10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-13149

STRYKER CORPORATION
(Exact name of registrant as specified in its charter)

Michigan			38-1239739
(State of incorporation)			(I.R.S. Employer Identification No.)
2825 Airview Boulevard	Kalamazoo,	Michigan	49002
(Address of principal executive offices)			(Zip Code)
	(269)	385-2600
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 Par Value	SYK	New York Stock Exchange
1.125% Notes due 2023	SYK23	New York Stock Exchange
0.250% Notes due 2024	SYK24A	New York Stock Exchange
2.125% Notes due 2027	SYK27	New York Stock Exchange
0.750% Notes due 2029	SYK29	New York Stock Exchange
2.625% Notes due 2030	SYK30	New York Stock Exchange
1.000% Notes due 2031	SYK31	New York Stock Exchange
Floating Rate Notes due 2020	SYK20A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Small reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

There were 375,790,657 shares of Common Stock, $0.10 par value, on September 30, 2020.

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

	Three Months				Nine Months
	2020		2019		2020		2019
Net sales	$	3,737	$	3,587	$	10,089	$	10,753
Cost of sales	1,276		1,257		3,749		3,760
Gross profit	$	2,461	$	2,330	$	6,340	$	6,993
Research, development and engineering expenses	242		246		729		717
Selling, general and administrative expenses	1,244		1,291		3,799		3,976
Recall charges	2		49		(4)		179
Amortization of intangible assets	114		116		342		352
Total operating expenses	$	1,602	$	1,702	$	4,866	$	5,224
Operating income	$	859	$	628	$	1,474	$	1,769
Other income (expense), net	(79)		(47)		(191)		(143)
Earnings before income taxes	$	780	$	581	$	1,283	$	1,626
Income taxes	159		115		252		268
Net earnings	$	621	$	466	$	1,031	$	1,358
Net earnings per share of common stock:
Basic	$	1.66	$	1.24	$	2.75	$	3.63
Diluted	$	1.63	$	1.23	$	2.71	$	3.58
Weighted-average shares outstanding (in millions):
Basic	375.7		374.2		375.3		373.8
Effect of dilutive employee stock compensation	4.5		6.1		4.7		6.0
Diluted	380.2		380.3		380.0		379.8
Cash dividends declared per share of common stock	$	0.575	$	0.52	$	1.725	$	1.56

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months				Nine Months
	2020		2019		2020		2019
Net earnings	$	621	$	466	$	1,031	$	1,358
Other comprehensive income (loss), net of tax:
Marketable securities	—		—		—		1
Pension plans	(6)		13		(14)		2
Unrealized gains (losses) on designated hedges	(2)		(15)		(58)		(28)
Financial statement translation	(194)		79		(239)		103
Total other comprehensive income (loss), net of tax	$	(202)	$	77	$	(311)	$	78
Comprehensive income	$	419	$	543	$	720	$	1,436

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

CONSOLIDATED BALANCE SHEETS

	September 30		December 31
	2020		2019
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	7,083	$	4,337
Marketable securities	78		88
Accounts receivable, less allowance of $125 ($88 in 2019)	2,426		2,893
Inventories:
Materials and supplies	751		677
Work in process	174		178
Finished goods	2,534		2,427
Total inventories	$	3,459	$	3,282
Prepaid expenses and other current assets	499		760
Total current assets	$	13,545	$	11,360
Property, plant and equipment:
Land, buildings and improvements	1,443		1,263
Machinery and equipment	3,396		3,451
Total property, plant and equipment	$	4,839	$	4,714
Less accumulated depreciation	2,310		2,147
Property, plant and equipment, net	$	2,529	$	2,567
Goodwill	9,128		9,069
Other intangibles, net	3,917		4,227
Noncurrent deferred income tax assets	1,627		1,575
Other noncurrent assets	1,540		1,369
Total assets	$	32,286	$	30,167
Liabilities and shareholders' equity
Current liabilities
Accounts payable	$	647	$	675
Accrued compensation	680		955
Income taxes	261		171
Dividends payable	216		213
Accrued expenses and other liabilities	1,766		1,527
Current maturities of debt	1,119		859
Total current liabilities	$	4,689	$	4,400
Long-term debt, excluding current maturities	12,008		10,231
Income taxes	999		1,068
Other noncurrent liabilities	1,604		1,661
Total liabilities	$	19,300	$	17,360
Shareholders' equity
Common stock, $0.10 par value	38		37
Additional paid-in capital	1,736		1,628
Retained earnings	12,129		11,748
Accumulated other comprehensive loss	(917)		(606)
Total shareholders' equity	$	12,986	$	12,807
Total liabilities and shareholders' equity	$	32,286	$	30,167

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

	Three Months				Nine Months
	2020		2019		2020		2019
Common stock shares outstanding (in millions)
Beginning	375.6		374.1		374.5		374.4
Issuance of common stock under stock compensation and benefit plans	0.2		0.3		1.3		1.9
Repurchase of common stock	—		—		—		(1.9)
Ending	375.8		374.4		375.8		374.4
Common stock
Beginning	$	38	$	37	$	37	$	37
Issuance of common stock under stock compensation and benefit plans	—		—		1		—
Ending	$	38	$	37	$	38	$	37
Additional paid-in capital
Beginning	$	1,706	$	1,569	$	1,628	$	1,559
Issuance of common stock under stock compensation and benefit plans	1		(8)		(7)		(53)
Repurchase of common stock	—		—		—		(8)
Share-based compensation	29		32		115		95
Ending	$	1,736	$	1,593	$	1,736	$	1,593
Retained earnings
Beginning	$	11,725	$	10,967	$	11,748	$	10,765
Net earnings	621		466		1,031		1,358
Repurchase of common stock	—		—		—		(299)
Cash dividends declared	(217)		(195)		(650)		(586)
Ending	$	12,129	$	11,238	$	12,129	$	11,238
Accumulated other comprehensive income (loss)
Beginning	$	(715)	$	(630)	$	(606)	$	(631)
Other comprehensive income (loss)	(202)		77		(311)		78
Ending	$	(917)	$	(553)	$	(917)	$	(553)
Total Stryker shareholders' equity	$	12,986	$	12,315	$	12,986	$	12,315
Non-controlling interest	—		—		—		—
Total shareholders' equity	$	12,986	$	12,315	$	12,986	$	12,315

