Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Stryker Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Stryker Corporation and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of earnings and comprehensive income, shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements“). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 10, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

			Uncertain Tax Positions
Description of the Matter			As described in Note 11 to the consolidated financial statements, the Company operates in multiple jurisdictions with complex tax policy and regulatory environments and establishes reserves for uncertain tax positions in accordance with the accounting guidance governing uncertainty in income taxes. Assessing tax positions involves judgment including interpreting tax laws of multiple jurisdictions and assumptions relevant to the measurement of an unrecognized tax benefit, including the estimated amount of tax liability that may be incurred should the tax position not be sustained upon inspection by a tax authority. These judgments and assumptions can significantly affect the reserve for uncertain tax positions. At December 31, 2022, the Company had accrued liabilities of $286 million relating to uncertain tax positions.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting process for uncertain tax positions. For example, we tested controls over management’s identification of uncertain tax positions and its application of the recognition and measurement principles, including management’s review of the inputs and calculations of unrecognized income tax benefits when recorded. Our audit procedures to test the Company’s uncertain tax positions included, among others, involvement of our tax professionals, including transfer pricing professionals. This included evaluating third-party transfer pricing studies obtained by the Company and assessing the Company’s correspondence with the relevant tax authorities. We analyzed the Company’s assumptions and data used to determine the amount of tax benefit to recognize and tested the accuracy of the calculations. Our testing also included the evaluation of the ongoing positions and consideration of changes, the recording of penalties and interest and the ultimate settlement and payment of certain tax matters. We also evaluated the adequacy of the Company’s disclosures included in Note 11 related to these tax matters.

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STRYKER CORPORATION 2022 FORM 10-K

			Valuation of Goodwill for the Spine Reporting Unit
Description of the Matter			At December 31, 2022, the Company’s goodwill was $14,880 million. As discussed in Note 1 of the consolidated financial statements, goodwill is not amortized but rather is tested for impairment at least annually at the reporting unit level. The Company’s goodwill is initially assigned to its reporting units as of the acquisition date in connection with business combinations. In connection with the Company’s annual impairment analysis, the Company recorded a goodwill impairment charge of $216 million for the year ended December 31, 2022 in the Spine reporting unit. Auditing management’s quantitative goodwill impairment test is complex and highly judgmental due to the significant measurement uncertainty in determining the fair value of a reporting unit. In particular, the fair value estimate for the Spine reporting unit was sensitive to significant assumptions such as revenue growth, operating margins, and discount rate, which are affected by expected future market and economic conditions.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment assessment process. For example, we tested controls over the Company’s forecast process as well as controls over management’s review of the significant assumptions discussed above in estimating the fair value of the Spine reporting unit. To test the fair value of the Company’s Spine reporting unit, our audit procedures included, among others, assessing methodologies used and testing the significant assumptions discussed above as well as the completeness and accuracy of the underlying data used by the Company. For example, we compared the significant assumptions used by management to current industry and economic trends, changes in the Company’s business model, and other relevant factors. We performed sensitivity analyses of the significant assumptions to evaluate the change in the fair value of the reporting unit resulting from changes in the assumptions. We also reviewed the reconciliation of the fair value of the reporting units to the market capitalization of the Company and evaluated the implied control premium. The evaluation of the Company’s methodology and significant assumptions was performed with the assistance of our valuation specialists. We also evaluated the adequacy of the Company’s disclosures included in Note 8 related to the impairment.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 1974

Grand Rapids, Michigan

February 10, 2023

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STRYKER CORPORATION 2022 FORM 10-K

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

			2022						2021						2020
Net sales			$	18,449					$	17,108					$	14,351
Cost of sales			6,871						6,140						5,294
Gross profit			$	11,578					$	10,968					$	9,057
Research, development and engineering expenses			1,454						1,235						984
Selling, general and administrative expenses			6,455						6,427						5,361
Recall charges, net			(15)						103						17
Amortization of intangible assets			627						619						472
Goodwill impairment			216						—						—
Total operating expenses			$	8,737					$	8,384					$	6,834
Operating income			$	2,841					$	2,584					$	2,223
Other income (expense), net			(158)						(303)						(269)
Earnings before income taxes			$	2,683					$	2,281					$	1,954
Income taxes			325						287						355
Net earnings			$	2,358					$	1,994					$	1,599
Net earnings per share of common stock:
Basic			$	6.23					$	5.29					$	4.26
Diluted			$	6.17					$	5.21					$	4.20
Weighted-average shares outstanding (in millions):
Basic			378.2						377.0						375.5
Effect of dilutive employee stock compensation			4.0						5.3						4.8
Diluted			382.2						382.3						380.3

Anti-dilutive shares excluded from the calculation of dilutive employee stock options were 4.3 in 2022 and de minimis in all other periods.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			2022						2021						2020
Net earnings			$	2,358					$	1,994					$	1,599
Other comprehensive income (loss), net of tax
Marketable securities			(1)						3						—
Pension plans			186						104						(80)
Unrealized gains (losses) on designated hedges			12						50						(57)
Financial statement translation			113						469						(414)
Total other comprehensive income (loss), net of tax			$	310					$	626					$	(551)
Comprehensive income			$	2,668					$	2,620					$	1,048

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2022 FORM 10-K

Stryker Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

			2022						2021
Assets
Current assets
Cash and cash equivalents			$	1,844					$	2,944
Marketable securities			84						75
Accounts receivable, less allowance of $154 ($167 in 2021)			3,565						3,022
Inventories:
Materials and supplies			1,006						691
Work in process			348						264
Finished goods			2,641						2,359
Total inventories			$	3,995					$	3,314
Prepaid expenses and other current assets			787						662
Total current assets			$	10,275					$	10,017
Property, plant and equipment:
Land, buildings and improvements			1,739						1,656
Machinery and equipment			4,066						3,842
Total property, plant and equipment			5,805						5,498
Less allowance for depreciation			2,835						2,665
Property, plant and equipment, net			$	2,970					$	2,833
Goodwill			14,880						12,918
Other intangibles, net			4,885						4,840
Noncurrent deferred income tax assets			1,410						1,760
Other noncurrent assets			2,464						2,263
Total assets			$	36,884					$	34,631
Liabilities and shareholders' equity
Current liabilities
Accounts payable			$	1,413					$	1,129
Accrued compensation			1,149						1,092
Income taxes			292						192
Dividend payable			284						263
Accrued product liabilities			230						401
Accrued expenses and other liabilities			1,744						1,465
Current maturities of debt			1,191						7
Total current liabilities			$	6,303					$	4,549
Long-term debt, excluding current maturities			11,857						12,472
Income taxes			641						913
Other noncurrent liabilities			1,467						1,820
Total liabilities			$	20,268					$	19,754
Shareholders' equity
Common stock, $0.10 par value			38						38
Additional paid-in capital			2,034						1,890
Retained earnings			14,765						13,480
Accumulated other comprehensive loss			(221)						(531)
Total shareholders' equity			$	16,616					$	14,877
Total liabilities & shareholders' equity			$	36,884					$	34,631

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2022 FORM 10-K

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

			2022									2021									2020
			Shares			Amount						Shares			Amount						Shares			Amount
Common stock
Beginning			377.5			$	38					376.1			$	38					374.5			$	37
Issuance of common stock under stock compensation and benefit plans			1.2			—						1.4			—						1.6			1
Ending			378.7			$	38					377.5			$	38					376.1			$	38
Additional paid-in capital
Beginning						$	1,890								$	1,741								$	1,628
Issuance of common stock under stock compensation and benefit plans						(24)									(22)									(29)
Share-based compensation						168									171									142
Ending						$	2,034								$	1,890								$	1,741
Retained earnings
Beginning						$	13,480								$	12,462								$	11,748
Net earnings						2,358									1,994									1,599
Cash dividends declared						(1,073)									(976)									(885)
Ending						$	14,765								$	13,480								$	12,462
Accumulated other comprehensive (loss) income
Beginning						$	(531)								$	(1,157)								$	(606)
Other comprehensive income (loss)						310									626									(551)
Ending						$	(221)								$	(531)								$	(1,157)
Total shareholders' equity						$	16,616								$	14,877								$	13,084

