $ | 788 | $ | 592 | 15.0 | % | 12.4 | % | 33.1 | % | |||||||||||||||||||
Net earnings per diluted share | $ | 2.05 | $ | 1.54 | 33.1 | % | |||||||||||||||||||||||
Adjusted net earnings per diluted share(1) | $ | 2.50 | $ | 2.14 | 16.8 | % |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 9 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Geographic and Segment Net Sales | Three Months | |||||||||||||||||||
Percentage Change | ||||||||||||||||||||
2024 | 2023 | As Reported | Constant Currency | |||||||||||||||||
Geographic: | ||||||||||||||||||||
United States | $ | 3,914 | $ | 3,512 | 11.4 | % | 11.4 | % | ||||||||||||
International | 1,329 | 1,266 | 4.9 | 6.8 | ||||||||||||||||
Total | $ | 5,243 | $ | 4,778 | 9.7 | % | 10.2 | % | ||||||||||||
Segment: | ||||||||||||||||||||
MedSurg and Neurotechnology | $ | 2,999 | $ | 2,690 | 11.5 | % | 12.0 | % | ||||||||||||
Orthopaedics and Spine | 2,244 | 2,088 | 7.5 | 8.0 | ||||||||||||||||
Total | $ | 5,243 | $ | 4,778 | 9.7 | % | 10.2 | % |
Supplemental Net Sales Growth Information | |||||||||||||||||||||||||||||||||||
Three Months | |||||||||||||||||||||||||||||||||||
Percentage Change | |||||||||||||||||||||||||||||||||||
United States | International | ||||||||||||||||||||||||||||||||||
2024 | 2023 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | |||||||||||||||||||||||||||||
MedSurg and Neurotechnology: | |||||||||||||||||||||||||||||||||||
Instruments | $ | 667 | $ | 566 | 17.7 | % | 17.9 | % | 20.3 | % | 8.6 | % | 9.8 | % | |||||||||||||||||||||
Endoscopy | 778 | 707 | 10.1 | 10.5 | 11.1 | 5.9 | 8.1 | ||||||||||||||||||||||||||||
Medical | 864 | 778 | 11.0 | 11.1 | 16.8 | (10.3) | (9.5) | ||||||||||||||||||||||||||||
Neurovascular | 310 | 284 | 9.1 | 11.4 | 2.9 | 13.4 | 17.5 | ||||||||||||||||||||||||||||
Neuro Cranial | 380 | 355 | 7.0 | 7.5 | 7.0 | 6.7 | 9.5 | ||||||||||||||||||||||||||||
$ | 2,999 | $ | 2,690 | 11.5 | % | 12.0 | % | 13.8 | % | 4.3 | % | 6.4 | % | ||||||||||||||||||||||
Orthopaedics and Spine: | |||||||||||||||||||||||||||||||||||
Knees | $ | 588 | $ | 566 | 4.0 | % | 4.5 | % | 3.1 | % | 6.3 | % | 8.2 | % | |||||||||||||||||||||
Hips | 393 | 375 | 5.1 | 6.1 | 6.8 | 2.1 | 5.0 | ||||||||||||||||||||||||||||
Trauma and Extremities | 830 | 769 | 7.9 | 8.0 | 10.3 | 1.7 | 2.1 | ||||||||||||||||||||||||||||
Spine | 300 | 284 | 5.5 | 5.7 | 3.9 | 10.2 | 11.1 | ||||||||||||||||||||||||||||
Other | 133 | 94 | 41.2 | 44.2 | 45.6 | 33.1 | 41.4 | ||||||||||||||||||||||||||||
$ | 2,244 | $ | 2,088 | 7.5 | % | 8.0 | % | 8.3 | % | 5.6 | % | 7.4 | % | ||||||||||||||||||||||
Total | $ | 5,243 | $ | 4,778 | 9.7 | % | 10.2 | % | 11.4 | % | 4.9 | % | 6.8 | % |
Gross Profit Percent Net Sales | |||||
Three Months 2023 | 63.1 | % | |||
Sales pricing | 30 bps | ||||
Volume and mix | 60 bps | ||||
Manufacturing and supply chain costs | (40) bps | ||||
Three Months 2024 | 63.6 | % |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 10 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Operating Income Percent Net Sales | ||||||||
MedSurg and Neurotechnology | Orthopaedics and Spine | |||||||
Three Months 2023 | 23.3 | % | 28.8 | % | ||||
Sales pricing | 100 bps | (10) bps | ||||||
Volume | 370 bps | 160 bps | ||||||
Manufacturing and supply chain costs | 190 bps | (50) bps | ||||||
Research, development and engineering expenses | (100) bps | (90) bps | ||||||
Selling, general and administrative expenses | (210) bps | (190) bps | ||||||