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months
	2020		2019
Operating activities
Net earnings	$	1,031	$	1,358
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	247		231
Amortization of intangible assets	342		352
Asset impairments	161		2
Share-based compensation	115		95
Recall charges	(4)		179
Sale of inventory stepped-up to fair value at acquisition	9		55
Changes in operating assets and liabilities:
Accounts receivable	467		(124)
Inventories	(154)		(414)
Accounts payable	(26)		37
Accrued expenses and other liabilities	(184)		64
Recall-related payments	(13)		(172)
Income taxes	5		(94)
Other, net	44		(113)
Net cash provided by operating activities	$	2,040	$	1,456
Investing activities
Acquisitions, net of cash acquired	(26)		(281)
Purchases of marketable securities	(34)		(57)
Proceeds from sales of marketable securities	44		52
Purchases of property, plant and equipment	(322)		(450)
Other investing, net	(11)		—
Net cash used in investing activities	$	(349)	$	(736)
Financing activities
Proceeds (payments) on short-term borrowings, net	3		(7)
Proceeds from issuance of long-term debt	2,293		—
Payments on long-term debt	(500)		(1,341)
Dividends paid	(647)		(585)
Repurchases of common stock	—		(307)
Cash paid for taxes from withheld shares	(79)		(130)
Other financing, net	(24)		10
Net cash provided by (used in) financing activities	$	1,046	$	(2,360)
Effect of exchange rate changes on cash and cash equivalents	9		(28)
Change in cash and cash equivalents	$	2,746	$	(1,668)
Cash and cash equivalents at beginning of period	4,337		3,616
Cash and cash equivalents at end of period	$	7,083	$	1,948

See accompanying notes to Consolidated Financial Statements.

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

General Information

Management believes the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring items, considered necessary to fairly present the financial position of Stryker Corporation and its consolidated subsidiaries ("Stryker," the "Company," "we," us" or "our") on September 30, 2020 and the results of operations for the three and nine months 2020. The results of operations included in these Consolidated Financial Statements may not necessarily be indicative of our annual results. These statements should be read in conjunction with our Annual Report on Form 10-K for 2019.

Certain prior year amounts have been reclassified to conform with current year presentation of segment results.

New Accounting Pronouncements Not Yet Adopted

We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.

Accounting Pronouncements Recently Adopted

On January 1, 2020 we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses for accounts receivables, loans and other financial instruments. The adoption of this update did not have a material impact on our Consolidated Financial Statements.

NOTE 2 - REVENUE RECOGNITION

Our policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for 2019.

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.

Net Sales by Product Line
	Three Months				Nine Months
	2020		2019		2020		2019
Orthopaedics:
Knees	$	435	$	426	$	1,108	$	1,305
Hips	334		332		866		1,011
Trauma and Extremities	430		407		1,152		1,197
Other	118		97		307		272
	$	1,317	$	1,262	$	3,433	$	3,785
MedSurg:
Instruments	$	467	$	452	$	1,308	$	1,417
Endoscopy	467		474		1,238		1,424
Medical	600		554		1,819		1,627
Sustainability	66		72		181		212
	$	1,600	$	1,552	$	4,546	$	4,680
Neurotechnology and Spine:
Neurotechnology	$	518	$	490	$	1,370	$	1,443
Spine	302		283		740		845
	$	820	$	773	$	2,110	$	2,288
Total	$	3,737	$	3,587	$	10,089	$	10,753

Net Sales by Geography
	Three Months 2020				Three Months 2019
	United States		International		United States		International
Orthopaedics:
Knees	$	332	$	103	$	318	$	108
Hips	223		111		211		121
Trauma and Extremities	285		145		262		145
Other	97		21		81		16
	$	937	$	380	$	872	$	390
MedSurg:
Instruments	$	369	$	98	$	357	$	95
Endoscopy	380		87		377		97
Medical	455		145		442		112
Sustainability	65		1		71		1
	$	1,269	$	331	$	1,247	$	305
Neurotechnology and Spine:
Neurotechnology	$	323	$	195	$	316	$	174
Spine	219		83		209		74
	$	542	$	278	$	525	$	248
Total	$	2,748	$	989	$	2,644	$	943

Net Sales by Geography
	Nine Months 2020				Nine Months 2019
	United States		International		United States		International
Orthopaedics:
Knees	$	833	$	275	$	962	$	343
Hips	564		302		643		368
Trauma and Extremities	753		399		768		429
Other	262		45		223		49
	$	2,412	$	1,021	$	2,596	$	1,189
MedSurg:
Instruments	$	1,028	$	280	$	1,121	$	296
Endoscopy	997		241		1,136		288
Medical	1,363		456		1,288		339
Sustainability	179		2		210		2
	$	3,567	$	979	$	3,755	$	925
Neurotechnology and Spine:
Neurotechnology	$	835	$	535	$	929	$	514
Spine	543		197		638		207
	$	1,378	$	732	$	1,567	$	721
Total	$	7,357	$	2,732	$	7,918	$	2,835

Contract Assets and Liabilities

On September 30, 2020 there were no contract assets recorded on our Consolidated Balance Sheets.

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 $389 and $313 on September 30, 2020 and December 31, 2019.