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2022 FORM 10-K

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

			2022						2021						2020
Operating activities
Net earnings			$	2,358					$	1,994					$	1,599
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation			371						371						340
Amortization of intangible assets			627						619						472
Goodwill impairment			216						—						—
Asset impairments			54						264						215
Share-based compensation			168						171						142
Recall charges, net			(15)						103						17
Sale of inventory stepped up to fair value at acquisition			12						266						48
Deferred income tax (benefit) expense			58						(237)						48
Changes in operating assets and liabilities:
Accounts receivable			(579)						(377)						354
Inventories			(762)						(189)						27
Accounts payable			290						329						100
Accrued expenses and other liabilities			328						315						(54)
Recall-related payments			(157)						(221)						(17)
Income taxes			(238)						(98)						(16)
Other, net			(107)						(47)						2
Net cash provided by operating activities			$	2,624					$	3,263					$	3,277
Investing activities
Acquisitions, net of cash acquired			(2,563)						(339)						(4,222)
Purchases of marketable securities			(52)						(49)						(54)
Proceeds from sales of marketable securities			43						55						61
Purchases of property, plant and equipment			(588)						(525)						(487)
Proceeds from settlement of net investment hedges			197						—						—
Other investing, net			39						(1)						1
Net cash used in investing activities			$	(2,924)					$	(859)					$	(4,701)
Financing activities
Proceeds and payments on short-term borrowings, net			(375)						(7)						(6)
Proceeds from issuance of long-term debt			1,500						5						3,292
Payments on long-term debt			(653)						(1,151)						(2,297)
Payments of dividends			(1,051)						(950)						(863)
Cash paid for taxes from withheld shares			(122)						(114)						(110)
Other financing, net			(48)						(148)						(27)
Net cash provided by (used in) financing activities			$	(749)					$	(2,365)					$	(11)
Effect of exchange rate changes on cash and cash equivalents			(51)						(38)						41
Change in cash and cash equivalents			$	(1,100)					$	1					$	(1,394)
Cash and cash equivalents at beginning of year			2,944						2,943						4,337
Cash and cash equivalents at end of year			$	1,844					$	2,944					$	2,943
Supplemental cash flow disclosure:
Cash paid for income taxes, net of refunds			$	505					$	622					$	323
Cash paid for interest on debt			$	324					$	325					$	304

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2022 FORM 10-K

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations: Stryker (the "Company," "we," "us," or "our") is one of the world's leading medical technology companies and, together with its customers, is driven to make healthcare better. The Company offers innovative products and services in Medical and Surgical, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes. Our products include surgical equipment and surgical navigation systems; endoscopic and communications systems; patient handling, emergency medical equipment and intensive care disposable products; clinical communication and 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.

Basis of Presentation and Consolidation: The Consolidated Financial Statements include the Company and its subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. We have no material interests in variable interest entities and none that require consolidation.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of net sales and expenses in the reporting period. Actual results could differ from those estimates.

Revenue Recognition: Sales are recognized as the performance obligations to deliver products or services are satisfied and are recorded based on the amount of consideration we expect to receive in exchange for satisfying the performance obligations. Our sales are recognized primarily when we transfer control to the customer, which can be on the date of shipment, the date of receipt by the customer or, for most Orthopaedics products, when we have received a purchase order and appropriate notification the product has been used or implanted. Products and services are primarily transferred to customers at a point in time, with some transfers of services taking place over time.

Sales represent the amount of consideration we expect to receive from customers in exchange for transferring products and services. Net sales exclude sales, value added and other taxes we collect from customers. Other costs to obtain and fulfill contracts are generally expensed as incurred due to the short-term nature of most of our sales. We extend terms of payment to our customers based on commercially reasonable terms for the markets of our customers, while also considering their credit quality.

A provision for estimated sales returns, discounts and rebates is recognized as a reduction of sales in the same period that the sales are recognized. Our estimate of the provision for sales returns has been established based on contract terms with our customers and historical business practices and current trends. Shipping and handling costs charged to customers are included in net sales.

Cost of Sales: Cost of sales is primarily comprised of direct materials and supplies consumed in the manufacture of product, as well as manufacturing labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost of

sales also includes the cost to distribute products to customers, inbound freight costs, warehousing costs and other shipping and handling activity.

Research, Development and Engineering Expenses: Research, development and engineering costs are charged to expense as incurred. Costs include research, development and engineering activities relating to the development of new products, improvement of existing products, technical support of products and compliance with governmental regulations for the protection of customers and patients. Costs primarily consist of salaries, wages, consulting and depreciation and maintenance of research facilities and equipment.

Selling, General and Administrative Expenses: Selling, general and administrative expense is primarily comprised of selling expenses, marketing expenses, administrative and other indirect overhead costs, amortization of loaner instrumentation, depreciation and amortization expense of non-manufacturing assets and other miscellaneous operating items.

Currency Translation: Financial statements of subsidiaries outside the United States generally are measured using the local currency as the functional currency. Adjustments to translate those statements into United States Dollars are recorded in other comprehensive income (OCI). Transactional exchange gains and losses are included in other income (expense), net.

Cash Equivalents: Highly liquid investments with remaining stated maturities of three months or less when purchased or other money market instruments that are redeemable upon demand are considered cash equivalents and recorded at cost.

Marketable Securities: Marketable securities consist of marketable debt securities, certificates of deposit and mutual funds. Mutual funds are acquired to offset changes in certain liabilities related to deferred compensation arrangements and are expected to be used to settle these liabilities and are recognized in other noncurrent assets. Pursuant to our investment policy, all individual marketable security investments must have a minimum credit quality of single A (Standard & Poor’s and Fitch) and A2 (Moody’s Corporation) at the time of acquisition, while the overall portfolio of marketable securities must maintain a minimum average credit quality of double A (Standard & Poor’s and Fitch) or Aa (Moody’s Corporation). In the event of a rating downgrade below the minimum credit quality subsequent to purchase, the marketable security investment is evaluated to determine the appropriate action to take to minimize the overall risk to our marketable security investment portfolio. Our marketable securities are classified as available-for-sale and trading securities. Investments in trading securities represent participant-directed investments of deferred employee compensation.

Accounts Receivable: Accounts receivable consists of trade and other miscellaneous receivables. An allowance is maintained for doubtful accounts for estimated losses in the collection of accounts receivable. Estimates are made regarding the ability of customers to make required payments based on historical credit experience, current market conditions and expected credit losses. Accounts receivable are written off when all reasonable collection efforts are exhausted.

Inventories: Inventories are stated at the lower of cost or net realizable value, with cost generally determined using the first-in, first-out (FIFO) cost method. For excess and obsolete inventory resulting from the potential inability to sell specific products at prices in excess of current carrying costs, reserves are maintained to reduce current carrying cost to net realizable value.

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

STRYKER CORPORATION 2022 FORM 10-K

Financial Instruments: Our financial instruments consist of cash, cash equivalents, marketable securities, accounts receivable, other investments, accounts payable, debt and foreign currency exchange contracts. The carrying value of our financial instruments, with the exception of our senior unsecured notes, approximates fair value on December 31, 2022 and 2021. Refer to Notes 3 and 10 for further details.

All marketable securities are recognized at fair value. Adjustments to the fair value of marketable securities that are classified as available-for-sale are recognized as increases or decreases, net of income taxes, within accumulated other comprehensive income (AOCI) in shareholders’ equity and adjustments to the fair value of marketable securities that are classified as trading are recognized in earnings. The amortized cost of marketable debt securities is adjusted for amortization of premiums and discounts to maturity computed under the effective interest method. Such amortization and interest and realized gains and losses are included in other income (expense), net. The cost of securities sold is determined by the specific identification method.

We review declines in the fair value of our investments classified as available-for-sale to determine whether the decline in fair value is a result of credit loss or other factors. Impairments of available-for-sale marketable debt securities related to credit loss are included in earnings and impairments related to other factors are recognized within AOCI.

Derivatives: All derivatives are recognized at fair value and reported on a gross basis. We enter into forward currency exchange contracts to mitigate the impact of currency fluctuations on transactions denominated in nonfunctional currencies, thereby limiting our risk that would otherwise result from changes in exchange rates. The periods of the forward currency exchange contracts correspond to the periods of the exposed transactions, with realized gains and losses included in the measurement and recording of transactions denominated in the nonfunctional currencies. All forward currency exchange contracts are recorded at their fair value each period.

Forward currency exchange contracts designated as cash flow hedges are designed to hedge the variability of cash flows associated with forecasted transactions denominated in a foreign currency that will take place in the future. These nonfunctional currency exposures principally relate to forecasted intercompany sales and purchases of manufactured products and generally have maturities up to eighteen months. Changes in value of derivatives designated as cash flow hedges are recorded in AOCI on the Consolidated Balance Sheets until earnings are affected by the variability of the underlying cash flows. At that time, the applicable amount of gain or loss from the derivative instrument that is deferred in shareholders’ equity is reclassified into earnings and is included in cost of goods sold in the Consolidated Statements of Earnings. Cash flows associated with these hedges are included in cash from operations in the same category as the cash flows from the items being hedged.