Three Months 2024 | 26.8 | % | 27.0 | % |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 11 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 12 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | |||||||||||||||||||||||||||||
Three Months 2024 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
Reported | $ | 3,333 | $ | 1,840 | $ | 368 | $ | 972 | $ | (49) | $ | 135 | $ | 788 | 14.6 | % | $ | 2.05 | |||||||||||
Reported percent net sales | 63.6 | % | 35.1 | % | 7.0 | % | 18.5 | % | (0.9) | % | nm | 15.0 | % | ||||||||||||||||
Acquisition and integration-related costs: | |||||||||||||||||||||||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Other acquisition and integration-related (a) | — | 13 | — | (13) | — | 1 | (14) | 0.3 | (0.04) | ||||||||||||||||||||
Amortization of purchased intangible assets | — | — | — | 153 | — | 32 | 121 | 1.4 | 0.31 | ||||||||||||||||||||
Structural optimization and other special charges (b) | 3 | (11) | — | 14 | — | 3 | 11 | 0.2 | 0.03 | ||||||||||||||||||||
Medical device regulations (c) | 1 | — | (12) | 13 | — | 3 | 10 | 0.1 | 0.03 | ||||||||||||||||||||
Recall-related matters (d) | — | (5) | — | 5 | — | 1 | 4 | 0.1 | 0.01 | ||||||||||||||||||||
Regulatory and legal matters (e) | — | (2) | — | 2 | — | 1 | 1 | — | — | ||||||||||||||||||||
Tax matters (f) | — | — | — | — | — | (41) | 41 | (4.4) | 0.11 | ||||||||||||||||||||
Adjusted | $ | 3,337 | $ | 1,835 | $ | 356 | $ | 1,146 | $ | (49) | $ | 135 | $ | 962 | 12.3 | % | $ | 2.50 | |||||||||||
Adjusted percent net sales | 63.6 | % | 35.0 | % | 6.8 | % | 21.9 | % | (0.9) | % | nm | 18.3 | % |
Three Months 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 | $ | 3,016 | $ | 1,781 | $ | 339 | $ | 735 | $ | (56) | $ | 87 | $ | 592 | 12.8 | % | $ | 1.54 | |||||||||||
Reported percent net sales | 63.1 | % | 37.3 | % | 7.1 | % | 15.4 | % | (1.2) | % | nm | 12.4 | % | ||||||||||||||||
Acquisition and integration-related costs: | |||||||||||||||||||||||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Other acquisition and integration-related (a) | — | (6) | — | 6 | — | 1 | 5 | 0.1 | 0.01 | ||||||||||||||||||||
Amortization of purchased intangible assets | — | — | — | 161 | — | 34 | 127 | 2.0 | 0.33 | ||||||||||||||||||||
Structural optimization and other special charges (b) | 2 | (40) | — | 42 | — | 8 | 34 | 0.3 | 0.09 | ||||||||||||||||||||
Medical device regulations (c) | — | — | (28) | 28 | — | 5 | 23 | 0.2 | 0.06 | ||||||||||||||||||||
Recall-related matters (d) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Regulatory and legal matters (e) | — | (34) | — | 34 | — | 6 | 28 | 0.3 | 0.07 | ||||||||||||||||||||
Tax matters (f) | — | — | — | — | (9) | (20) | 11 | (2.9) | 0.04 | ||||||||||||||||||||
Adjusted | $ | 3,018 | $ | 1,701 | $ | 311 | $ | 1,006 | $ | (65) | $ | 121 | $ | 820 | 12.8 | % | $ | 2.14 | |||||||||||
Adjusted percent net sales | 63.2 | % | 35.6 | % | 6.5 | % | 21.1 | % | (1.4) | % | nm | 17.2 | % |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
Termination of sales relationships | $ | 1 | $ | — | |||||||
Changes in the fair value of contingent consideration | (16) | (1) | |||||||||
Manufacturing integration costs | — | 2 | |||||||||
Other integration-related activities | 2 | 5 | |||||||||
Adjustments to Operating Income | $ | (13) | $ | 6 | |||||||
Adjustments to Income Taxes | $ | 1 | $ | 1 | |||||||
Adjustments to Net Earnings | $ | (14) | $ | 5 |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
Employee retention and workforce reductions | $ | (1) | $ | 21 | |||||||
