Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ABOUT STRYKER

Stryker is one of the world's leading medical technology companies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in Medical and Surgical, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes. Alongside its customers around the world, Stryker impacts more than 130 million patients annually.

We segregate our operations into two reportable business segments: (i) MedSurg and Neurotechnology and (ii) Orthopaedics and Spine. MedSurg and Neurotechnology products include surgical equipment and navigation systems (Instruments), endoscopic and communications systems (Endoscopy), patient handling, emergency medical equipment and intensive care disposable products (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). 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.

Macroeconomic Environment

The global economy continues to experience increased inflationary pressures in part due to global supply chain disruptions, labor shortages and other impacts of the macroeconomic environment which we anticipate will continue. Higher interest rates and capital costs, higher shipping costs, increased costs of labor, fluctuating foreign currency exchange rates and the military conflicts in Russia and Ukraine and the Middle East have created additional economic challenges and uncertainties. These conditions may cause our customers to decrease or delay orders for our products and services, and the higher interest rates may impact deal mix for our capital products.

China Volume-Based Procurement, Import Purchase Evaluation and Anti-Corruption Campaign

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. We have been a winning bidder in certain national and regional VBP programs, including those for joint replacement and trauma products in 2021, certain neurovascular products in the fourth quarter 2022 and the first nine months of 2023 and for the renewal of trauma products in the third quarter 2023. The prices required for a successful bid have negatively impacted the commercial operations of our joint replacement, trauma and certain neurovascular products in China.

We were unsuccessful in our bids in the VBP program for spine products that took place in the third quarter 2022 and as a result we are exiting the spine business in China. To date our other

businesses have not been significantly impacted, but may be in the future as a result of additional VBP programs. In the second quarter 2023 government agencies announced data collection initiatives for sports medicine, biologics and craniomaxilliofacial products in preparation for VBP programs that could be announced as soon as the fourth quarter 2023. The impact of VBP programs, if any, for these products is not expected to be significant.

China has also issued national guiding standards for Import Purchase Evaluation which has increased the purchase of locally sourced equipment in China's public hospitals and is impacting our MedSurg business in China. Additionally, China's National Health Commission has launched an anti-corruption campaign focused on investigating government officials and individuals employed by state-owned entities and public institutions in the healthcare sector. We have seen some limitations to physician and surgeon access, but our business has not been significantly impacted. Our business in China represented approximately 1.9% of our revenues in the nine months 2023.

Overview of the Three and Nine Months

In the three months 2023 we achieved sales growth of 9.6% from 2022. Excluding the impact of acquisitions and divestitures sales grew 9.2% in constant currency. We reported operating income margin of 19.0%, net earnings of $692 and net earnings per diluted share of $1.80. Excluding the impact of certain items, adjusted operating income margin(1) increased by 110 basis points to 23.4%, with adjusted net earnings(1) of $944 and adjusted net earnings per diluted share(1) of $2.46, an increase of 16.0% from 2022.

In the nine months 2023 we achieved sales growth of 10.8% from 2022. Excluding the impact of acquisitions and divestitures sales grew 11.5% in constant currency. We reported operating income margin of 17.9%, net earnings of $2,022 and net earnings per diluted share of $5.27. Excluding the impact of certain items, adjusted operating income margin(1) increased by 40 basis points to 23.0%, with adjusted net earnings(1) of $2,740 and adjusted net earnings per diluted share(1) of $7.14, an increase of 12.6% from 2022.

Recent Developments

In May 2023 we acquired Cerus Endovascular Limited (Cerus) for net cash consideration of $289 and up to $225 in future milestone payments. Cerus designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke. Cerus is part of our Neurovascular business within MedSurg and Neurotechnology. Refer to Note 7 to our Consolidated Financial Statements for further information.

In August 2023 we repaid the remaining balance of $650 on the $1.5 billion term loan scheduled to mature on February 22, 2025 and issued €500 of floating rate senior notes due November 16, 2024. The notes bear interest at a base rate based on the three-month Euro Interbank Offered Rate (EURIBOR) plus 0.3%.

(1) Refer to "Non-GAAP Financial Measures" for a discussion of non-GAAP financial measures used in this report and a reconciliation to the most directly comparable GAAP financial measure.