Forward currency exchange contracts are used to offset our exposure to the change in value of specific foreign currency denominated assets and liabilities, primarily intercompany payables and receivables. These derivatives are not designated as hedges and, therefore, changes in the value of these forward contracts are recognized in earnings, thereby offsetting the current earnings effect of the related changes in value of foreign currency denominated assets and liabilities. The estimated fair value of our forward currency exchange contracts represents the

measurement of the contracts at month-end spot rates as adjusted by current forward points.

From time to time, we designate derivative and non-derivative financial instruments as net investment hedges of our investments in certain international subsidiaries. For derivative instruments that are designated and qualify as a net investment hedge, the effective portion of the derivative's gain or loss is recognized in OCI and reported as a component of AOCI. We have elected to use the spot method to assess effectiveness for our derivatives designated as net investment hedges. Accordingly, the change in fair value attributable to changes in the spot rate is recorded in AOCI. We exclude the spot-forward difference from the assessment of hedge effectiveness and amortize this amount separately on a straight-line basis over the term of the forward contracts. This amortization is recognized in other income (expense), net.

From time to time, we designate forward starting interest rate derivative instruments as cash flow hedges to manage the exposure to interest rate volatility with regard to future issuance and refinancing of debt. Changes in value of derivatives designated as cash flow hedges are recorded in AOCI on the Consolidated Balance Sheets until earnings are affected by the variability of the underlying cash flows. At that time, the applicable amount of gain or loss from the derivative instrument that is deferred in shareholders’ equity is reclassified into earnings and is included in interest expense within other income (expense), net in the Consolidated Statements of Earnings.

Interest rate derivative instruments designated as fair value hedges have been used in the past to manage the exposure to interest rate movements and to reduce borrowing costs by converting fixed-rate debt into floating-rate debt. Under these agreements, we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.

Property, Plant and Equipment: Property, plant and equipment is stated at cost. Depreciation is generally computed by the straight-line method over the estimated useful lives of three to 30 years for buildings and improvements and three to 15 years for machinery and equipment.

Goodwill and Other Intangible Assets: Goodwill represents the excess of purchase price over fair value of tangible net assets of acquired businesses at the acquisition date, after amounts allocated to other identifiable intangible assets. Factors that contribute to the recognition of goodwill include synergies that are specific to our business and not available to other market participants and are expected to increase net sales and profits; acquisition of a talented workforce; cost savings opportunities; the strategic benefit of expanding our presence in core and adjacent markets; and diversifying our product portfolio.

The fair values of other identifiable intangible assets acquired in a business combination are primarily determined using the income approach. Other intangible assets include, but are not limited to, developed technology, customer and distributor relationships (which reflect expected continued customer or distributor patronage) and trademarks and patents. Intangible assets with determinable useful lives are amortized on a straight-line basis over their estimated useful lives of four to 40 years. Certain acquired trade names are considered to have indefinite lives and are not amortized, but are assessed annually for potential impairment as described below.

In some of our acquisitions, we acquire in-process research and development (IPRD) intangible assets. For acquisitions accounted for as business combinations IPRD is considered to

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

STRYKER CORPORATION 2022 FORM 10-K

be an indefinite-lived intangible asset until the research is completed (then it becomes a determinable-lived intangible asset) or determined to have no future use (then it is impaired). For asset acquisitions IPRD is expensed immediately unless there is an alternative future use.

Goodwill, Intangibles and Long-Lived Asset Impairment Tests: We perform our annual impairment test for goodwill as of October 31 each year. We consider qualitative indicators of the fair value of a reporting unit when it is unlikely that a reporting unit has impaired goodwill and periodically corroborate that assessment with quantitative information. In certain circumstances, we may also utilize a discounted cash flow analysis that requires certain assumptions and estimates be made regarding market conditions and our future profitability. Indefinite-lived intangible assets are also tested at least annually for impairment by comparing the individual carrying values to the fair value.

We review long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows. Undiscounted cash flows expected to be generated by the related assets are estimated over the asset's useful life based on updated projections. If the evaluation indicates that the carrying amount of the asset may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique. Assets classified as held for sale are recorded at the lower of carrying amount or fair value less costs to sell.

Share-Based Compensation: Share-based compensation is in the form of stock options, restricted stock units (RSUs) and performance stock units (PSUs). Stock options are granted under long-term incentive plans to certain key employees and non-employee directors at an exercise price not less than the fair market value of the underlying common stock, which is the quoted closing price of our common stock on the day prior to the date of grant. The options are granted for periods of up to 10 years and become exercisable in varying installments.

We grant RSUs to key employees and non-employee directors and PSUs to certain key employees under our long-term incentive plans. The fair value of RSUs is determined based on the number of shares granted and the quoted closing price of our common stock on the date of grant, adjusted for the fact that RSUs do not include anticipated dividends. RSUs generally vest in one-third increments over a three-year period and are settled in stock. PSUs are earned over a three-year performance cycle and vest in March of the year following the end of that performance cycle. The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals in that three-year performance cycle. The fair value of PSUs is determined based on the quoted closing price of our common stock on the day of grant.

Compensation expense is recognized in the Consolidated Statements of Earnings based on the estimated fair value of the awards on the grant date. Compensation expense recognized reflects an estimate of the number of awards expected to vest after taking into consideration an estimate of award forfeitures based on actual experience and is recognized on a straight-line basis over the requisite service period, which is generally the period required to obtain full vesting. Management expectations related to the achievement of performance goals associated with PSU grants is assessed regularly and that assessment is used to

determine whether PSU grants are expected to vest. If performance-based milestones related to PSU grants are not met or not expected to be met, any compensation expense recognized associated with such grants will be reversed.

Income Taxes: Deferred income tax assets and liabilities are determined based on differences between financial reporting and income tax bases of assets and liabilities and are measured using the enacted income tax rates in effect for the years in which the differences are expected to reverse. Deferred income tax benefits generally represent the change in net deferred income tax assets and liabilities in the year. Other amounts result from adjustments related to acquisitions and foreign currency as appropriate.

We operate in multiple income tax jurisdictions both within the United States and internationally. Accordingly, management must determine the appropriate allocation of income to each of these jurisdictions based on current interpretations of complex income tax regulations. Income tax authorities in these jurisdictions regularly perform audits of our income tax filings. Income tax audits associated with the allocation of this income and other complex issues, including inventory transfer pricing and cost sharing, product royalty and foreign branch arrangements, may require an extended period of time to resolve and may result in significant income tax adjustments if changes to the income allocation are required between jurisdictions with different income tax rates.

New Accounting Pronouncements Not Yet Adopted

In September 2022 the Financial Accounting Standards Board issued ASU 2022-04, Liabilities - Supplier Finance Programs: Disclosure of Supplier Finance Program Obligations, which requires entities that utilize supplier finance programs in connection with the purchase of goods and services to disclose information about the key terms of the programs, a rollforward of the obligations under the programs and where those obligations are presented in the balance sheet. The new disclosure requirements are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Currently our obligations under these programs are not material.

Accounting Pronouncements Recently Adopted

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

NOTE 2 - REVENUE RECOGNITION

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

Products and services are primarily transferred to customers at a point in time, with some transfers of services taking place over time. In 2022 less than 10% of our sales were recognized as services transferred over time. Refer to Note 1 for further discussion on our revenue recognition policies.