Closure/transfer of manufacturing and other facilities | 6 | 12 | |||||||||
Product line exits | — | 3 | |||||||||
Certain long-lived and intangible asset write-offs and impairments | 3 | 1 | |||||||||
Other charges | 6 | 5 | |||||||||
Adjustments to Operating Income | $ | 14 | $ | 42 | |||||||
Adjustments to Income Taxes | $ | 3 | $ | 8 | |||||||
Adjustments to Net Earnings | $ | 11 | $ | 34 |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 13 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
Three Months | |||||||||||
2024 | 2023 | ||||||||||
Adjustments related to the transfer of certain intellectual properties between tax jurisdictions | $ | (47) | $ | (47) | |||||||
Certain tax audit settlements | — | 28 | |||||||||
Other tax matters | 6 | (1) | |||||||||
Adjustments to Income Taxes | $ | (41) | $ | (20) | |||||||
Benefits for certain tax audit settlements | — | (9) | |||||||||
Adjustments to Other Income (Expense), Net | $ | — | $ | (9) | |||||||
Adjustments to Net Earnings | $ | 41 | $ | 11 |
Three Months | |||||||||||
Net cash provided by (used in): | 2024 | 2023 | |||||||||
Operating activities | $ | 204 | $ | 445 | |||||||
Investing activities | (408) | (132) | |||||||||
Financing activities | (418) | (481) | |||||||||
Effect of exchange rate changes | (19) | (5) | |||||||||
Change in cash and cash equivalents | $ | (641) | $ | (173) |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 14 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
31(i) | |||||
31(ii) | |||||
32(i)* | |||||
32(ii)* | |||||
101.INS | iXBRL Instance Document | ||||
101.SCH | iXBRL Schema Document | ||||
101.CAL | iXBRL Calculation Linkbase Document | ||||
101.DEF | iXBRL Definition Linkbase Document | ||||
101.LAB | iXBRL Label Linkbase Document | ||||
101.PRE | iXBRL Presentation Linkbase Document | ||||
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) | ||||
* Furnished with this Form 10-Q |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 15 |
STRYKER CORPORATION | 2024 First Quarter Form 10-Q |
STRYKER CORPORATION | |||||||||||
(Registrant) | |||||||||||
Date: | May 1, 2024 | /s/ KEVIN A. LOBO | |||||||||
Kevin A. Lobo | |||||||||||
Chair, Chief Executive Officer and President | |||||||||||
Date: | May 1, 2024 | /s/ GLENN S. BOEHNLEIN | |||||||||
Glenn S. Boehnlein | |||||||||||
Vice President, Chief Financial Officer |
16 |
Date: | May 1, 2024 | /s/ KEVIN A. LOBO | ||||||
Kevin A. Lobo | ||||||||
Chair, Chief Executive Officer and President |
Date: | May 1, 2024 | /s/ GLENN S. BOEHNLEIN | ||||||
Glenn S. Boehnlein | ||||||||
Vice President, Chief Financial Officer |
Date: | May 1, 2024 | /s/ KEVIN A. LOBO | ||||||
Kevin A. Lobo | ||||||||
Chair, Chief Executive Officer and President |
Date: | May 1, 2024 | /s/ GLENN S. BOEHNLEIN | ||||||
Glenn S. Boehnlein | ||||||||
Vice President, Chief Financial Officer |
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CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Statement [Abstract] | ||
Net sales | $ 5,243 | $ 4,778 |
Cost of sales | 1,910 | 1,762 |
Gross profit | 3,333 | 3,016 |
Research, development and engineering expenses | 368 | 339 |
Selling, general and administrative expenses | 1,840 | 1,781 |
Amortization of intangible assets | 153 | 161 |
Total operating expenses | 2,361 | 2,281 |
Operating income | 972 | 735 |
Other income (expense), net | (49) | (56) |
Earnings before income taxes | 923 | 679 |
Income taxes | 135 | 87 |
Net earnings | $ 788 | $ 592 |