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

NOTE 3 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI)

Three Months 2020	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(187)	$	(9)	$	(516)	$	(715)
OCI	—		(11)		2		(248)		(257)
Income taxes	—		3		(1)		59		61
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense	—		2		(1)		(7)		(6)
Income taxes	—		—		1		2		3
Net OCI	$	—	$	(6)	$	(2)	$	(194)	$	(202)
Ending	$	(3)	$	(193)	$	(11)	$	(710)	$	(917)

Three Months 2019	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(148)	$	37	$	(516)	$	(630)
OCI	—		11		(18)		116		109
Income taxes	—		1		10		(32)		(21)
Reclassifications to:
Cost of sales	—		—		(2)		—		(2)
Other (income) expense	—		1		—		(7)		(6)
Income taxes	—		—		(5)		2		(3)
Net OCI	$	—	$	13	$	(15)	$	79	$	77
Ending	$	(3)	$	(135)	$	22	$	(437)	$	(553)

Nine Months 2020	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(179)	$	47	$	(471)	$	(606)
OCI	—		(25)		(70)		(285)		(380)
Income taxes	—		5		18		61		84
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense	—		8		(4)		(20)		(16)
Income taxes	—		(2)		1		5		4
Net OCI	$	—	$	(14)	$	(58)	$	(239)	$	(311)
Ending	$	(3)	$	(193)	$	(11)	$	(710)	$	(917)

Nine Months 2019	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(4)	$	(137)	$	50	$	(540)	$	(631)
OCI	1		(5)		(34)		144		106
Income taxes	—		4		18		(36)		(14)
Reclassifications to:
Cost of sales	—		—		(4)		—		(4)
Other (income) expense	—		4		—		(7)		(3)
Income taxes	—		(1)		(8)		2		(7)
Net OCI	$	1	$	2	$	(28)	$	103	$	78
Ending	$	(3)	$	(135)	$	22	$	(437)	$	(553)

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 our counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum loss exposure is the asset balance of the instrument. We have not changed our hedging

strategies, accounting practices or objectives from those disclosed in our Annual Report on Form 10-K for 2019.

Foreign Currency Hedges

September 2020	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	$	824	$	1,169	$	5,619	$	7,612
Maximum term in days							1372
Fair value:
Other current assets	$	10	$	—	$	13	$	23
Other noncurrent assets	1		43		—		44
Other current liabilities	(6)		—		(97)		(103)
Other noncurrent liabilities	(2)		—		—		(2)
Total fair value	$	3	$	43	$	(84)	$	(38)

December 2019	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	$	801	$	1,113	$	6,174	$	8,088
Maximum term in days							1646
Fair value:
Other current assets	$	5	$	—	$	180	$	185
Other noncurrent assets	1		40		—		41
Other current liabilities	(10)		—		(11)		(21)
Other noncurrent liabilities	(2)		—		—		(2)
Total fair value	$	(6)	$	40	$	169	$	203

In December 2019 and November 2018 we designated the issuance of €2,400 and €2,250 of senior unsecured notes 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. On September 30, 2020 the total after tax gain (loss) amount in AOCI related to these designated net investment hedges was ($179).

In July 2019 we entered into €1.0 billion in certain forward currency contracts and designated these as net investment hedges to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros.

Net Currency Exchange Rate Gains (Losses)

		Three Months				Nine Months
Derivative instrument	Recorded in:	2020		2019		2020		2019
Cash Flow	Cost of sales	$	3	$	2	$	3	$	4
Net Investment	Other income (expense), net	7		7		20		7
Non-Designated	Other income (expense), net	(3)		(6)		(12)		(10)
	Total	$	7	$	3	$	11	$	1

Pretax gains (losses) on derivatives designated as cash flow of $6 and net investment hedges of $27 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense) in earnings within 12 months as of September 30, 2020. 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

In conjunction with our offerings of senior unsecured notes in December 2019 and June 2020 we terminated cash flow hedges with gross notional amounts of €600 and $500 designated as

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

forward starting interest rate swaps of our interest rates, the impact of which will be recognized over time within interest expense. Pretax gains recorded in AOCI related to closed interest rate hedges of $6 are expected to be reclassified to other income (expense) in earnings within 12 months of September 30, 2020.

On September 30, 2020 we had interest rate swap agreements with notional amounts of $750 designated as forward starting interest rate swaps in anticipation of future debt issuances. Pretax losses of $66 were recorded in AOCI as of September 30, 2020. Upon the probable issuance of the debt, these amounts will be released to interest expense over the term of the debt. The cash flow effect of these hedges is recorded in cash flow from operations.

NOTE 5 - FAIR VALUE MEASUREMENTS

Our policies for managing risk related to foreign currency, interest rates, credit and markets and our process for determining fair value have not changed from those described in our Annual Report on Form 10-K for 2019.

There were no significant transfers into or out of any level in 2020.

Assets Measured at Fair Value	September		December
	2020		2019
Cash and cash equivalents	$	7,083	$	4,337
Trading marketable securities	154		149
Level 1 - Assets	$	7,237	$	4,486
Available-for-sale marketable securities:
Corporate and asset-backed debt securities	$	37	$	32
United States agency debt securities	6		2
United States Treasury debt securities	34		49
Certificates of deposit	1		5
Total available-for-sale marketable securities	$	78	$	88
Foreign currency exchange forward contracts	67		226
Interest rate swap asset	—		17
Level 2 - Assets	$	145	$	331
Total assets measured at fair value	$	7,382	$	4,817

Liabilities Measured at Fair Value	September		December
	2020		2019
Deferred compensation arrangements	$	154	$	149
Level 1 - Liabilities	$	154	$	149
Foreign currency exchange forward contracts	$	105	$	23
Interest rate swap liability	65		—
Level 2 - Liabilities	$	170	$	23
Contingent consideration:
Beginning	$	306	$	117
Additions	5		298
Change in estimate	6		(10)
Settlements	(30)		(99)
Ending	$	287	$	306
Level 3 - Liabilities	$	287	$	306
Total liabilities measured at fair value	$	611	$	478

Fair Value of Available for Sale Securities by Maturity
	September 2020		December 2019
Due in one year or less	$	40	$	50
Due after one year through three years	$	38	$	38

On September 30, 2020 and December 31, 2019 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest and marketable securities income recorded in other income (expense), net, was $19 and $36 in the three months and $84 and $109 in the nine months 2020 and 2019.

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 6 - CONTINGENCIES AND COMMITMENTS

We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters, the most significant of which are more fully described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings, the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management had sufficient information to reasonably estimate our future obligations, a liability representing management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for product liability 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.

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. We continue to offer support for recall-related care and reimburse patients who are not eligible to enroll in the settlement program for testing and treatment services, including any necessary revision surgeries. In addition, 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. The specific terms of the settlement agreement, including the financial terms, are confidential.