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

STRYKER CORPORATION						2023 Third Quarter Form 10-Q

CONSOLIDATED RESULTS OF OPERATIONS
			Three Months																		Nine Months
									Percent Net Sales						Percentage												Percent Net Sales						Percentage
			2023			2022			2023			2022			Change						2023			2022			2023			2022			Change
Net sales			$	4,909		$	4,479		100.0		%	100.0		%	9.6		%				$	14,683		$	13,247		100.0		%	100.0		%	10.8		%
Gross profit			3,158			2,782			64.3			62.1			13.5						9,355			8,342			63.7			63.0			12.1
Research, development and engineering expenses			353			364			7.2			8.1			(3.0)						1,038			1,128			7.1			8.5			(8.0)
Selling, general and administrative expenses			1,701			1,455			34.7			32.5			16.9						5,188			4,704			35.3			35.5			10.3
Recall charges, net			9			(4)			0.2			(0.1)			(325.0)						12			14			0.1			0.1			(14.3)
Amortization of intangible assets			164			159			3.3			3.5			3.1						486			469			3.3			3.5			3.6
Other income (expense), net			(62)			8			(1.3)			0.2			nm						(184)			(105)			(1.3)			(0.8)			75.2
Income taxes			177			—			nm			nm			nm						425			127			nm			nm			234.6
Net earnings			$	692		$	816		14.1		%	18.2		%	(15.2)		%				$	2,022		$	1,795		13.8		%	13.6		%	12.6		%
Net earnings per diluted share			$	1.80		$	2.14								(15.9)		%				$	5.27		$	4.70								12.1		%
Adjusted net earnings per diluted share**(1)**			$	2.46		$	2.12								16.0		%				$	7.14		$	6.34								12.6		%

nm - not meaningful

Geographic and Segment Net Sales			Three Months																		Nine Months
												Percentage Change																		Percentage Change
			2023			2022						As Reported			Constant Currency						2023			2022						As Reported			Constant Currency
Geographic:
United States			$	3,678		$	3,360					9.5		%	9.5		%				$	10,901		$	9,776					11.5		%	11.5		%
International			1,231			1,119						10.0			8.9						3,782			3,471						9.0			12.2
Total			$	4,909		$	4,479					9.6		%	9.3		%				$	14,683		$	13,247					10.8		%	11.7		%
Segment:
MedSurg and Neurotechnology			$	2,859		$	2,588					10.5		%	10.3		%				$	8,409		$	7,560					11.2		%	12.1		%
Orthopaedics and Spine			2,050			1,891						8.4			8.0						6,274			5,687						10.3			11.1
Total			$	4,909		$	4,479					9.6		%	9.3		%				$	14,683		$	13,247					10.8		%	11.7		%

Supplemental Net Sales Growth Information
			Three Months																								Nine Months
									Percentage Change																								Percentage Change
															United States			International																					United States			International
			2023			2022			As Reported			Constant Currency			As Reported			As Reported			Constant Currency						2023			2022			As Reported			Constant Currency			As Reported			As Reported			Constant Currency
MedSurg and Neurotechnology:
Instruments			$	628		$	535		17.6		%	17.1		%	18.7		%	13.3		%	11.1		%				$	1,833		$	1,626		12.8		%	13.4		%	13.6		%	9.6		%	12.5		%
Endoscopy			738			662			11.3			11.3			10.6			14.7			14.5						2,141			1,946			10.0			10.6			9.9			10.4			14.0
Medical			798			765			4.3			4.0			5.7			(2.0)			(3.4)						2,417			2,095			15.4			15.9			15.9			13.1			16.1
Neurovascular			311			294			5.9			6.5			8.7			4.2			5.3						906			901			0.6			3.1			8.3			(4.0)			(0.1)
Neuro Cranial			384			332			15.5			15.5			14.5			20.4			19.8						1,112			992			12.1			12.7			11.1			16.8			20.8
			$	2,859		$	2,588		10.5		%	10.3		%	11.2		%	7.9		%	7.4		%				$	8,409		$	7,560		11.2		%	12.1		%	12.6		%	7.0		%	10.5		%
Orthopaedics and Spine:
Knees			$	515		$	481		7.1		%	6.9		%	5.3		%	12.8		%	12.0		%				$	1,643		$	1,445		13.7		%	14.5		%	11.9		%	19.1		%	22.5		%
Hips			362			347			4.5			4.4			3.0			7.1			6.8						1,130			1,038			8.9			10.4			9.1			8.4			12.6
Trauma and Extremities			752			672			11.9			10.9			11.5			13.0			9.3						2,287			2,033			12.5			13.0			13.2			10.8			12.5
Spine			291			280			4.1			3.3			5.4			0.5			(2.7)						871			849			2.6			3.1			5.6			(5.3)			(3.9)
Other			130			111			16.4			17.8			1.8			65.2			70.7						343			322			6.1			8.1			(4.3)			38.2			47.6
			$	2,050		$	1,891		8.4		%	8.0		%	6.9		%	12.4		%	10.6		%				$	6,274		$	5,687		10.3		%	11.1		%	10.0		%	11.1		%	14.1		%
Total			$	4,909		$	4,479		9.6		%	9.3		%	9.5		%	10.0		%	8.9		%				$	14,683		$	13,247		10.8		%	11.7		%	11.5		%	9.0		%	12.2		%