Net earnings per share of common stock: | ||
Basic (in dollars per share) | $ 2.07 | $ 1.56 |
Diluted (in dollars per share) | $ 2.05 | $ 1.54 |
Weighted-average shares outstanding (in millions): | ||
Basic (in shares) | 380.4 | 379.0 |
Effect of dilutive employee stock compensation (in shares) | 4.7 | 4.2 |
Diluted (in shares) | 385.1 | 383.2 |
Cash dividends declared per share of common stock (in dollars per share) | $ 0.80 | $ 0.75 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 788 | $ 592 |
Other comprehensive income (loss), net of tax: | ||
Marketable securities | 0 | 0 |
Pension plans | 2 | (2) |
Unrealized gains (losses) on designated hedges | 2 | (9) |
Financial statement translation | 35 | (73) |
Total other comprehensive income (loss), net of tax | 39 | (84) |
Comprehensive income | $ 827 | $ 508 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 175 | $ 182 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Basis Of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION General Information Management believes the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring items, considered necessary to fairly present the financial position of Stryker Corporation and its consolidated subsidiaries ("Stryker," the "Company," "we," "us" or "our") on March 31, 2024 and the results of operations for the three months 2024. The results of operations included in these Consolidated Financial Statements may not necessarily be indicative of our annual results. These statements should be read in conjunction with our Annual Report on Form 10-K for 2023. New Accounting Pronouncements Not Yet Adopted In December 2023 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 (Topic 740): Income Taxes: Improvements to Income Tax Disclosures which expands the existing rules on income tax disclosures. This update requires entities to disclose specific categories in the tax rate reconciliation, provide additional information for reconciling items that meet a quantitative threshold and disclose additional information about income taxes paid on an annual basis. The new disclosure requirements are effective for fiscal years beginning after December 15, 2024 and we will adopt this ASU in 2025. In November 2023 the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which expands disclosure requirements to require entities to disclose significant segment expenses that are regularly provided to or easily computed from information regularly provided to the chief operating decision maker. This update also requires all annual disclosures currently required by Topic 280 to be disclosed in interim periods. The new disclosure requirements are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We will adopt this ASU in the fourth quarter 2024. We evaluate all ASUs issued by the FASB for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.
|
Revenue Recognition |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | REVENUE RECOGNITION Our policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for 2023. We disaggregate our net sales by business and geographic location for each of our segments as we believe it best depicts how the nature, amount, timing and certainty of our net sales and cash flows are affected by economic factors. Beginning in the first quarter 2024, a product line previously included in Instruments has been reclassified to Endoscopy to align with a change in our internal reporting structure. We have reflected this change in all historical periods presented.