We have incurred, and expect to incur in the future, costs associated with the defense and settlement of these matters. Based on the information that has been received, we have estimated the remaining range of probable loss related to these matters globally to be approximately $280 to $515. We have recorded charges to earnings representing the 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

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

accruals and could have a material adverse effect on our results of operations and cash flows.

Leases	September			December
	2020			2019
Right-of-use assets	$	401		$	384
Lease liabilities, current	$	100		$	86
Lease liabilities, non-current	$	310		$	301
Other information
Weighted-average remaining lease term	5.5 years			6.2 years
Weighted-average discount rate	2.87		%	3.34		%

	Three Months			Nine Months
	2020		2019	2020	2019
Operating lease cost	$	27	34	94	102

NOTE 7 - 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 $26 and $446 in the nine months 2020 and 2019.

In October 2019 we completed the acquisition of Mobius Imaging and Cardan Robotics for net cash consideration of $360 and future regulatory and commercial milestone payments of up to $130. Mobius Imaging is a leader in point-of-care imaging technology focused on integrating advanced imaging technologies into medical workflow. Cardan Robotics is working to develop innovative robotics and navigation technology systems for surgical and interventional radiology procedures. Mobius Imaging and Cardan Robotics (Mobius) are part of our Spine business within Neurotechnology and Spine. For income tax purposes the acquisition was treated as an asset purchase. Goodwill attributable to the acquisition is deductible for tax purposes.

In March 2019 we completed the acquisition of OrthoSpace, Ltd. (OrthoSpace) for net cash consideration of $110 and future regulatory milestone payments of up to $110. OrthoSpace is a medical device company specializing in orthopaedic biodegradable technology for the treatment of irreparable rotator cuff tears. OrthoSpace is part of our Endoscopy business within MedSurg. Goodwill attributable to the acquisition is not deductible for tax purposes.

In November 2019 we announced a definitive agreement to acquire all of the issued and outstanding ordinary shares of Wright Medical Group N.V. (Wright) for $30.75 per share, or an aggregate purchase price of approximately $5.4 billion (including convertible notes). Pursuant to the agreement, on December 13, 2019 our wholly owned subsidiary, Stryker B.V., commenced a tender offer to purchase all of the outstanding ordinary shares, par value €0.03 per share, of Wright at a price of $30.75 per share, without interest, but subject to any applicable withholding of taxes. We expect the acquisition to close in the fourth quarter of 2020, subject to the expiration of the waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other required approvals and clearances under applicable antitrust laws and other customary conditions. Wright is a global medical device company focused on extremities and biologics. Following closing, we plan to integrate Wright into our Trauma and Extremities business within Orthopaedics.

Purchase price allocations for our significant acquisitions are:

Purchase Price Allocation of Acquired Net Assets
	2019
	Mobius		OrthoSpace
Tangible assets:
Accounts receivable	$	3	$	1
Inventory	6		1
Other assets	2		1
Contingent consideration	(4)		—
Other liabilities	(10)		(29)
Intangible assets:
Customer relationship	7		—
Developed technology and patents	59		120
In-process research and development	98		—
Non-compete agreements	9		—
Goodwill	303		114
Purchase price, net of cash acquired	$	473	$	208
Weighted-average life of intangible assets	12		18

The purchase price allocation for Mobius is based on preliminary valuations, primarily related to intangible assets that are subject to change within the measurement period. The purchase price allocation for OrthoSpace was finalized in 2020.

Estimated Amortization Expense
Remainder of 2020		2021		2022		2023		2024
$	115	$	446	$	436	$	421	$	390

NOTE 8 - 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 September 30, 2020.

Our commercial paper program allows us to have a maximum of $1,500 in commercial paper outstanding with maturities up to 397 days from the date of issuance. On September 30, 2020 there were no amounts outstanding under our commercial paper program.

Summary of Total Debt			September 2020		December 2019
Senior unsecured notes:
	Rate	Due
	4.375%	January 15, 2020	$	—	$	500
	Variable	November 30, 2020	351		333
	2.625%	March 15, 2021	750		749
	1.125%	November 30, 2023	640		609
	3.375%	May 15, 2024	590		587
	0.250%	December 3, 2024	987		938
	1.150%	June 15, 2025	644		—
	3.375%	November 1, 2025	747		746
	3.500%	March 15, 2026	992		991
	2.125%	November 30, 2027	871		829
	3.650%	March 7, 2028	596		596
	0.750%	March 1, 2029	929		884
	1.950%	June 15, 2030	988		—
	2.625%	November 30, 2030	749		712
	1.000%	December 3, 2031	865		823
	4.100%	April 1, 2043	392		391
	4.375%	May 15, 2044	395		395
	4.625%	March 15, 2046	981		981
	2.900%	June 15, 2050	641		—
Other			19		26
Total debt			$	13,127	$	11,090
Less current maturities of debt			1,119		859
Total long-term debt			$	12,008	$	10,231

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

	September 2020		December 2019
Unamortized debt issuance costs	$	71	$	58
Available secured borrowing capacity	$	2,904	$	1,403
Fair value of senior unsecured notes	$	14,366	$	11,910

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.

In January 2020 we repaid $500 of senior unsecured notes with a coupon of 4.375% that were due on January 15, 2020.

On April 30, 2020 we amended our primary credit facility. The principal change was to increase the leverage ratio financial covenant from 3.5:1 to 4.5:1 at the end of each fiscal quarter ending on or prior to June 30, 2021.

On April 30, 2020 we entered into a credit agreement that provides for up to $1,500 of borrowings in United States Dollars pursuant to a 364-day revolving credit facility, which matures on April 29, 2021 and is available for working capital and general corporate purposes.

In June 2020 we issued $650 of senior unsecured notes with a fixed interest rate of 1.150% due on June 15, 2025, $1,000 of senior unsecured notes with a fixed interest rate of 1.950% due on June 15, 2030 and $650 of senior unsecured notes with a fixed interest rate of 2.900% due on June 15, 2050. The 2025 and 2030 notes are subject to a special mandatory redemption feature in which we will be required to redeem the notes in whole at a price equal to 101% of the aggregate principal amount plus accrued and unpaid interest if we do not consummate the Wright tender offer on or before February 4, 2021.