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

STRYKER CORPORATION 2022 FORM 10-K

Segment Net Sales
MedSurg and Neurotechnology:			2022						2021						2020
Instruments			$	2,279					$	2,111					$	1,863
Endoscopy			2,423						2,141						1,763
Medical			3,031						2,607						2,524
Neurovascular			1,200						1,188						973
Neuro Cranial			1,376						1,214						972
Other			302						277						250
			$	10,611					$	9,538					$	8,345
Orthopaedics and Spine:
Knees			$	1,997					$	1,848					$	1,567
Hips			1,413						1,342						1,206
Trauma and Extremities			2,807						2,664						1,722
Spine			1,146						1,167						1,047
Other			475						549						464
			$	7,838					$	7,570					$	6,006
Total			$	18,449					$	17,108					$	14,351

United States Net Sales
MedSurg and Neurotechnology:			2022						2021						2020
Instruments			$	1,810					$	1,637					$	1,471
Endoscopy			1,914						1,670						1,408
Medical			2,422						2,007						1,910
Neurovascular			446						451						381
Neuro Cranial			1,135						988						801
Other			297						273						247
			$	8,024					$	7,026					$	6,218
Orthopaedics and Spine:
Knees			$	1,493					$	1,351					$	1,170
Hips			896						822						777
Trauma and Extremities			2,035						1,866						1,139
Spine			836						831						764
Other			354						425						387
			$	5,614					$	5,295					$	4,237
Total			$	13,638					$	12,321					$	10,455

International Net Sales
MedSurg and Neurotechnology:			2022						2021						2020
Instruments			$	469					$	474					$	392
Endoscopy			509						471						355
Medical			609						600						614
Neurovascular			754						737						592
Neuro Cranial			241						226						171
Other			5						4						3
			$	2,587					$	2,512					$	2,127
Orthopaedics and Spine:
Knees			$	504					$	497					$	397
Hips			517						520						429
Trauma and Extremities			772						798						583
Spine			310						336						283
Other			121						124						77
			$	2,224					$	2,275					$	1,769
Total			$	4,811					$	4,787					$	3,896

MedSurg and Neurotechnology

MedSurg and Neurotechnology products include surgical equipment and navigation systems (Instruments), endoscopic and communications systems (Endoscopy), patient handling, emergency medical equipment, intensive care disposable products and clinical communication and workflow solutions (Medical), minimally invasive products for the treatment of acute ischemic and hemorrhagic stroke (Neurovascular), a comprehensive line of products for traditional brain and open skull based surgical procedures; orthobiologic and biosurgery

products, including synthetic bone grafts and vertebral augmentation products (Neuro Cranial) and other medical device products used in a variety of medical specialties. Substantially all MedSurg and Neurotechnology sales are recognized when a purchase order has been received and control has transferred. For certain Endoscopy, Instruments and Medical services, we may recognize sales over time as we satisfy performance obligations that may include an obligation to complete installation, provide training and perform ongoing services, generally performed within one year.

Orthopaedics and Spine

Orthopaedics and Spine products consist primarily of implants used in hip and knee joint replacements and trauma and extremity surgeries, and cervical, thoracolumbar and interbody systems used in spinal injury, deformity and degenerative therapies. Substantially all Orthopaedics sales are recognized when we have received a purchase order and appropriate notification the product has been used or implanted. Substantially all Spine sales are recognized when a purchase order has been received and control has transferred. For certain Orthopaedic products in the "other" category, we recognize sales at a point in time, as well as over time for performance obligations that may include an obligation to complete installation and provide training and ongoing services. Performance obligations are generally satisfied within one year.

Contract Assets and Liabilities

The nature of our products and services do not generally give rise to contract assets as we typically do not incur costs to fulfill a contract before a product or service is provided to a customer. Our costs to obtain contracts are typically in the form of sales commissions paid to employees or third-party agents. Certain sales commissions paid to employees prior to recognition of sales are recorded as contract assets. We expense sales commissions associated with obtaining a contract at the time of the sale or as incurred as the amortization period is generally less than one year. These costs have been presented within selling, general and administrative expenses. On December 31, 2022 contract assets recorded in our Consolidated Balance Sheets were not significant.

Our contract liabilities arise as a result of consideration received from customers at inception of contracts for certain businesses or where the timing of billing for services precedes satisfaction of our performance obligations. We generally satisfy performance obligations within one year from the contract inception date. Our contract liabilities were $741 and $529 on December 31, 2022 and 2021. Changes in contract liabilities during the year were as follows:

			2022
Beginning contract liabilities			$	529
Revenue recognized from beginning of year contract liabilities			(329)
Contract liabilities acquired			80
Net advance consideration received during the period			461
Ending contract liabilities			$	741

NOTE 3 - FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are classified in their entirety based on the lowest level of input and disclosed in one of the following three categories:

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

STRYKER CORPORATION 2022 FORM 10-K

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

Use of observable market data, when available, is required in making fair value measurements. When inputs used fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. We determine fair value for Level 1 instruments using exchange-traded prices for identical instruments. We determine fair value of Level 2 instruments using exchange-traded prices of similar instruments, where available, or utilizing other observable inputs that take into account our credit risk and that of our counterparties. Foreign currency exchange contracts and interest rate hedges, when outstanding, are included in Level 2 and are primarily valued using standard calculations and models that use readily observable market data as their basis. Our Level 3 liabilities are comprised of contingent consideration arising from recently completed acquisitions. We determine fair value of these Level 3 liabilities using a discounted cash flow technique. Significant unobservable inputs were used in our assessment of fair value, including assumptions regarding future business results, discount rates, discount periods and probability assessments based on the likelihood of reaching various targets. We remeasure the fair value of our assets and liabilities each reporting period. We record the changes in fair value within selling, general and administrative expense.

During the third quarter 2022 we determined that certain commercial and regulatory milestones related to technology acquired in the purchase of Mobius Imaging and Cardan Robotics were no longer probable of being achieved and recorded a $110 reduction in the fair value of contingent consideration reflected in selling, general and administrative expenses.

Assets Measured at Fair Value
			2022			2021
Cash and cash equivalents			$	1,844		$	2,944
Trading marketable securities			166			193
Level 1 - Assets			$	2,010		$	3,137
Available-for-sale marketable securities:
Corporate and asset-backed debt securities			$	42		$	48
Foreign government debt securities			1			2
United States agency debt securities			3			5
United States treasury debt securities			36			19
Certificates of deposit			2			1
Total available-for-sale marketable securities			$	84		$	75
Foreign currency exchange forward contracts			119			212
Level 2 - Assets			$	203		$	287
Total assets measured at fair value			$	2,213		$	3,424

Liabilities Measured at Fair Value
			2022			2021
Deferred compensation arrangements			$	166		$	193
Level 1 - Liabilities			$	166		$	193
Foreign currency exchange forward contracts			$	102		$	17
Level 2 - Liabilities			$	102		$	17
Contingent consideration:
Beginning			$	306		$	393
Additions			1			62
Change in estimate			(137)			(1)
Settlements			(49)			(148)
Ending			$	121		$	306
Level 3 - Liabilities			$	121		$	306
Total liabilities measured at fair value			$	389		$	516

Fair Value of Available for Sale Securities by Maturity
			2022			2021
Due in one year or less			$	53		$	36
Due after one year through three years			$	31		$	39

On December 31, 2022 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest and marketable securities income was $94, $68 and $102 in 2022, 2021 and 2020, which was recorded in other income (expense), net.

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

NOTE 4 - DERIVATIVE INSTRUMENTS

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

Foreign Currency Hedges

2022			Cash Flow			Net Investment			Non-Designated			Total
Gross notional amount			$	1,053		$	1,598		$	3,417		$	6,068
Maximum term in years												3.9
Fair value:
Other current assets			$	20		$	—		$	9		$	29
Other noncurrent assets			1			89			—			90
Other current liabilities			(6)			—			(79)			(85)
Other noncurrent liabilities			(1)			(16)			—			(17)
Total fair value			$	14		$	73		$	(70)		$	17
2021
Gross notional amount			$	973		$	2,266		$	5,512		$	8,751
Maximum term in years												4.9
Fair value:
Other current assets			$	15		$	39		$	92		$	146
Other noncurrent assets			1			65			—			66
Other current liabilities			(7)			—			(10)			(17)
Total fair value			$	9		$	104		$	82		$	195

We had €1.5 billion and €2.0 billion at December 31, 2022 and 2021 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 €4.4 billion at December 31, 2022 and 2021 of senior unsecured notes designated as net investment hedges to selectively hedge portions of our investment in certain international subsidiaries. The currency effects of our Euro-denominated senior unsecured notes are reflected in AOCI within shareholders' equity where they offset gains and losses recorded on our net investment in international subsidiaries.

In 2022 we settled certain foreign currency forward contracts designated as net investment hedges resulting in cash proceeds of $197. The amounts in AOCI related to settled net investment

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

STRYKER CORPORATION 2022 FORM 10-K

hedges will remain in AOCI until the hedged investment is either sold or substantially liquidated.

The total after-tax gain (loss) recognized in OCI related to designated net investment hedges was $321 in 2022.