Note: Beginning in the first quarter 2023 we consolidated Other MedSurg and Neurotechnology into Endoscopy as Other MedSurg and Neurotechnology (primarily Sustainability Solutions) has been fully integrated into our Endoscopy business. Endoscopy includes sales related to Other of $84 and $72 for the three months 2023 and 2022 and $252 and $218 for the nine months 2023 and 2022. We have reflected these changes in all historical periods presented.

Consolidated Net Sales

Consolidated net sales increased 9.6% in the three months 2023 as reported and 9.3% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.3%. Excluding the 0.1% impact of acquisitions and divestitures, net sales in constant currency increased by 8.9% from increased unit volume and 0.3% due to higher prices. The unit volume increase was due

to higher product shipments across all MedSurg and Neurotechnology and Orthopaedics and Spine businesses.

Consolidated net sales increased 10.8% in the nine months 2023 as reported and 11.7% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.9%. Excluding the 0.2% impact of acquisitions and divestitures, net sales in constant currency increased by 11.0% from increased unit

Dollar amounts are in millions except per share amounts or as otherwise specified.			11

STRYKER CORPORATION						2023 Third Quarter Form 10-Q

volume and 0.5% due to higher prices. The unit volume increase was due to higher product shipments across all MedSurg and Neurotechnology and Orthopaedics and Spine businesses.

MedSurg and Neurotechnology Net Sales

MedSurg and Neurotechnology net sales increased 10.5% in the three months 2023 as reported and 10.3% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.2%. Excluding the 0.2% impact of acquisitions and divestitures, net sales in constant currency increased by 8.7% from increased unit volume and 1.4% from higher prices. The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology businesses.

MedSurg and Neurotechnology net sales increased 11.2% in the nine months 2023 as reported and 12.1% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.9%. Excluding the 0.3% impact of acquisitions and divestitures, net sales in constant currency increased by 10.2% from increased unit volume and 1.6% from higher prices. The unit volume increase was due to higher shipments across all MedSurg and Neurotechnology businesses.

Orthopaedics and Spine Net Sales

Orthopaedics and Spine net sales increased 8.4% in the three months 2023 as reported and 8.0% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.4%. Net sales in constant currency increased 9.1% from increased unit volume partially offset by 1.1% from lower prices. The unit volume increase was due to higher shipments across all Orthopaedics and Spine businesses.

Orthopaedics and Spine net sales increased 10.3% in the nine months 2023 as reported and 11.1% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.8%. Net sales in constant currency increased 12.0% from increased unit volume partially offset by 0.9% from lower prices. The unit volume increase was due to higher shipments across all Orthopaedics and Spine businesses.

Gross Profit

Gross profit was $3,158 and $2,782 in the three months 2023 and 2022. The key components of the change were:

			Gross Profit Percent Net Sales
Three Months 2022			62.1		%
Sales pricing			10 bps
Volume and mix			90 bps
Manufacturing and supply chain costs			120 bps
Three Months 2023			64.3		%

Gross profit as a percentage of net sales in the three months 2023 increased to 64.3% from 62.1% in 2022 due to favorable volume and lower manufacturing and supply chain costs primarily due to supply chain challenges impacting the capital products in our MedSurg businesses in the three months 2022.

Gross profit was $9,355 and $8,342 in the nine months 2023 and 2022. The key components of the change were:

			Gross Profit Percent Net Sales
Nine Months 2022			63.0		%
Sales pricing			20 bps
Volume and mix			100 bps
Manufacturing and supply chain costs			(60) bps
Inventory stepped up to fair value			10 bps
Nine Months 2023			63.7		%

Gross profit as a percentage of net sales in the nine months 2023 increased to 63.7% from 63.0% in 2022 due to higher prices and favorable volume offset by higher manufacturing and supply chain costs primarily due to higher raw material costs and supply chain inefficiencies.

While segment mix was not a significant driver of the change in gross profit as a percent of net sales between the three and nine months 2023 and 2022, we generally expect segment mix to have an unfavorable impact for the foreseeable future as we anticipate more rapid sales growth in our lower gross margin MedSurg and Neurotechnology segment than our Orthopaedics and Spine segment.