We sell certain customer lease agreements and the related leased assets to third-party financial institutions to accelerate our cash collection cycle. The lease receivables are sold without recourse and are derecognized from our Consolidated Balance Sheets at the time of sale. Under the terms of our arrangements, we collect lease payments on behalf of the financial institutions but maintain no other form of continuing involvement. Sales of these lease agreements are classified as operating activities in our Consolidated Statements of Cash Flows. Fees earned for our servicing activities are immaterial. Revenue related to customer lease agreements sold under these arrangements represented approximately 3% of our total revenue for the three months 2024 and 2023. Contract Assets and Liabilities On March 31, 2024 and December 31, 2023 contract assets recorded in our Consolidated Balance Sheets were not significant. Our contract liabilities arise as a result of consideration received from customers at inception of contracts for certain businesses or where the timing of billing for services precedes satisfaction of our performance obligations. This occurs primarily when payment is received upfront for certain multi-period extended service contracts. Our contract liabilities of $866 and $860 on March 31, 2024 and December 31, 2023 are classified within accrued |
Accumulated Other Comprehensive (Loss) Income (AOCI) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive (Loss) Income (AOCI) | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI)
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | DERIVATIVE INSTRUMENTS We use operational and economic hedges, foreign currency exchange forward contracts, net investment hedges (both derivative and non-derivative financial instruments) and interest rate derivative instruments to manage the impact of currency exchange and interest rate fluctuations on earnings, cash flow and equity. We do not enter into derivative instruments for speculative purposes. We are exposed to potential credit loss in the event of nonperformance by counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum loss exposure is the asset balance of the instrument. We have not changed our hedging strategies, accounting practices or objectives from those disclosed in our Annual Report on Form 10-K for 2023. Foreign Currency Hedges
We had €1.5 billion at March 31, 2024 and December 31, 2023 in certain forward currency contracts designated as net investment hedges to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros. In addition to these derivative financial instruments designated as net investment hedges, we had €4.9 billion at March 31, 2024 and December 31, 2023 of senior unsecured notes designated as net investment hedges to selectively hedge portions of our investment in certain international subsidiaries. The currency effects of our Euro-denominated senior unsecured notes are reflected in AOCI within shareholders' equity where they offset gains and losses recorded on our net investment in international subsidiaries. The total after-tax gain (loss) recognized in OCI related to designated net investment hedges was $122 in the three months 2024. Currency Exchange Rate Gains (Losses) Recognized in Net Earnings
Pretax gains (losses) on derivatives designated as cash flow hedges of $26 and net investment hedges of $24 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense), net in earnings within 12 months of March 31, 2024. This cash flow hedge reclassification is primarily due to the sale of inventory that includes previously hedged purchases. A component of the AOCI amounts related to net investment hedges is reclassified over the life of the hedge instruments as we elected to exclude the initial value of the component related to the spot-forward difference from the effectiveness assessment. Interest Rate Hedges Pretax gains of $4 recorded in AOCI related to interest rate hedges closed in conjunction with debt issuances are expected to be reclassified to other income (expense), net in earnings within 12 months of March 31, 2024. The cash flow effect of interest rate hedges is recorded in cash flow from operations. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS Our policies for managing risk related to foreign currency, interest rates, credit and markets and our process for determining fair value have not changed from those described in our Annual Report on Form 10-K for 2023. In 2023 we recorded $192 of contingent consideration related to the acquisition of Cerus Endovascular Limited (Cerus) described in Note 7. There were no significant transfers into or out of any level of the fair value hierarchy in 2024.
On March 31, 2024 and December 31, 2023 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest income on cash and cash equivalents, short-term investments and marketable securities income was $36 and $13 in the three months 2024 and 2023, which was recorded in other income (expense), net. Our investments in available-for-sale marketable securities had a minimum credit quality rating of A2 (Moody's), A (Standard & Poor's) and A (Fitch). We do not plan to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.