Net Currency Exchange Rate Gains (Losses)
Derivative Instrument			Recorded in:			2022			2021			2020
Cash Flow			Cost of sales			$	23		$	(12)		$	5
Net Investment			Other income (expense), net			39			35			28
Non-Designated			Other income (expense), net			1			(10)			(13)
			Total			$	63		$	13		$	20

Pretax gains (losses) on derivatives designated as cash flow hedges of $32 and net investment hedges of $34 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense), net in earnings within 12 months as of December 31, 2022. This cash flow hedge reclassification is primarily due to the sale of inventory that includes previously hedged purchases. A component of the AOCI amounts related to net investment hedges is reclassified over the life of the hedge instruments as we elected to exclude the initial value of the component related to the spot-forward difference from the effectiveness assessment.

Interest Rate Hedges

Pretax gains of $5 recorded in AOCI related to other interest rate hedges closed in conjunction with debt issuances are expected to be reclassified to other income (expense), net in earnings within 12 months of December 31, 2022. The cash flow effect of interest rate hedges is recorded in cash flow from operations.

NOTE 5 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI)

			Marketable Securities			Pension Plans			Hedges			Financial Statement Translation			Total
2020			$	(3)		$	(259)		$	(10)		$	(885)		$	(1,157)
OCI			4			123			46			551			724
Income taxes			—			(32)			(15)			(54)			(101)
Reclassifications to:
Cost of sales			—			—			12			—			12
Other (income) expense, net			—			15			6			(35)			(14)
Income taxes			(1)			(2)			1			7			5
Net OCI			3			104			50			469			626
2021			$	—		$	(155)		$	40		$	(416)		$	(531)
OCI			(1)			244			43			253			539
Income taxes			—			(64)			1			(110)			(173)
Reclassifications to:
Cost of sales			—			—			(23)			—			(23)
Other (income) expense, net			—			8			(5)			(39)			(36)
Income taxes			—			(2)			(4)			9			3
Net OCI			(1)			186			12			113			310
2022			$	(1)		$	31		$	52		$	(303)		$	(221)

NOTE 6 - ACQUISITIONS

We acquire stock in companies and various assets that continue to support our capital deployment and product development strategies. The aggregate purchase price of our acquisitions, net of cash acquired was $2,563 and $393 in 2022 and 2021.

In February 2022 we completed the acquisition of Vocera for $79.25 per share, or an aggregate purchase price of $2.6 billion, net of cash acquired ($3.0 billion including convertible notes). Vocera is a leader in the digital care coordination and communication category. Vocera is part of our Medical business within MedSurg and Neurotechnology. Goodwill attributable to the acquisition reflects the strategic benefits of expanding our

presence in adjacent markets, diversifying our product portfolio, advancing innovations and accelerating our digital aspirations. This goodwill is not deductible for tax purposes.

During 2022 note holders elected to redeem the 1.50% and 0.50% convertible notes assumed in the Vocera acquisition for $101 and $324. These repayments are classified as financing activities in the Consolidated Statements of Cash Flows.

Share-based awards for Vocera employees vested upon our acquisition and a charge of $132 was recorded in selling, general and administrative expenses in 2022.

Purchase price allocations for our significant acquisitions are:

Purchase Price Allocation of Acquired Net Assets
2022						Vocera
Tangible assets acquired:
Accounts receivable						$	33
Inventory						13
Deferred income tax assets						73
Other assets						92
Debt						(425)
Deferred income tax liabilities						(182)
Other liabilities						(115)
Intangible assets:
Customer and distributor relationships						550
Developed technology						178
Trade name						18
Goodwill						2,328
Purchase price, net of cash acquired of $281						$	2,563
Weighted average life of intangible assets						13

Our allocation of the Vocera purchase price to intangible assets and residual goodwill is preliminary. These amounts are subject to review and potential change during the measurement period, which will extend to February 2023. The subsequent adjustment of the preliminary amounts may be material.

In September 2021 we completed the acquisition of Gauss Surgical, Inc. (Gauss) for $120 in cash and up to $40 in future milestone payments. Gauss is a medical device company that has developed Triton, an artificial intelligence-enabled platform for real-time monitoring of blood loss during surgery. Gauss is part of our Instruments business within MedSurg and Neurotechnology. Goodwill attributable to the acquisition is not deductible for tax purposes. The purchase price allocations for Gauss and other 2021 acquisitions were finalized in 2022 without material adjustments.

NOTE 7 - CONTINGENCIES AND COMMITMENTS

We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, 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

Dollar amounts in millions except per share amounts or as otherwise specified.			32

STRYKER CORPORATION 2022 FORM 10-K

operating results. We are self-insured for certain claims and expenses. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, results of operations and cash flows.

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

Recall Matters

In June 2012 we voluntarily recalled our Rejuvenate and ABG II Modular-Neck hip stems and terminated global distribution of these hip products. Product liability lawsuits relating to this voluntary recall have been filed against us. In November 2014 we entered into a settlement agreement to compensate eligible United States patients who had revision surgery prior to November 3, 2014 and in December 2016 the settlement program was extended to patients who had revision surgery prior to December 19, 2016. In September 2020 we entered into a second settlement agreement to compensate eligible United States patients who had revision surgery prior to September 9, 2020. There are remaining lawsuits that we will continue to defend against.

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

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

We have incurred, and expect to incur in the future, costs associated with the defense and settlement of these matters. In 2022 we made payments of $157, primarily related to LFIT femoral heads and Wright hip products. Based on the information that has been received, we have estimated the remaining range of probable loss related to these recall matters to be approximately $213 to $347. We have recorded reserves representing the remaining minimum of the range of probable loss. The final outcomes of these matters are dependent on many factors that are difficult to predict. Accordingly, the ultimate cost related to these matters may be materially different than the amount of our current estimate and accruals and could have a material adverse effect on our results of operations and cash flows.

Leases

We lease various manufacturing, warehousing and distribution facilities, administrative and sales offices as well as equipment

under operating leases. We evaluate our contracts to identify leases, which is generally if there is an identified asset and we have the right to direct the use of and obtain substantially all of the economic benefit from the use of the identified asset. Certain of our lease agreements contain rent escalation clauses (including index-based escalations), rent holidays, capital improvement funding or other lease incentives. We recognize our minimum rental expense on a straight-line basis over the term of the lease beginning with the date of initial control of the asset. Right-of-use assets are recorded in Other noncurrent assets on our Consolidated Balance Sheets. Current and noncurrent lease liabilities are recorded in Accrued expenses and other liabilities and Other noncurrent liabilities, respectively.

We have made certain significant assumptions and judgments when recording leases. For all asset classes, we elected to not recognize a right-of-use asset and lease liability for short-term leases and not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component. The determination of the discount rate used in a lease is our incremental borrowing rate which is based on what we would normally pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments.

			2022						2021
Right-of-use assets			$	473					$	419
Lease liabilities, current			$	121					$	112
Lease liabilities, noncurrent			$	357					$	310
Other information:
Weighted-average remaining lease term (years)			5.5						5.4
Weighted-average discount rate			3.22		%				2.86		%

Operating lease expense totaled $149, $133, and $130 in 2022, 2021 and 2020.

Future Obligations

We have purchase commitments for materials, supplies, services and property, plant and equipment as part of the normal course of business. In addition, we lease various manufacturing, warehousing and distribution facilities, administrative and sales offices as well as equipment under operating leases. Refer to Note 10 for more information on the debt obligations.

			2023			2024			2025			2026			2027			Thereafter
Debt repayments			$	1,208		$	1,450		$	2,250		$	1,000		$	750		$	6,300
Purchase obligations			$	1,595		$	68		$	53		$	56		$	59		$	14
Minimum lease payments			$	126		$	96		$	73		$	54		$	41		$	76

NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

We performed our annual impairment test for goodwill as of October 31, 2022 and determined that the carrying value of the Spine reporting unit exceeded its fair value. As a result an impairment charge of $216 was recognized in the Goodwill impairment line in the Consolidated Statements of Earnings in 2022. As of December 31, 2022 goodwill of the Spine reporting unit is $1,002 after the impairment charge.

We estimated the fair value of the Spine reporting unit using a discounted cash flow analysis. Significant inputs to the analysis include assumptions for future revenue growth and operating margin. The analysis also included a rate to discount the estimated future cash flow projections to their present value, based on the reporting unit’s estimated weighted average cost of capital. The impairment charge for the Spine reporting unit was primarily driven by the slower than anticipated recovery of surgery volumes as we emerge from the COVID-19 pandemic, the competitive pressures in the spine market and rising interest rates in the current macroeconomic environment.

Dollar amounts in millions except per share amounts or as otherwise specified.			33

STRYKER CORPORATION 2022 FORM 10-K

For our other reporting units, we considered qualitative indicators of impairment as it was considered more likely than not that the fair values of those reporting units exceeded their respective carrying values. No impairment was identified for those reporting units in 2022.