Research, Development and Engineering Expenses

Research, development and engineering expenses decreased $11 or 3.0% in the three months 2023 and decreased as a percentage of net sales to 7.2% from 8.1% in 2022, primarily due to increased costs for product launches and higher spend related to the new medical device regulations in the European Union in the three months 2022.

Research, development and engineering expenses decreased $90 or 8.0% in the nine months 2023 and decreased as a percentage of net sales to 7.1% from 8.5% in 2022, primarily due to increased costs for product launches, the write-off of certain intangible assets and higher spend related to the new medical device regulations in the European Union in the nine months 2022.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $246 or 16.9% in the three months 2023 and increased as a percentage of net sales to 34.7% from 32.5% in 2022, primarily due to disciplined increases in spend and investments to support our growth. Expenses as a percentage of net sales in the three months 2022 included the benefit of a reduction of $110 in the fair value of contingent consideration based on our determination 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.

Selling, general and administrative expenses increased $484 or 10.3% in the nine months 2023 and decreased as a percentage of net sales to 35.3% from 35.5% in 2022. The increase in selling, general and administrative expenses in the nine months 2023 was primarily due to disciplined increases in spend and investments to support our growth. Expenses as a percentage of net sales in the nine months 2022 included the impact of $132 of charges for share-based awards for Vocera employees that vested upon our acquisition, offset by the benefit of the reduction in fair value of contingent consideration described above.

Recall Charges, Net

Recall charges, net were a charge of $9 and credit of $4 in the three months and charges of $12 and $14 in the nine months 2023 and 2022. Charges in the three and nine months 2023 were primarily related to LFIT Anatomic CoCr V40 Femoral Heads. Charges in the nine months 2022 were primarily related to Wright hip products. Refer to Note 6 to our Consolidated Financial Statements for further information.

Amortization of Intangible Assets

Amortization of intangible assets was $164 and $159 in the three months and $486 and $469 in the nine months 2023 and 2022. Refer to Note 7 to our Consolidated Financial Statements for further information.

Dollar amounts are in millions except per share amounts or as otherwise specified.			12

STRYKER CORPORATION						2023 Third Quarter Form 10-Q

Operating Income

Operating income was $931 and $808 in the three months 2023 and 2022. Operating income as a percentage of net sales in the three months 2023 increased to 19.0% from 18.0% in 2022. Refer to the comments above for discussion of the primary drivers of the change.

Operating income was $2,631 and $2,027 in the nine months 2023 and 2022. Operating income as a percentage of net sales in the nine months 2023 increased to 17.9% from 15.3% in 2022. Refer to the comments above for discussion of the primary drivers of the change.

MedSurg and Neurotechnology operating income as a percentage of net sales increased to 30.0% in the three months 2023 from 23.6% in 2022. Orthopaedics and Spine operating income as a percentage of net sales decreased to 24.3% in the three months 2023 from 28.2% in 2022. The key components of the change were:

			Operating Income Percent Net Sales
			MedSurg and Neurotechnology			Orthopaedics and Spine
Three Months 2022			23.6		%	28.2		%
Sales pricing			110 bps			(80) bps
Volume			350 bps			440 bps
Manufacturing and supply chain costs			500 bps			(280) bps
Research, development and engineering expenses			0 bps			(80) bps
Selling, general and administrative expenses			(320) bps			(390) bps
Three Months 2023			30.0		%	24.3		%

The increase in MedSurg and Neurotechnology operating income as a percentage of net sales for the three months was primarily driven by higher unit volumes and lower manufacturing and supply chain costs due to supply chain challenges impacting the capital products in our MedSurg businesses in the three months 2022 partially offset by higher selling, general and administrative expenses due to disciplined increases in spend and investments to support our growth.

The decrease in Orthopaedics and Spine operating income as a percentage of net sales for the three months was primarily driven by higher selling, general and administrative expenses due to disciplined increases in spend and investments to support our growth and higher manufacturing and supply chain costs primarily due to increased inventory reserves partially offset by higher unit volumes.

MedSurg and Neurotechnology operating income as a percentage of net sales increased to 26.9% in the nine months 2023 from 24.7% in 2022. Orthopaedics and Spine operating income as a percentage of net sales decreased to 27.1% in the nine months 2023 from 28.4% in 2022. The key components of the change were:

			Operating Income Percent Net Sales
			MedSurg and Neurotechnology			Orthopaedics and Spine
Nine Months 2022			24.7		%	28.4		%
Sales pricing			120 bps			(60) bps
Volume			400 bps			550 bps
Manufacturing and supply chain costs			60 bps			(150) bps
Research, development and engineering expenses			0 bps			(20) bps
Selling, general and administrative expenses			(360) bps			(450) bps
Nine Months 2023			26.9		%	27.1		%

The increase in MedSurg and Neurotechnology operating income as a percentage of net sales for the nine months was primarily driven by higher unit volumes and higher prices partially offset by higher selling, general and administrative expenses due to disciplined increases in spend and investments to support our growth.