NOTE 9 - INCOME TAXES

Our effective tax rates were 20.4% and 19.8% in the three months and 19.6% and 16.5% in the nine months 2020 and 2019. The changes in the effective tax rates were primarily due to a change in geographic profit mix in the three months and a favorable audit settlement recorded in 2019 in the nine months.

In March 2020 the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law in the United States. We do not expect the provisions of the CARES Act to have a material impact on our annual effective tax rate or Consolidated Financial Statements in 2020.

NOTE 10 - SEGMENT INFORMATION

	Three Months				Nine Months
	2020		2019		2020		2019
Orthopaedics	$	1,317	$	1,262	$	3,433	$	3,785
MedSurg	1,600		1,552		4,546		4,680
Neurotechnology and Spine	820		773		2,110		2,288
Net sales	$	3,737	$	3,587	$	10,089	$	10,753
Orthopaedics	$	472	$	437	$	1,027	$	1,322
MedSurg	451		394		1,085		1,179
Neurotechnology and Spine	228		199		513		608
Segment operating income	$	1,151	$	1,030	$	2,625	$	3,109
Items not allocated to segments:
Corporate and other	(104)		(117)		(371)		(371)
Acquisition and integration-related charges	(29)		(32)		(85)		(223)
Amortization of intangible assets	(114)		(116)		(342)		(352)
Restructuring-related and other charges	(29)		(48)		(292)		(146)
Medical device regulations	(14)		(15)		(60)		(34)
Recall-related matters	(2)		(49)		4		(179)
Regulatory and legal matters	—		(25)		(5)		(35)
Consolidated operating income	$	859	$	628	$	1,474	$	1,769

There were no significant changes to total assets by segment from information provided in our Annual Report on Form 10-K for 2019.

NOTE 11 - ASSET IMPAIRMENTS

The significant negative impact the COVID-19 pandemic has had on Stryker’s operations and financial results has led to the decision to suspend certain in-process investments resulting in charges of $189 to impair certain long-lived assets (primarily the portion of our investment in a new global ERP system that was in-process of being developed for future deployment) and product line and other exit costs in the second quarter of 2020. These charges were included in cost of sales and selling, general and administrative expenses.

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

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 Orthopaedics, Medical and Surgical, and Neurotechnology and Spine that help improve patient and hospital outcomes.

We segregate our operations into three reportable business segments: Orthopaedics, MedSurg, and Neurotechnology and Spine. Orthopaedics products consist primarily of implants used in hip and knee joint replacements and trauma and extremities surgeries. MedSurg products include surgical equipment and surgical navigation systems (Instruments), endoscopic and communications systems (Endoscopy), patient handling, emergency medical equipment and intensive care disposable products (Medical), reprocessed and remanufactured medical devices (Sustainability) and other medical device products used in a variety of medical specialties. Neurotechnology and Spine products include neurosurgical, neurovascular and spinal implant devices.

COVID-19 Pandemic

The COVID-19 global pandemic has led to severe disruptions in the market and the global and United States economies that may continue for a prolonged duration and trigger a recession or a period of economic slowdown. In response, various governmental authorities and private enterprises have implemented numerous measures to contain the pandemic, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns. A significant number of our global suppliers, vendors, distributors and manufacturing facilities are located in regions that have been affected by the pandemic. Those operations have been materially adversely affected by restrictive government and private enterprise measures implemented in response to the pandemic.

Some of our products are particularly sensitive to reductions in deferrable medical procedures. Deferrable medical procedures were suspended in the first quarter of 2020 in many of the markets where our products are marketed and sold, which negatively affected our business, cash flows, financial condition and results of operations. While we have seen progressive improvement in the second and third quarters, to the extent individuals are required to continue to de-prioritize or delay deferrable procedures as a result of the COVID-19 pandemic or otherwise, our business, cash flows, financial condition and results of operations could be negatively affected.

Overview of the Three and Nine Months

The response to the COVID-19 pandemic has included unprecedented measures to slow the spread of the virus taken by

local governments and health care authorities globally, including the postponement of deferrable medical procedures and social contact restrictions, which have had, and we expect will continue to have, a significant negative impact on Stryker’s operations and financial results. While we are still recovering from the impacts of the COVID-19 pandemic, most of our businesses reported overall increased unit volume during the third quarter.

In the three months 2020 we achieved sales growth of 4.2%. Excluding the impact of acquisitions sales grew 3.3% in constant currency. We reported operating income margin of 23.0%, net earnings of $621 and net earnings per diluted share of $1.63. Excluding the impact of certain items, we expanded adjusted operating income margin(1) by 260 bps to 28.0%, with adjusted net earnings(1) of $812 and growth of 12.0% in adjusted net earnings per diluted share(1).

In the nine months 2020 we experienced sales declines of 6.2%. Excluding the impact of acquisitions sales decreased 6.3% in constant currency. We reported operating income margin of 14.6%, net earnings of $1,031 and net earnings per diluted share of $2.71, including $170 of charges related to certain in-process asset impairments (primarily the portion of our investment in a new global ERP system that was in-process of being developed for future deployment) and product line and other exit costs resulting from our decision to suspend certain investments due to pandemic-related constraints. Excluding the impact of certain items, adjusted operating income margin(1) was 22.3%, with adjusted net earnings(1) of $1,756 and a reduction of 19.9% in adjusted net earnings per diluted share(1).

Recent Developments

In January 2020 we repaid $500 of our senior unsecured notes with a coupon of 4.375% that were due on January 15, 2020. In June 2020 we issued $650 of senior unsecured notes with a fixed interest rate of 1.150% due on June 15, 2025, $1,000 of senior unsecured notes with a fixed interest rate of 1.950% due on June 15, 2030 and $650 of senior unsecured notes with a fixed interest rate of 2.900% due on June 15, 2050. Refer to Note 8 to our Consolidated Financial Statements for further Information.