Future changes in the judgments, assumptions and estimates that are used in our impairment testing for goodwill, including discount and tax rates and future cash flow projections, could result in significantly different estimates of the fair values. A significant reduction in the estimated fair values could result in impairment charges that could materially affect our results of operations.

Changes in the Net Carrying Value of Goodwill by Segment
			MedSurg and Neurotechnology			Orthopaedics and Spine			Total
2020			$	5,459		$	7,319		$	12,778
Additions and adjustments			223			59			282
Foreign exchange			(13)			(129)			(142)
2021			$	5,669		$	7,249		$	12,918
Goodwill impairment			—			(216)			(216)
Additions and adjustments			2,320			—			2,320
Foreign exchange			(54)			(88)			(142)
2022			$	7,935		$	6,945		$	14,880

Summary of Other Intangible Assets
			Weighted Average Amortization Period (Years)			Gross Carrying Amount			Less Accumulated Amortization			Net Carrying Amount
Developed technologies
2022			14			$	5,440		$	2,363		$	3,077
2021			13			5,326			1,956			3,370
Customer relationships
2022			15			$	2,847		$	1,322		$	1,525
2021			15			2,324			1,174			1,150
Patents
2022			11			$	343		$	297		$	46
2021			12			343			286			57
Trademarks
2022			16			$	425		$	220		$	205
2021			16			415			199			216
In-process research and development
2022			N/A			$	21		$	—		$	21
2021			N/A			29			—			29
Other
2022			6			$	105		$	94		$	11
2021			9			105			87			18
Total
2022			14			$	9,181		$	4,296		$	4,885
2021			14			8,542			3,702			4,840

Estimated Amortization Expense
2023			2024			2025			2026			2027
$	620		$	588		$	568		$	510		$	490

NOTE 9 - CAPITAL STOCK

The aggregate number of shares of all classes of stock which we are authorized to issue is up to 1,000,500,000, divided into two classes consisting of 500,000 shares of $1 par value preferred stock and 1,000,000,000 shares of common stock with a par value of $0.10. No shares of preferred stock were outstanding on December 31, 2022.

We made no repurchases of shares in 2022. The manner, timing and amount of repurchases are determined by management based on an evaluation of market conditions, stock price and other factors and are subject to regulatory considerations. Purchases are made from time-to-time in the open market, in privately negotiated transactions or otherwise. On December 31,

2022 the total dollar value of shares that could be purchased under our authorized repurchase program was $1,033.

Shares reserved for future compensation grants of our common stock were 23 million and 25 million on December 31, 2022 and 2021.

Stock Options

We measure the cost of employee stock options based on the grant-date fair value and recognize that cost using the straight-line method over the period in which a recipient is required to provide services in exchange for the options, typically the vesting period. The weighted-average fair value per share of options is estimated on the date of grant using the Black-Scholes option pricing model.

Option Value and Assumptions
			2022						2021						2020
Weighted-average fair value per share			$	68.08					$	53.35					$	39.34
Assumptions:
Risk-free interest rate			1.8		%				0.8		%				1.4		%
Expected dividend yield			1.0		%				1.2		%				1.0		%
Expected stock price volatility			27.0		%				26.9		%				18.9		%
Expected option life (years)			5.9						5.9						5.8

The risk-free interest rate for periods within the expected life of options granted is based on the United States Treasury yield curve in effect at the time of grant. Expected stock price volatility is based on the historical volatility of our stock. The expected option life, representing the period of time that options granted are expected to be outstanding, is based on historical option exercise and employee termination data.

2022 Stock Option Activity
			Shares (in millions)						Weighted Average Exercise Price						Weighted-Average Remaining Term (in years)						Aggregate Intrinsic Value
Outstanding January 1			12.1						$	150.17
Granted			1.9						248.36
Exercised			(1.5)						102.85
Canceled or forfeited			(0.4)						220.16
Outstanding December 31			12.1						$	168.80					5.4						$	925.3
Exercisable December 31			7.2						$	131.38					3.1						$	819.2
Options expected to vest			4.4						$	222.62					7.7						$	102.5

The aggregate intrinsic value of options, which represents the cumulative difference between the fair market value of the underlying common stock and the option exercise prices, exercised was $218, $253, and $258 in 2022, 2021 and 2020. Exercise prices for options outstanding ranged from $64.01 to $270.94 on December 31, 2022. On December 31, 2022 there was $111 of unrecognized compensation cost related to nonvested stock options granted under the long-term incentive plans; that cost is expected to be recognized over the weighted-average period of approximately 1.6 years.

Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) Activity
			Shares (in millions)												Weighted Average Grant Date Fair Value
			RSUs						PSUs						RSUs						PSUs
Nonvested on January 1			0.7						0.2						$	213.16					$	210.73
Granted			0.4						0.1						239.76						237.17
Vested			(0.3)						(0.1)						204.62						179.35
Canceled or forfeited			(0.1)						—						225.83						179.35
Nonvested on December 31			0.7						0.2						$	232.02					$	234.70

Dollar amounts in millions except per share amounts or as otherwise specified.			34

STRYKER CORPORATION 2022 FORM 10-K

On December 31, 2022 there was $72 of unrecognized compensation cost related to nonvested RSUs. That cost is expected to be recognized as expense over the weighted-average period of approximately one year. The weighted-average grant date fair value per share of RSUs granted was $239.76 and $230.61 in 2022 and 2021. The fair value of RSUs and PSUs vested in 2022 was $75 and $14. On December 31, 2022 there was $18 of unrecognized compensation cost related to nonvested PSUs; the cost is expected to be recognized as expense over the weighted-average period of approximately one year.

Employee Stock Purchase Plans (ESPP)

Employees may participate in our ESPP provided they meet certain eligibility requirements. The purchase price for our common stock under the terms of the ESPP is defined as 95% of the closing stock price on the last trading day of a purchase period. We issued 221,387 and 183,964 shares under the ESPP in 2022 and 2021.

NOTE 10 - DEBT AND CREDIT FACILITIES

We have lines of credit issued by various financial institutions that are available to fund our day-to-day operating needs. Certain of our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on December 31, 2022.

In February 2022 we entered into a $1.5 billion term loan agreement that matures on February 22, 2025 and bears interest at a base rate based on the Term Secured Overnight Financing Rate (SOFR) plus 0.725%. In 2022 we repaid $650 on the term loan.

In 2022 our Board of Directors approved an increase to the maximum amount of commercial paper that can be outstanding from $1,500 to $2,250.

On December 31, 2022 there were no borrowings outstanding under our credit facility or commercial paper program which allows for maturities up to 397 days from the date of issuance.

Summary of Total Debt
			Rate						Due						2022						2021
Senior unsecured notes:
			1.125%						November 30, 2023						$	585					$	622
			0.600%						December 1, 2023						599						598
			3.375%						May 15, 2024						596						593
			0.250%						December 3, 2024						903						958
			1.150%						June 15, 2025						647						645
			3.375%						November 1, 2025						748						748
			3.500%						March 15, 2026						995						994
			2.125%						November 30, 2027						795						845
			3.650%						March 7, 2028						597						597
			0.750%						March 1, 2029						848						901
			1.950%						June 15, 2030						991						990
			2.625%						November 30, 2030						684						727
			1.000%						December 3, 2031						790						840
			4.100%						April 1, 2043						392						392
			4.375%						May 15, 2044						396						395
			4.625%						March 15, 2046						983						982
			2.900%						June 15, 2050						642						642
Term loan															850						—
Other															7						10
Total debt															$	13,048					$	12,479
Less current maturities															1,191						7
Total long-term debt															$	11,857					$	12,472
Unamortized debt issuance costs															$	52					$	62
Borrowing capacity on existing facilities															$	2,162					$	2,162
Fair value of senior unsecured notes															$	10,910					$	13,391

The fair value of the senior unsecured notes was estimated using quoted interest rates, maturities and amounts of borrowings based on quoted active market prices and yields that took into account the underlying terms of the debt instruments. Substantially all of our debt is classified within Level 2 of the fair value hierarchy.

Interest expense, including required fees incurred on outstanding debt and credit facilities that were included in other income (expense), net, totaled $337, $337, and $315 in 2022, 2021 and 2020.

NOTE 11 - INCOME TAXES

Our effective tax rate was 12.1%, 12.6% and 18.2% for 2022, 2021 and 2020. 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 and the 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.