The decrease in Orthopaedics and Spine operating income as a percentage of net sales for the nine months was primarily driven by higher selling, general and administrative expenses due to disciplined increases in spend and investments to support our growth and higher manufacturing and supply chain costs primarily due to supply chain inefficiencies partially offset by higher unit volumes.

Other Income (Expense), Net

Other income (expense), net was ($62) and $8 in the three months and ($184) and ($105) in the nine months 2023 and 2022. The increase in net expense in the three months 2023 was primarily due to higher interest expense and the release of accrued interest of $50 in the three months 2022 related to the effective settlement of the United States federal income tax audit for years 2014 through 2018. The increase in net expense in the nine months 2023 was primarily due to foreign currency fluctuations, higher interest expense and the release of accrued interest of $50 in the nine months 2022 related to the effective settlement of the United States federal income tax audit for years 2014 through 2018, partially offset by higher interest income.

Income Taxes

Our effective tax rates were 20.4% and 17.4% in the three and nine months 2023 and 0.0% and 6.6% in the three and nine months 2022. The effective tax rates for the three and nine months 2023 and 2022 reflect the continued lower effective income tax rates as a result of our European operations and certain discrete tax items. The effective tax rates for the three and nine months 2022 also reflect income tax benefits of $162 due to the effective settlement of the United States federal income tax audit for years 2014 through 2018. In addition, the effective tax rate for the nine months 2022 reflects the reversal of deferred income tax on undistributed earnings of foreign subsidiaries as our revised capital plan determined that certain cash outside of the United States would no longer need to be repatriated during the period previously contemplated.

Net Earnings

Net earnings decreased to $692 or $1.80 per diluted share in the three months 2023 from $816 or $2.14 per diluted share in 2022. Adjusted net earnings per diluted share(1) was $2.46 in three months 2023, an increase of 16.0% from 2022.

Net earnings increased to $2,022 or $5.27 per diluted share in the nine months 2023 from $1,795 or $4.70 per diluted share in 2022. Adjusted net earnings per diluted share(1) was $7.14 in the nine months 2023, an increase of 12.6% from 2022.

Dollar amounts are in millions except per share amounts or as otherwise specified.			13

STRYKER CORPORATION						2023 Third Quarter Form 10-Q

Non-GAAP Financial Measures

We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; percentage organic sales growth; adjusted gross profit; adjusted selling, general and administrative expenses; adjusted research, development and engineering expenses; adjusted operating income; adjusted other income (expense), net; adjusted income taxes; adjusted effective income tax rate; adjusted net earnings; and adjusted net earnings per diluted share (Diluted EPS). We believe these non-GAAP financial measures provide meaningful information to assist investors and shareholders in understanding our financial results and assessing our prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of our operations because they exclude items that may not be indicative of or are unrelated to our core operating results and provide a baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures for reviewing the operating results of reportable business segments and analyzing potential future business trends in connection with our budget process and bases certain management incentive compensation on these non-GAAP financial measures. To measure percentage sales growth in constant currency, we remove the impact of changes in foreign currency exchange rates that affect the comparability and trend of sales. Percentage sales growth in constant currency is calculated by translating current and prior year results at the same foreign currency exchange rate. To measure percentage organic sales growth, we remove the impact of changes in foreign currency exchange rates, acquisitions and divestitures, which affect the comparability and trend of sales. Percentage organic sales growth is calculated by translating current year and prior year results at the same foreign currency exchange rates excluding the impact of acquisitions and divestitures. To measure earnings performance on a consistent and comparable basis, we exclude certain items that affect the comparability of operating results and the trend of earnings. The income tax effect of each adjustment was determined based on the tax effect of the jurisdiction in which the related pre-tax adjustment was recorded. These adjustments are irregular in timing and may not be indicative of our past and future performance. The following are examples of the types of adjustments that may be included in a period:

1.Acquisition and integration-related costs. Costs related to integrating recently acquired businesses (e.g., costs associated with the termination of sales relationships, employee retention and workforce reductions, manufacturing integration costs and other integration-related activities), changes in the fair value of contingent consideration, amortization of inventory stepped-up to fair value and specific costs (e.g., deal costs) related to the consummation of the acquisition process and legal entity rationalization.