In the nine months 2020 we did not repurchase any shares of our common stock under our authorized repurchase program. The total dollar value of shares of our common stock that could be acquired under our authorized repurchase program was $1,033 as of September 30, 2020. As previously announced we intend to maintain the suspension of our share repurchase program through 2021.

(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 2020 Third Quarter Form 10-Q

CONSOLIDATED RESULTS OF OPERATIONS

	Three Months										Nine Months
					Percent Net Sales				Percentage						Percent Net Sales				Percentage
	2020		2019		2020		2019		Change		2020		2019		2020		2019		Change
Net sales	$	3,737	$	3,587	100.0	%	100.0	%	4.2	%	$	10,089	$	10,753	100.0	%	100.0	%	(6.2)	%
Gross profit	2,461		2,330		65.9		65.0		5.6		6,340		6,993		62.8		65.0		(9.3)
Research, development and engineering expenses	242		246		6.5		6.9		(1.6)		729		717		7.2		6.7		1.7
Selling, general and administrative expenses	1,244		1,291		33.3		36.0		(3.6)		3,799		3,976		37.7		37.0		(4.5)
Recall charges	2		49		0.1		1.4		(95.9)		(4)		179		—		1.7		nm
Amortization of intangible assets	114		116		3.1		3.2		(1.7)		342		352		3.4		3.3		(2.8)
Other income (expense), net	(79)		(47)		(2.1)		(1.3)		68.1		(191)		(143)		(1.9)		(1.3)		33.6
Income taxes	159		115		nm		nm		38.3		252		268		nm		nm		(6.0)
Net earnings	$	621	$	466	16.6	%	13.0	%	33.3	%	$	1,031	$	1,358	10.2	%	12.6	%	(24.1)	%
Net earnings per diluted share	$	1.63	$	1.23					32.5	%	$	2.71	$	3.58					(24.3)	%
Adjusted net earnings per diluted share(1)	$	2.14	$	1.91					12.0	%	$	4.62	$	5.77					(19.9)	%

nm - not meaningful

Geographic and Segment Net Sales	Three Months								Nine Months
					Percentage Change								Percentage Change
	2020		2019		As Reported		Constant Currency		2020		2019		As Reported		Constant Currency
Geographic:
United States	$	2,748	$	2,644	3.9	%	3.9	%	$	7,357	$	7,918	(7.1)	%	(7.1)	%
International	989		943		5.0		3.3		2,732		2,835		(3.6)		(2.1)
Total	$	3,737	$	3,587	4.2	%	3.8	%	$	10,089	$	10,753	(6.2)	%	(5.8)	%
Segment:
Orthopaedics	$	1,317	$	1,262	4.4	%	3.8	%	$	3,433	$	3,785	(9.3)	%	(9.0)	%
MedSurg	1,600		1,552		3.2		2.9		4,546		4,680		(2.9)		(2.4)
Neurotechnology and Spine	820		773		6.0		5.5		2,110		2,288		(7.8)		(7.4)
Total	$	3,737	$	3,587	4.2	%	3.8	%	$	10,089	$	10,753	(6.2)	%	(5.8)	%

Supplemental Net Sales Growth Information
	Three Months														Nine Months
					Percentage Change														Percentage Change
									United States		International												United States		International
	2020		2019		As Reported		Constant Currency		As Reported		As Reported		Constant Currency		2020		2019		As Reported		Constant Currency		As Reported		As Reported		Constant Currency
Orthopaedics:
Knees	$	435	$	426	2.2	%	1.7	%	4.6	%	(4.8)	%	(6.9)	%	$	1,108	$	1,305	(15.1)	%	(14.8)	%	(13.4)	%	(19.8)	%	(18.8)	%
Hips	334		332		0.4		(0.1)		5.3		(8.2)		(9.7)		866		1,011		(14.4)		(13.9)		(12.3)		(18.1)		(16.8)
Trauma and Extremities	430		407		5.6		4.7		9.0		(0.5)		(3.0)		1,152		1,197		(3.8)		(3.5)		(1.9)		(7.1)		(6.4)
Other	118		97		22.5		22.2		20.0		34.9		33.0		307		272		13.0		13.1		17.5		(7.5)		(6.7)
	$	1,317	$	1,262	4.4	%	3.8	%	7.5	%	(2.6)	%	(4.7)	%	$	3,433	$	3,785	(9.3)	%	(9.0)	%	(7.1)	%	(14.2)	%	(13.2)	%
MedSurg:
Instruments	$	467	$	452	3.4	%	3.1	%	3.1	%	4.7	%	2.9	%	$	1,308	$	1,417	(7.7)	%	(7.4)	%	(8.4)	%	(5.1)	%	(3.5)	%
Endoscopy	467		474		(1.3)		(1.5)		1.0		(10.1)		(11.0)		1,238		1,424		(13.0)		(12.7)		(12.2)		(16.4)		(14.8)
Medical	600		554		8.3		8.0		3.0		29.0		27.8		1,819		1,627		11.8		12.6		5.8		34.6		38.8
Sustainability	66		72		(8.7)		(8.7)		(8.9)		nm		nm		181		212		(14.7)		(14.7)		(14.7)		nm		nm
	$	1,600	$	1,552	3.2	%	2.9	%	1.7	%	8.9	%	7.6	%	$	4,546	$	4,680	(2.9)	%	(2.4)	%	(5.0)	%	5.9	%	8.4	%
Neurotechnology and Spine:
Neurotechnology	$	518	$	490	5.7	%	5.1	%	1.9	%	12.6	%	11.1	%	$	1,370	$	1,443	(5.1)	%	(4.7)	%	(10.2)	%	4.2	%	5.3	%
Spine	302		283		6.6		6.1		4.9		11.3		9.6		740		845		(12.4)		(12.1)		(14.8)		(4.9)		(3.9)
	$	820	$	773	6.0	%	5.5	%	3.1	%	12.2	%	10.6	%	$	2,110	$	2,288	(7.8)	%	(7.4)	%	(12.1)	%	1.6	%	2.6	%
Total	$	3,737	$	3,587	4.2	%	3.8	%	3.9	%	5.0	%	3.3	%	$	10,089	$	10,753	(6.2)	%	(5.8)	%	(7.1)	%	(3.6)	%	(2.1)	%

Consolidated Net Sales

Consolidated net sales increased 4.2% in the three months 2020 as reported and 3.8% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.4%. Excluding the 0.5% impact of acquisitions, net sales in constant currency increased by 4.7% from increased unit volume partially offset by 1.4% due to lower prices. The unit volume increase was primarily due to higher shipments of knee, hip, medical, instruments, neurotechnology and spine products.