Effective Income Tax Rate Reconciliation
			2022						2021						2020
United States federal statutory rate			21.0		%				21.0		%				21.0		%
United States state and local income taxes, less federal deduction			2.0						2.7						0.1
Foreign income tax at rates other than 21%			(4.1)						(6.9)						(3.3)
Tax related to repatriation of foreign earnings			(2.4)						1.4						3.0
Intellectual property transfers			0.1						(2.3)						(1.4)
United States federal audit settlement			(6.1)						—						—
Goodwill impairment			1.7						—						—
Other			(0.1)						(3.3)						(1.2)
Effective income tax rate			12.1		%				12.6		%				18.2		%

Earnings Before Income Taxes
			2022						2021						2020
United States			$	407					$	433					$	239
International			2,276						1,848						1,715
Total			$	2,683					$	2,281					$	1,954

Components of Income Tax Expense (Benefit)
Current income tax expense (benefit):			2022						2021						2020
United States federal			$	(76)					$	155					$	80
United States state and local			64						97						20
International			279						272						207
Total current income tax expense			$	267					$	524					$	307
Deferred income tax expense (benefit):
United States federal			$	(179)					$	(82)					$	1
United States state and local			(30)						(23)						(25)
International			267						(132)						72
Total deferred income tax expense (benefit)			$	58					$	(237)					$	48
Total income tax expense			$	325					$	287					$	355

Interest and penalties included in other income (expense), net were income of $71 in 2022, and expense of ($23) and ($35) in 2021 and 2020. The United States federal deferred income tax benefit (expense) includes the utilization of net operating loss carryforwards of $56, $283 and $41 in 2022, 2021 and 2020.

Dollar amounts in millions except per share amounts or as otherwise specified.			35

STRYKER CORPORATION 2022 FORM 10-K

Deferred Income Tax Assets and Liabilities
Deferred income tax assets:			2022						2021
Inventories			$	516					$	513
Product-related liabilities			26						39
Other accrued expenses			155						501
Depreciation and amortization			1,038						1,194
State income taxes			153						128
Share-based compensation			73						63
Research and development capitalization			204						—
International interest expense carryforwards			135						—
Net operating loss and other credit carryforwards			247						232
Other			165						191
Total deferred income tax assets			$	2,712					$	2,861
Less valuation allowances			(285)						(164)
Net deferred income tax assets			$	2,427					$	2,697
Deferred income tax liabilities:
Depreciation and amortization			$	(1,037)					$	(891)
Undistributed earnings			(47)						(114)
Total deferred income tax liabilities			$	(1,084)					$	(1,005)
Net deferred income tax assets			$	1,343					$	1,692
Reported as:
Noncurrent deferred income tax assets			$	1,410					$	1,760
Noncurrent liabilities—Other liabilities			(67)						(68)
Total			$	1,343					$	1,692

Accrued interest and penalties were $66 and $150 on December 31, 2022 and 2021 which were reported in accrued expenses and other liabilities and other noncurrent liabilities.

Net operating loss carryforwards totaling $544 with $155 being subject to a full valuation allowance on December 31, 2022 are available to reduce future taxable earnings of certain domestic and foreign subsidiaries. United States loss carryforwards of $377 begin to expire in 2023. International loss carryforwards of $167 begin to expire in 2023; however, some have no expiration. We also have tax credit carryforwards of $133 with $91 being subject to a full valuation allowance. The credits with a full valuation allowance begin to expire in 2023. We do not anticipate generating income tax in excess of the non-expiring credits in the foreseeable future.

The Tax Cuts and Jobs Act (the Act) was enacted in 2017 in the United States. We recorded a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred. The Act also subjects a United States shareholder to tax on Global Intangible Low-Taxed Income (GILTI) earned by certain foreign subsidiaries. We have elected to account for GILTI tax in the year the tax is incurred.

We recorded deferred income tax on undistributed earnings of foreign subsidiaries not determined to be indefinitely reinvested. Determination of the total amount of unrecognized deferred income tax on undistributed earnings of foreign subsidiaries is not practicable.

Uncertain Income Tax Positions
			2022						2021
Beginning uncertain tax positions			$	444					$	457
Increases related to current year income tax positions			17						13
Increases related to prior year income tax positions			34						4
Decreases related to prior year income tax positions			(178)						(18)
Settlements of income tax audits			(13)						—
Statute of limitations expirations and other			(6)						—
Foreign currency translation			(12)						(12)
Ending uncertain tax positions			$	286					$	444
Reported as:
Noncurrent liabilities—Income taxes			$	286					$	444

Our income tax expense would have been reduced by $289 and $445 in 2022 and 2021 had these uncertain income tax positions been favorably resolved. It is reasonably possible that the amount of unrecognized tax benefits will significantly change due

to one or more of the following events in the next 12 months: expiring statutes, audit activity, tax payments, competent authority proceedings related to transfer pricing or final decisions in matters that are the subject of controversy in various taxing jurisdictions in which we operate, including inventory transfer pricing, cost sharing, product royalty and foreign branch arrangements. We are not able to reasonably estimate the amount or the future periods in which changes in unrecognized tax benefits may be resolved. Interest and penalties incurred associated with uncertain tax positions are included in other income (expense), net.

In the normal course of business, income tax authorities in various income tax jurisdictions both within the United States and internationally conduct routine audits of our income tax returns filed in prior years. These audits are generally designed to determine if individual income tax authorities are in agreement with our interpretations of complex income tax regulations regarding the allocation of income to the various income tax jurisdictions. Income tax expense in 2022 decreased $162 due to the effective settlement of the United States federal income tax audit for years 2014 through 2018. In addition, 2022 other income (expense), net includes a benefit of $50 related to the release of accrued interest associated with this settlement. Income tax years are open from 2019 through the current year for the United States federal jurisdiction. Income tax years open for our other major jurisdictions range from 2007 through the current year.

NOTE 12 - RETIREMENT PLANS

Defined Contribution Plans

We provide certain employees with defined contribution plans and other types of retirement plans. A portion of our retirement plan expense under the defined contribution plans is funded with Stryker common stock. The use of Stryker common stock represents a non-cash operating activity that is not reflected in our Consolidated Statements of Cash Flows.

			2022						2021						2020
Plan expense			$	305					$	259					$	235
Expense funded with Stryker common stock			41						37						34
Stryker common stock held by plan:
Dollar amount			522						582						542
Shares (in millions)			2.1						2.2						2.2
Value as a percentage of total plan assets			10		%				10		%				11		%

Defined Benefit Plans

Certain of our subsidiaries have both funded and unfunded defined benefit pension plans covering some or all of their employees. The majority of our defined benefit pension plans have projected benefit obligations in excess of plan assets.

Discount Rate

The discount rates were selected using a hypothetical portfolio of high quality bonds on December 31 that would provide the necessary cash flows to match our projected benefit payments.

Expected Return on Plan Assets

The expected return on plan assets is determined by applying the target allocation in each asset category of plan investments to the anticipated return for each asset category based on historical and projected returns.

Dollar amounts in millions except per share amounts or as otherwise specified.			36

STRYKER CORPORATION 2022 FORM 10-K

Components of Net Periodic Pension Cost
Net periodic benefit cost:			2022						2021						2020
Service cost			$	(56)					$	(72)					$	(63)
Interest cost			(10)						(7)						(8)
Expected return on plan assets			15						11						13
Amortization of prior service credit			1						1						1
Recognized actuarial loss			(9)						(16)						(13)
Curtailment gain			—						9						—
Net periodic benefit cost			$	(59)					$	(74)					$	(70)
Changes in assets and benefit obligations recognized in OCI:
Net actuarial gain (loss)			$	244					$	132					$	(117)
Recognized net actuarial loss			9						16						13
Prior service credit and transition amount			(1)						(1)						(1)
Curtailment gain			—						(9)						—
Total recognized in other comprehensive income (loss)			$	252					$	138					$	(105)
Total recognized in net periodic benefit cost and OCI			$	193					$	64					$	(175)
Weighted-average rates used to determine net periodic benefit cost:
Discount rate			1.1		%				0.8		%				1.0		%
Expected return on plan assets			3.1		%				2.5		%				2.9		%
Rate of compensation increase			2.6		%				2.6		%				2.9		%
Weighted-average discount rate used to determine projected benefit obligations			3.3		%				1.1		%				0.8		%

The actuarial gain (loss) for all pension plans was primarily related to a change in the discount rate used to measure the benefit obligations of those plans.

Investment Strategy

The investment strategy for our defined benefit pension plans is to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within appropriate risk tolerances.