2.Amortization of purchased intangible assets. Periodic amortization expense related to purchased intangible assets.

3.Structural optimization and other special charges. Costs associated with employee retention and workforce reductions, the closure or transfer of manufacturing and other facilities (e.g., site closure costs, contract termination costs and redundant employee costs during the work transfers), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs), certain long-lived and intangible asset write-offs and

impairments and other charges.

4.Medical device regulations. Costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the new medical device reporting regulations and other requirements of the European Union.

5.Recall-related matters. Changes in our best estimate of the minimum of the range of probable loss to resolve the Rejuvenate, LFIT V40, Wright legacy hip products and other product recalls.

6.Regulatory and legal matters. Changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.

7.Tax matters. Impact of accounting for certain significant and discrete tax items.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, selling, general and administrative expenses, research, development and engineering expenses, operating income, other income (expense), net, income taxes, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of our operations when viewed with our GAAP results and the reconciliations to corresponding GAAP financial measures at the end of the discussion of Consolidated Results of Operations below. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The weighted-average diluted shares outstanding used in the calculation of non-GAAP net earnings per diluted share are the same as those used in the calculation of reported net earnings per diluted share for the respective period.

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

STRYKER CORPORATION						2023 Third Quarter Form 10-Q

Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Three Months 2023			Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Income Taxes			Net Earnings			Effective Tax Rate			Diluted EPS
Reported			$	3,158		$	1,701		$	353		$	931		$	(62)		$	177		$	692		20.4		%	$	1.80
Reported percent net sales			64.3		%	34.7		%	7.2		%	19.0		%	(1.3)		%	nm			14.1		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value			—			—			—			—			—			—			—			—			—
Other acquisition and integration-related (a)			—			1			—			(1)			—			(28)			27			(3.1)			0.07
Amortization of purchased intangible assets			—			—			—			164			—			36			128			1.6			0.34
Structural optimization and other special charges (b)			19			(9)			—			28			—			7			21			0.3			0.06
Medical device regulations (c)			1			—			(18)			19			—			4			15			0.2			0.04
Recall-related matters (d)			—			—			—			9			—			2			7			0.1			0.01
Regulatory and legal matters (e)			—			1			—			(1)			—			1			(2)			0.1			—
Tax matters (f)			—			—			—			—			1			(55)			56			(6.4)			0.14
Adjusted			$	3,178		$	1,694		$	335		$	1,149		$	(61)		$	144		$	944		13.2		%	$	2.46
Adjusted percent net sales			64.7		%	34.5		%	6.8		%	23.4		%	(1.2)		%	nm			19.2		%

Three Months 2022			Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Income Taxes			Net Earnings			Effective Tax Rate			Diluted EPS
Reported			$	2,782		$	1,455		$	364		$	808		$	8		$	—		$	816		—		%	$	2.14
Reported percent net sales			62.1		%	32.5		%	8.1		%	18.0		%	0.2		%	nm			18.2		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value			—			—			—			—			—			—			—			—			—
Other acquisition and integration-related (a)			—			78			—			(78)			—			4			(82)			2.0			(0.21)
Amortization of purchased intangible assets			—			—			—			159			—			27			132			0.5			0.34
Structural optimization and other special charges (b)			19			(31)			(8)			58			—			8			50			—			0.13
Medical device regulations (c)			1			2			(39)			38			—			6			32			0.1			0.08
Recall-related matters (d)			—			—			—			(4)			—			—			(4)			—			(0.01)
Regulatory and legal matters (e)			—			(20)			—			20			—			5			15			0.2			0.04
Tax matters (f)			—			—			—			—			(62)			87			(149)			11.7			(0.39)
Adjusted			$	2,802		$	1,484		$	317		$	1,001		$	(54)		$	137		$	810		14.5		%	$	2.12
Adjusted percent net sales			62.6		%	33.1		%	7.1		%	22.3		%	(1.2)		%	nm			18.1		%

(a)			Charges represent certain acquisition and integration-related costs associated with acquisitions, including charges for termination of sales relationships ($2 in 2023, $2 in 2022), employee retention and workforce reductions ($3 in 2023, $11 in 2022), changes in the fair value of contingent consideration (($4) in 2023, ($107) in 2022), manufacturing integration costs ($0 in 2023, $6 in 2022), adjustments to acquisition-related tax provisions (charges of $28 included in Income Taxes for 2023, $0 for 2022) and other integration-related activities such as deal costs and costs associated with legal entity rationalization (($2) in 2023, $10 in 2022).
(b)			Charges represent the costs associated with employee retention and workforce reductions (($5) in 2023, $7 in 2022), the closure/transfer of manufacturing and other facilities, including site closure costs, contract termination costs and redundant employee costs during the work transfers ($12 in 2023, $16 in 2022), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs) ($7 in 2023, $15 in 2022), certain long-lived and intangible asset write-offs and impairments ($9 in 2023, $12 in 2022) and other charges ($5 in 2023, $8 in 2022).
(c)			Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union.
(d)			Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain recall-related matters.
(e)			Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
(f)			Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the transfer of certain intellectual properties between tax jurisdictions (charges of $44 in 2023 and $46 in 2022) and certain tax audit settlements ($0 for 2023, benefit of $45 included in Other Income (Expense) and benefit of $162 included in Income Taxes for 2022).