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Contingencies and Commitments |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contingencies and Commitments | CONTINGENCIES AND COMMITMENTS We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters, the most significant of which are more fully described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management had sufficient information to reasonably estimate our future obligations, a liability representing management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for certain claims and expenses. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, results of operations and cash flows. In February 2024 we reached an agreement with PureWick Corporation and its affiliates to settle patent infringement claims related to our PrimaFit and PrimoFit products. The terms of the settlement agreement are confidential and did not have a significant impact to our previously recorded reserves, financial position, results of operations or cash flows. We are currently investigating whether certain business activities in certain foreign countries violated provisions of the Foreign Corrupt Practices Act (FCPA) and have engaged outside counsel to conduct these investigations. We have been contacted by the United States Securities and Exchange Commission, United States Department of Justice and certain other regulatory authorities and are cooperating with these agencies. At this time we are unable to predict the outcome of the investigations or the potential impact, if any, on our financial statements. We have conducted voluntary recalls of certain products, including our Rejuvenate and ABG II Modular-Neck hip stems and certain lot-specific sizes and offsets of LFIT Anatomic CoCr V40 Femoral Heads. Additionally, we are responsible for certain product liability claims, primarily related to certain hip products sold by Wright Medical Group N.V. (Wright) prior to its 2014 divestiture of the OrthoRecon business. We have incurred, and expect to incur in the future, costs associated with the defense and settlement of claims and lawsuits. Based on the information that has been received related to the matters discussed above, our accrual for these matters was $277 at March 31, 2024, representing our best estimate of probable loss. The final outcomes of these matters are dependent on many factors that are difficult to predict. Accordingly the ultimate cost related to these matters may be materially different than the amount of our current estimate and accruals and could have a material adverse effect on our results of operations and cash flows.
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Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS We acquire stock in companies and various assets that continue to support our capital deployment and product development strategies. In the three months 2024 and 2023 cash paid for acquisitions, net of cash acquired was $246 and $0. On March 20, 2024 we acquired SERF SAS (SERF) for a purchase price of $246. SERF's implants strengthen the global portfolio of our Joint Replacement business within Orthopaedics and Spine. The purchase price allocation for SERF is based on preliminary valuations, primarily related to developed technology and customer relationships. Goodwill attributable to the acquisition is not deductible for tax purposes. In May 2023 we acquired Cerus for net cash consideration of $289 and up to $225 in future milestone payments that had a fair value of $192 at the acquisition date. Cerus designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke. Cerus is part of our Neurovascular business within MedSurg and Neurotechnology. Goodwill attributable to the acquisition is not deductible for tax purposes. The purchase price allocation for Cerus is:
The purchase price allocation for Cerus is based on preliminary valuations, primarily related to developed technology and deferred income taxes. Our estimates and assumptions are subject to change within the measurement period.
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Debt and Credit Facilities |
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Long-Term Debt, Unclassified [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt And Credit Facilities | DEBT AND CREDIT FACILITIES We have lines of credit issued by various financial institutions that are available to fund our day-to-day operating needs. Certain of our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on March 31, 2024. On March 31, 2024 there were no borrowings outstanding under our revolving credit facility or our commercial paper program which allows for maturities up to 397 days from the date of issuance. The maximum amount of our commercial paper that can be outstanding at any time is $2,250.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXESOur effective tax rates were 14.6% and 12.8% in the three months 2024 and 2023. The effective tax rates for the three months 2024 and 2023 reflect the continued lower effective income tax rates as a result of our European operations and certain discrete tax items. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION
There were no significant changes to total assets by segment from the information provided in our Annual Report on Form 10-K for 2023.
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Basis Of Presentation (Policies) |
3 Months Ended |
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Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Not Yet Adopted In December 2023 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 (Topic 740): Income Taxes: Improvements to Income Tax Disclosures which expands the existing rules on income tax disclosures. This update requires entities to disclose specific categories in the tax rate reconciliation, provide additional information for reconciling items that meet a quantitative threshold and disclose additional information about income taxes paid on an annual basis. The new disclosure requirements are effective for fiscal years beginning after December 15, 2024 and we will adopt this ASU in 2025. In November 2023 the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which expands disclosure requirements to require entities to disclose significant segment expenses that are regularly provided to or easily computed from information regularly provided to the chief operating decision maker. This update also requires all annual disclosures currently required by Topic 280 to be disclosed in interim periods. The new disclosure requirements are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We will adopt this ASU in the fourth quarter 2024. We evaluate all ASUs issued by the FASB for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.