Consolidated net sales in the nine months 2020 were significantly negatively impacted by the global response to the COVID-19

pandemic. Consolidated net sales decreased 6.2% in the nine months 2020 as reported and 5.8% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.4%. Excluding the 0.5% impact of acquisitions, net sales in constant currency decreased by 5.6% from decreased unit volume and 0.7% due to lower prices. The unit volume decrease was primarily due to lower shipments of knee, hip, instruments, endoscopy, neurotechnology and spine products partially offset by higher shipments of medical products.

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

Orthopaedics Net Sales

Orthopaedics net sales increased 4.4% in the three months 2020 as reported and 3.8% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.6%. Net sales in constant currency increased 5.9% from increased unit volume partially offset by 2.1% from lower prices. The unit volume increase was primarily due to higher shipments of knee, hip and trauma and extremities products.

Orthopaedics net sales decreased 9.3% in the nine months 2020 as reported and 9.0% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.3%. Net sales in constant currency decreased due to the postponement of deferrable medical procedures as part of the global response to the COVID-19 pandemic with 7.4% from lower unit volume and 1.6% from lower prices. The unit volume decrease was primarily due to lower shipments of knee and hip products.

MedSurg Net Sales

MedSurg net sales increased 3.2% in the three months 2020 as reported and 2.9% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.3%. Excluding the 0.4% impact of acquisitions, net sales in constant currency increased by 3.1% from increased unit volume partially offset by 0.6% due to lower prices. The unit volume increase was primarily due to higher shipments of instruments and medical products partially offset by lower shipments of sustainability solutions products.

MedSurg net sales decreased 2.9% in the nine months 2020 as reported and 2.4% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.5%. Excluding the 0.5% impact of acquisitions, net sales in constant currency decreased by 2.9% from lower unit volume. The unit volume decrease was primarily due to lower shipments of instruments, endoscopy and sustainability solutions products partially offset by higher shipments of medical products.

Neurotechnology and Spine Net Sales

Neurotechnology and Spine net sales increased 6.0% in the three months 2020 as reported and 5.5% in constant currency, as foreign currency exchange rates positively impacted net sales by 0.5%. Excluding the 1.2% impact of acquisitions, net sales in constant currency increased by 6.0% from increased unit volume partially offset by 1.7% due to lower prices. The unit volume increase was due to higher shipments of neurotechnology and spine products.

Neurotechnology and Spine net sales decreased 7.8% in the nine months 2020 as reported and 7.4% in constant currency, as foreign currency exchange rates negatively impacted net sales by 0.4%. Excluding the 1.2% impact of acquisitions, net sales in constant currency decreased by 8.2% from decreased unit volume and 0.4% due to lower prices. The unit volume decrease was due to lower shipments of neurotechnology and spine products.

Gross Profit

Gross profit as a percentage of sales in the three months 2020 increased to 65.9% from 65.0% in 2019. Excluding the impact of the items noted below, gross profit increased to 65.9% of sales in the three months 2020 from 65.7% in 2019 primarily due to leverage from higher sales volumes partially offset by lower selling prices.

Gross profit was significantly negatively impacted by the global response to the COVID-19 pandemic in the nine months 2020, decreasing as a percentage of sales to 62.8% from 65.0% in 2019. Excluding the impact of the items noted below, gross profit

decreased to 63.3% of sales in the nine months 2020 from 65.7% in 2019 primarily due to lower sales volumes, lower selling prices, lower manufacturing volumes and unfavorable product mix due to the postponement of deferrable medical procedures as part of the global response to the COVID-19 pandemic.

					Percent Net Sales
Three Months	2020		2019		2020		2019
Reported	$	2,461	$	2,330	65.9	%	65.0	%
Inventory stepped-up to fair value	—		17		—		0.4
Restructuring-related and other charges	—		10		—		0.3
Medical device regulations	—		—		—		—
Adjusted	$	2,461	$	2,357	65.9	%	65.7	%

					Percent Net Sales
Nine Months	2020		2019		2020		2019
Reported	$	6,340	$	6,993	62.8	%	65.0	%
Inventory stepped-up to fair value	9		55		0.1		0.5
Restructuring-related and other charges	36		21		0.4		0.2
Medical device regulations	1		1		—		—
Adjusted	$	6,386	$	7,070	63.3	%	65.7	%

Research, Development and Engineering Expenses

Research, development and engineering expenses decreased $4 or 1.6% in the three months 2020 and decreased as a percentage of sales to 6.5% from 6.9% in 2019. Excluding the impact of the items noted below, expenses decreased to 6.1% of sales in 2020 from 6.5% in 2019. Overall spending levels decreased due to continued operating expense savings actions in response to the COVID-19 pandemic.

Research, development and engineering expenses increased $12 or 1.7% to 7.2% of sales in the nine months 2020 from 6.7% in 2019. Excluding the impact of the items noted below, expenses increased to 6.6% of sales in 2020 from 6.4% in 2019. Projects to develop new products, investments in new technologies, integration of recent acquisitions and the impact of lower sales contributed to the increase partially offset by operating expense savings actions in response to the COVID-19 pandemic that will continue to drive lower spending in the remainder of the year.

					Percent Net Sales
Three Months	2020		2019		2020		2019
Reported	$	242	$	246	6.5	%	6.9	%
Medical device regulations	(13)		(15)		(0.4)		(0.4)
Adjusted	$	229	$	231	6.1	%	6.5	%

					Percent Net Sales
Nine Months	2020		2019		2020		2019
Reported	$	729	$	717	7.2	%	6.7	%
Medical device regulations	(59)		(33)		(0.6)		(0.3)
Adjusted	$	670	$	684	6.6	%	6.4	%

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $47 or 3.6% in the three months 2020 and decreased as a percentage of sales to 33.3% from 36.0% in 2019. Excluding the impact of the items noted below, expenses decreased to 31.7% of sales in 2020 from 33.8% in 2019, primarily due to operating expense savings actions taken in response to the COVID-19 pandemic partially offset by the impact of higher sales volumes.