Nine Months 2023			Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Income Taxes			Net Earnings			Effective Tax Rate			Diluted EPS
Reported			$	9,355		$	5,188		$	1,038		$	2,631		$	(184)		$	425		$	2,022		17.4		%	$	5.27
Reported percent net sales			63.7		%	35.3		%	7.1		%	17.9		%	(1.3)		%	nm			13.8		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value			—			—			—			—			—			—			—			—			—
Other acquisition and integration-related (a)			—			(7)			—			7			—			(25)			32			(1.0)			0.08
Amortization of purchased intangible assets			—			—			—			486			—			104			382			1.5			1.00
Structural optimization and other special charges (b)			30			(112)			—			142			—			32			110			0.5			0.29
Medical device regulations (c)			1			—			(73)			74			—			17			57			0.3			0.15
Recall-related matters (d)			—			—			—			12			—			3			9			—			0.02
Regulatory and legal matters (e)			—			(19)			—			19			—			4			15			—			0.04
Tax matters (f)			—			—			—			—			(8)			(121)			113			(4.9)			0.29
Adjusted			$	9,386		$	5,050		$	965		$	3,371		$	(192)		$	439		$	2,740		13.8		%	$	7.14
Adjusted percent net sales			63.9		%	34.4		%	6.6		%	23.0		%	(1.3)		%	nm			18.7		%

Dollar amounts are in millions except per share amounts or as otherwise specified.			15

STRYKER CORPORATION						2023 Third Quarter Form 10-Q

Nine Months 2022			Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other Income (Expense), Net			Income Taxes			Net Earnings			Effective Tax Rate			Diluted EPS
Reported			$	8,342		$	4,704		$	1,128		$	2,027		$	(105)		$	127		$	1,795		6.6		%	$	4.70
Reported percent net sales			63.0		%	35.5		%	8.5		%	15.3		%	(0.8)		%	nm			13.6		%
Acquisition and integration-related costs:
Inventory stepped-up to fair value			12			—			—			12			—			3			9			—			0.02
Other acquisition and integration-related (a)			—			(96)			—			96			—			50			46			1.9			0.12
Amortization of purchased intangible assets			—			—			—			469			—			98			371			1.7			0.97
Structural optimization and other special charges (b)			29			(113)			(87)			229			—			39			190			0.4			0.50
Medical device regulations (c)			3			—			(95)			98			—			16			82			0.1			0.21
Recall-related matters (d)			—			—			—			14			—			4			10			0.1			0.03
Regulatory and legal matters (e)			—			(53)			—			53			—			14			39			0.3			0.10
Tax matters (f)			—			—			—			—			(74)			46			(120)			3.0			(0.31)
Adjusted			$	8,386		$	4,442		$	946		$	2,998		$	(179)		$	397		$	2,422		14.1		%	$	6.34
Adjusted percent net sales			63.3		%	33.5		%	7.1		%	22.6		%	(1.4)		%	nm			18.3		%

(a)			Charges represent certain acquisition and integration-related costs associated with acquisitions, including charges for termination of sales relationships ($2 in 2023, $16 in 2022), employee retention and workforce reductions ($3 in 2023, $29 in 2022), changes in the fair value of contingent consideration (($7) in 2023, ($132) in 2022), manufacturing integration costs ($2 in 2023, $23 in 2022), stock compensation payments upon a change in control ($0 in 2023, $132 in 2022), adjustments to acquisition-related tax provisions (charges of $28 included in Income Taxes for 2023, $0 for 2022) and other integration-related activities such as deal costs and costs associated with legal entity rationalization ($7 in 2023, $28 in 2022).
(b)			Charges represent the costs associated with employee retention and workforce reductions ($63 in 2023, $36 in 2022), the closure/transfer of manufacturing and other facilities, including site closure costs, contract termination costs and redundant employee costs during the work transfers ($36 in 2023, $62 in 2022), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs) ($16 in 2023, $7 in 2022), certain long-lived and intangible asset write-offs and impairments ($12 in 2023, $104 in 2022) and other charges ($15 in 2023, $20 in 2022).
(c)			Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union.
(d)			Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain recall-related matters.
(e)			Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
(f)			Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the transfer of certain intellectual properties between tax jurisdictions (charges of $138 in 2023 and $138 in 2022), certain tax audit settlements (benefit of $9 included in Other Income (Expense), Net for 2023 and benefit of $24 included in Income Taxes for 2023, benefit of $45 included in Other Income (Expense) and benefit of $162 included in Income Taxes for 2022) and the reversal of deferred income tax on undistributed earnings of foreign subsidiaries ($0 for 2023, benefit of $71 for 2022).