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Revenue Recognition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregated Revenue |
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Contract with Customer, Contract Asset, Contract Liability, and Receivable | Changes in contract liabilities during the three months 2024 were as follows:
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Accumulated Other Comprehensive (Loss) Income (AOCI) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) |
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Reclassification out of Accumulated Other Comprehensive Income |
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Derivative Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value |
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Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location |
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
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Investments Classified by Contractual Maturity Date |
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Contingencies and Commitments (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost |
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Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | urchase price allocation for Cerus is:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense |
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Debt and Credit Facilities (Tables) |
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Long-Term Debt, Unclassified [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments |
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and Other Financial Information by Business Segment |
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Revenue Recognition - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Disaggregation of Revenue [Line Items] | |||
Contract liabilities | $ 866 | $ 860 | |
Revenue Benchmark | Product Concentration Risk | Customer Lease Agreements | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk (as a percent) | 3.00% | 3.00% |
Revenue Recognition - Changes in Contract Liabilities (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2024
USD ($)
| |
Movement In Contract Liabilities [Roll Forward] | |
Beginning contract liabilities | $ 860 |
Revenue recognized from beginning of year contract liabilities | (153) |
Net advance consideration received during the period | 159 |
Ending contract liabilities | $ 866 |
Derivative Instruments (Income Statement Location) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Foreign Exchange Contract | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net currency exchange rate gains (losses) | $ 21 | $ 17 |
Foreign Exchange Contract | Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net currency exchange rate gains (losses) | 10 | 13 |
Foreign Exchange Contract | Other income (expense), net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net currency exchange rate gains (losses) | 3 | (4) |
Net Investment | Other income (expense), net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net currency exchange rate gains (losses) | $ 8 | $ 8 |
Fair Value Measurements (Assets and Liabilities Measured At Fair Value On A Recurring Basis Using Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Due in one year or less | $ 36 | $ 46 |
Due after one year through three years | $ 41 | $ 36 |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Fair Value Disclosures [Abstract] | ||
Gain on sale of marketable securities | $ 36 | $ 13 |
Contingencies and Commitments (Narrative) (Details) $ in Millions |
Mar. 31, 2024
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Estimate of possible loss | $ 277 |
Contingencies and Commitments - Leases (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Right-of-use assets | $ 525 | $ 494 | |
Lease liabilities, current | 157 | 143 | |
Lease liabilities, non-current | $ 378 | $ 356 | |
Other information: | |||
Weighted-average remaining lease term (years) | 5 years 2 months 12 days | 5 years 6 months | |
Weighted-average discount rate | 3.92% | 3.87% | |
Operating lease cost | $ 47 | $ 38 |
Acquisitions (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 20, 2024 |
May 02, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Business Acquisition [Line Items] | |||||
Acquisitions, net of cash acquired | $ 246 | $ 0 | |||
SERF | |||||
Business Acquisition [Line Items] | |||||
Aggregate purchase price of acquisitions | $ 246 | ||||
Cerus | |||||
Business Acquisition [Line Items] | |||||
Aggregate purchase price of acquisitions | $ 289 | ||||
Business acquisition, future milestone payments (up to) | $ 225 | ||||
Fair value of contingent consideration | $ 192 |
Acquisitions (Allocation Of The Preliminary Purchase Price To The Acquired Net Assets (Details) - USD ($) $ in Millions |
May 02, 2023 |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 15,351 | $ 15,243 | |
Cerus | |||
Business Acquisition [Line Items] | |||
Accounts receivable | $ 1 | ||
Inventory | 2 | ||
Deferred income tax assets | 4 | ||
Other assets | 1 | ||
Deferred income tax liabilities | (60) | ||
Other liabilities | (22) | ||
Goodwill | 315 | ||
Purchase price, net of cash acquired of $7 | 481 | ||
Cash acquired from acquisition | 7 | ||
Cerus | Developed technology | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired | $ 240 | ||
Weighted average amortization period at acquisition (years) | 13 years |
Acquisitions (Future Amortization Expense) (Details) $ in Millions |
Mar. 31, 2024
USD ($)
|
---|---|
Business Combinations [Abstract] | |
Remainder of 2024 | $ 468 |
2025 | 593 |
2026 | 537 |
2027 | 514 |
2028 | $ 468 |
Income Taxes (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate reconciliation, percent | 14.60% | 12.80% |
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