			2022						2021
Fair value of plan assets			$	420					$	543
Benefit obligations			(673)						(1,036)
Funded status			$	(253)					$	(493)
Reported as:
Noncurrent assets—other assets			$	21					$	—
Current liabilities—accrued compensation			(3)						(2)
Noncurrent liabilities—other liabilities			(271)						(491)
Pre-tax amounts recognized in AOCI:
Unrecognized net actuarial gain (loss)			33						(215)
Unrecognized prior service credit			11						7
Total			$	44					$	(208)

Change in Benefit Obligations
			2022						2021
Beginning projected benefit obligations			$	1,036					$	1,118
Service cost			56						72
Interest cost			10						7
Foreign exchange impact			(56)						(70)
Employee contributions			5						8
Actuarial (gains) losses			(354)						(71)
Curtailment gain			—						(23)
Benefits paid			(24)						(5)
Ending projected benefit obligations			$	673					$	1,036
Ending accumulated benefit obligations			$	645					$	987

Change in Plan Assets
			2022						2021
Beginning fair value of plan assets			$	543					$	522
Actual return			(109)						17
Employer contributions			19						33
Employee contributions			5						8
Foreign exchange impact			(24)						(29)
Benefits paid			(14)						(8)
Ending fair value of plan assets			$	420					$	543

Allocation of Plan Assets
			2023 Target						2022 Actual						2021 Actual
Equity securities			25		%				27		%				23		%
Debt securities			41						38						41
Other			34						35						36
Total			100		%				100		%				100		%

Valuation of Plan Assets
2022			Level 1			Level 2			Level 3			Total
Cash and cash equivalents			$	18		$	—		$	—		$	18
Equity securities			21			99			—			120
Corporate debt securities			2			151			—			153
Other			5			69			55			129
Total			$	46		$	319		$	55		$	420
2021
Cash and cash equivalents			$	21		$	—		$	—		$	21
Equity securities			28			119			—			147
Corporate debt securities			2			202			—			204
Other			4			68			99			171
Total			$	55		$	389		$	99		$	543

Our Level 3 pension plan assets consist primarily of guaranteed investment contracts with insurance companies. The insurance contracts guarantee us principal repayment and a fixed rate of return. The $44 decrease in Level 3 pension plan assets is primarily driven by the change in the corresponding pension liability. We expect to contribute $19 to our defined benefit pension plans in 2023.

Estimated Future Benefit Payments
2023			2024			2025			2026			2027			2028-2032
$	22		$	26		$	23		$	23		$	25		$	146

NOTE 13 - SUMMARY OF QUARTERLY DATA (UNAUDITED)

2022 Quarters			Mar 31			Jun 30			Sep 30			Dec 31
Net sales			$	4,275		$	4,493		$	4,479		$	5,202
Gross profit			2,734			2,826			2,782			3,236
Earnings (loss) before income taxes			386			720			816			761
Net earnings (loss)			323			656			816			563
Net earnings (loss) per share of common stock:
Basic			$	0.86		$	1.73		$	2.16		$	1.48
Diluted			$	0.84		$	1.72		$	2.14		$	1.47
Dividends declared per share of common stock			$	0.695		$	0.695		$	0.695		$	0.750
2021 Quarters			Mar 31			Jun 30			Sep 30			Dec 31
Net sales			$	3,953		$	4,294		$	4,160		$	4,701
Gross profit			2,509			2,772			2,642			3,045
Earnings before income taxes			367			662			495			757
Net earnings			302			592			438			662
Net earnings per share of common stock:
Basic			$	0.80		$	1.57		$	1.17		$	1.75
Diluted			$	0.79		$	1.55		$	1.14		$	1.73
Dividends declared per share of common stock			$	0.630		$	0.630		$	0.630		$	0.695

NOTE 14 - SEGMENT AND GEOGRAPHIC DATA

We segregate our operations into two reportable business segments: (i) MedSurg and Neurotechnology and (ii) Orthopaedics and Spine which aligns to our internal reporting structure and how the Company manages its businesses.

The Corporate and Other category shown in the table below includes corporate and administration, corporate initiatives and share-based compensation, which includes compensation related to employee stock options, restricted stock units and performance stock unit grants and director stock options and restricted stock unit grants.

Dollar amounts in millions except per share amounts or as otherwise specified.			37

STRYKER CORPORATION 2022 FORM 10-K

Segment Results			2022			2021			2020
MedSurg and Neurotechnology			$	10,611		$	9,538		$	8,345
Orthopaedics and Spine			7,838			7,570			6,006
Net sales			$	18,449		$	17,108		$	14,351
MedSurg and Neurotechnology			$	540		$	518		$	496
Orthopaedics and Spine			614			629			458
Segment depreciation and amortization			$	1,154		$	1,147		$	954
Corporate and Other			124			125			122
Total depreciation and amortization			$	1,278		$	1,272		$	1,076
MedSurg and Neurotechnology			$	2,737		$	2,807		$	2,414
Orthopaedics and Spine			2,296			2,180			1,588
Segment operating income			$	5,033		$	4,987		$	4,002
Items not allocated to segments:
Corporate and Other			$	(649)		$	(605)		$	(503)
Acquisition and integration-related charges			(150)			(585)			(242)
Amortization of intangible assets			(627)			(619)			(472)
Restructuring-related and other charges			(349)			(386)			(458)
Goodwill impairment			(216)			—			—
Medical device regulations			(140)			(107)			(81)
Recall-related matters			15			(103)			(17)
Regulatory and legal matters			(76)			2			(6)
Consolidated operating income			$	2,841		$	2,584		$	2,223

Segment Assets and Capital Spending
Assets:			2022			2021			2020
MedSurg and Neurotechnology			$	18,283		$	15,218		$	15,250
Orthopaedics and Spine			17,295			18,149			18,090
Total segment assets			$	35,578		$	33,367		$	33,340
Corporate and Other			1,306			1,264			990
Total assets			$	36,884		$	34,631		$	34,330
Purchases of property, plant and equipment:
MedSurg and Neurotechnology			$	173		$	197		$	192
Orthopaedics and Spine			175			165			150
Total segment purchases of property, plant and equipment			$	348		$	362		$	342
Corporate and Other			240			163			145
Total purchases of property, plant and equipment			$	588		$	525		$	487

We measure the financial results of our reportable segments using an internal performance measure that excludes acquisition and integration-related charges, restructuring-related and other charges, goodwill impairment, reserves for certain product recall matters and reserves for certain legal and regulatory matters. Identifiable assets are those assets used exclusively in the operations of each business segment or allocated when used jointly. Corporate assets are principally property, plant and equipment, and noncurrent assets.

The countries in which we have local revenue generating operations have been combined into the following geographic areas: the United States (including Puerto Rico); Europe, Middle East, Africa; Asia Pacific; and other foreign countries, which include Canada and countries in the Latin American region. Net sales are reported based on the geographic area of the Stryker location where the sales to the customer originated.

Geographic Information
			Net Sales												Net Property, Plant and Equipment
			2022			2021			2020						2022			2021
United States			$	13,638		$	12,321		$	10,455					$	1,791		$	1,717
Europe, Middle East, Africa			2,348			2,299			1,818						995			941
Asia Pacific			1,885			1,973			1,630						76			76
Other countries			578			515			448						108			99
Total			$	18,449		$	17,108		$	14,351					$	2,970		$	2,833

NOTE 15 - ASSET IMPAIRMENTS

The government in China has launched regional and national programs for volume-based procurement (VBP) of high-value medical consumables to reduce healthcare costs. Each VBP program has specific requirements to award contracts to the lowest bidders who are able to satisfy the quality and quantity requirements. The successful bidders may be guaranteed sales volume for certain products, while unsuccessful bidders may lose unit sales volume. The prices required for a successful bid have negatively impact our affected commercial operations in China, including those for joint replacement, trauma and certain neurovascular products.

As a result of the outcome of certain regional programs for our trauma products and the national VBP program for hips and knees we recorded charges of $105 to impair certain long-lived and intangible assets in 2021. These charges were included in selling, general and administrative expenses. The national VBP program for spine products took place in the third quarter of 2022 and we were unsuccessful in our bid. As a result we are exiting the spine business in China. Related asset impairments recognized in 2022 were not significant and we do not expect any significant impairments related to future VBP programs. Our business in China represented approximately 2.4% of our revenues for the year ended December 31, 2022.

In addition to asset impairments in connection with VBP program results, we recognized asset impairments of $47 in 2022 for long-lived and intangible assets primarily as a result of the exit of certain product lines.

Dollar amounts in millions except per share amounts or as otherwise specified.			38

STRYKER CORPORATION 2022 FORM 10-K