FINANCIAL CONDITION AND LIQUIDITY

			Nine Months
			2023			2022
Net cash provided by (used in):
Operating activities			$	2,183		$	1,621
Investing activities			(810)			(2,762)
Financing activities			(1,308)			(303)
Effect of exchange rate changes on cash and cash equivalents			(49)			(80)
Change in cash and cash equivalents			$	16		$	(1,524)

Operating Activities

Cash provided by operating activities was $2,183 and $1,621 in the nine months 2023 and 2022. The increase was primarily due to net earnings and higher accounts receivable collections.

Investing Activities

Cash used in investing activities was $810 and $2,762 in the nine months 2023 and 2022. The nine months 2023 included cash paid for the Cerus acquisition and the nine months 2022 included cash paid for the Vocera acquisition partially offset by settlements of certain foreign currency forward contracts designated as net investment hedges. Refer to Note 7 to our Consolidated Financial Statements for further information on the Cerus and Vocera acquisitions.

Financing Activities

Cash used in financing activities was $1,308 and $303 in the nine months 2023 and 2022. Cash used in 2023 was primarily due to dividend payments of $854, repayments of $850 on the term loan used to fund the acquisition of Vocera and cash paid of $121 for taxes on withheld shares, partially offset by proceeds from the issuance of €500 of floating rate senior notes. Cash used in financing activities in 2022 was primarily due to $500 of

payments on the $1,500 term loan used to fund the acquisition of Vocera, dividend payments of $788, net repayments of $376 on short-term borrowings and cash paid of $89 for taxes on withheld shares.

We did not repurchase any shares in the nine months 2023 and 2022.

Liquidity

Cash, cash equivalents and marketable securities were $1,936 and $1,928 on September 30, 2023 and December 31, 2022. Current assets exceeded current liabilities by $3,587 and $3,972 on September 30, 2023 and December 31, 2022. We anticipate being able to support our short-term liquidity and operating needs from a variety of sources including cash from operations, commercial paper and existing credit lines.

We have raised funds in the capital markets and have accessed the credit markets in the past and may continue to do so from time-to-time. We continue to have strong investment-grade short-term and long-term debt ratings that we believe should enable us to refinance our debt as needed.

Our cash, cash equivalents and marketable securities held in locations outside the United States was approximately 28% on September 30, 2023 compared to 36% on December 31, 2022.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for 2022, except as described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

New Accounting Pronouncements Not Yet Adopted

Refer to Note 1 to our Consolidated Financial Statements for information.

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

STRYKER CORPORATION						2023 Third Quarter Form 10-Q

Guarantees and Other Off-Balance Sheet Arrangements

We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, of a magnitude that we believe could have a material impact on our financial condition or liquidity.

OTHER MATTERS

Legal and Regulatory Matters

We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of our business, including proceedings related to product, labor, intellectual property and other matters. Refer to Note 6 to our Consolidated Financial Statements for further information.

FORWARD-LOOKING STATEMENTS

This report contains statements that are not historical facts and are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current projections about operations, industry conditions, financial condition and liquidity. Words that identify forward-looking statements include, without limitation, words such as "may," "could," "will," "should," "possible," "plan," "predict," "forecast," "potential," "anticipate," "estimate," "expect," "project," "intend," "believe," "may impact," "on track," "goal," "strategy" and words and terms of similar substance used in connection with any discussion of future operating or financial performance, an acquisition or our businesses. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Those statements are not guarantees and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results could differ materially and adversely from these forward-looking statements, historical experience or our present expectations. Some important factors that could cause our actual results to differ from our expectations in any forward-looking statements include the risks discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for 2022. This Form 10-Q should be read in conjunction with our Consolidated Financial Statements and accompanying notes to our Consolidated Financial Statements in our Annual Report on Form 10-K for 2022. We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that affect the likelihood that actual results will differ from those contained in the forward-looking statements.