Selling, general and administrative expenses decreased $177 or 4.5% in the nine months 2020 and increased as a percentage of sales to 37.7% from 37.0% in 2019 and included charges related to certain in-process asset impairments (primarily the portion of our investment in a new global ERP system that was in-process of being developed for future deployment) and other exit costs resulting from our decision to suspend certain investments due to pandemic-related constraints. Excluding the impact of the items

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

noted below, expenses increased to 34.3% of sales in 2020 from 33.9% in 2019, primarily due to the impact of lower sales volumes partially offset by operating expense savings actions taken in response to the COVID-19 pandemic that will continue to drive lower spending in the remainder of the year.

					Percent Net Sales
Three Months	2020		2019		2020		2019
Reported	$	1,244	$	1,291	33.3	%	36.0	%
Other acquisition and integration-related	(29)		(15)		(0.8)		(0.4)
Restructuring-related and other charges	(29)		(37)		(0.8)		(1.1)
Regulatory and legal matters	—		(25)		—		(0.7)
Adjusted	$	1,186	$	1,214	31.7	%	33.8	%

					Percent Net Sales
Nine Months	2020		2019		2020		2019
Reported	$	3,799	$	3,976	37.7	%	37.0	%
Other acquisition and integration-related	(76)		(168)		(0.8)		(1.6)
Restructuring-related and other charges	(256)		(125)		(2.6)		(1.2)
Regulatory and legal matters	(5)		(35)		—		(0.3)
Adjusted	$	3,462	$	3,648	34.3	%	33.9	%

Recall Charges

Recall charges were minimal in the three and nine months 2020 and were $49 and $179 in the three and nine months 2019. Charges were primarily due to the previously disclosed Rejuvenate and ABGII Modular-Neck hip stems and LFIT V40 femoral head voluntary recalls. Refer to Note 6 to our Consolidated Financial Statements for further information.

Amortization of Intangible Assets

Amortization of intangible assets was $114 and $116 in the three months and $342 and $352 in the nine months 2020 and 2019. The decrease in 2020 was primarily due to decreased acquisition activity in 2020. Refer to Note 7 to our Consolidated Financial Statements for further information.

Operating Income

Operating income increased $231 or 36.8% to 23.0% of sales in the three months 2020 from 17.5% of sales in 2019. Excluding the impact of the items noted below, operating income increased to 28.0% of sales in 2020 from 25.4% in 2019 primarily due to leverage from higher sales volumes and continued focus on our operating expense savings actions partially offset by lower selling prices.

Operating income was significantly negatively impacted by the global response to the COVID-19 pandemic in the nine months 2020. Operating income decreased $295 or 16.7% to 14.6% of sales in the nine months 2020 from 16.5% in 2019. Excluding the impact of the items noted below, operating income decreased to 22.3% of sales in 2020 from 25.5% in 2019 primarily due to unfavorable business mix and the impact of lower sales volumes from the postponement of deferrable medical procedures as part of the global response to the COVID-19 pandemic partially offset by continued focus on our operating expense savings actions that will continue to drive lower spending in the remainder of the year.

					Percent Net Sales
Three Months	2020		2019		2020		2019
Reported	$	859	$	628	23.0	%	17.5	%
Inventory stepped-up to fair value	—		17		—		0.5
Other acquisition and integration-related	29		15		0.7		0.4
Amortization of purchased intangible assets	114		116		3.1		3.2
Restructuring-related and other charges	29		48		0.7		1.3
Medical device regulations	14		15		0.4		0.4
Recall-related matters	2		49		0.1		1.4
Regulatory and legal matters	—		25		—		0.7
Adjusted	$	1,047	$	913	28.0	%	25.4	%

					Percent Net Sales
Nine Months	2020		2019		2020		2019
Reported	$	1,474	$	1,769	14.6	%	16.5	%
Inventory stepped-up to fair value	9		55		0.1		0.5
Other acquisition and integration-related	76		168		0.8		1.6
Amortization of purchased intangible assets	342		352		3.3		3.2
Restructuring-related and other charges	292		146		2.9		1.4
Medical device regulations	60		34		0.6		0.3
Recall-related matters	(4)		179		—		1.7
Regulatory and legal matters	5		35		—		0.3
Adjusted	$	2,254	$	2,738	22.3	%	25.5	%

Other Income (Expense), Net

Other income (expense), net was ($79) and ($47) in the three months and ($191) and ($143) in the nine months 2020 and 2019. The increase in net expense in 2020 was primarily due to increased interest expense driven by the additional debt from the bond offerings completed in December 2019 and June 2020.

Income Taxes

Our effective tax rates were 20.4% and 19.8% in the three months and 19.6% and 16.5% in the nine months 2020 and 2019. The changes in the effective tax rates were primarily due to a change in geographic profit mix in the three months and a favorable audit settlement recorded in 2019 in the nine months.

In March 2020 the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law in the United States. We do not expect the provisions of the CARES Act to have a material impact on our annual effective tax rate or Consolidated Financial Statements in 2020.

Net Earnings

Net earnings increased to $621 or $1.63 per diluted share in the three months 2020 from net earnings of $466 or $1.23 per diluted share in 2019. Adjusted net earnings per diluted share(1) increased 12.0% to $2.14 in 2020 from $1.91 in 2019. The impact of foreign currency exchange rates increased net earnings per diluted share by approximately $0.01 in 2020 and reduced net earnings per diluted share by approximately $0.02 in 2019.

Earnings were significantly negatively impacted by the global response to the COVID-19 pandemic in the nine months 2020. Net earnings decreased to $1,031 or $2.71 per diluted share in the nine months 2020 from $1,358 or $3.58 per diluted share in 2019. Adjusted net earnings per diluted share(1) decreased 19.9% to $4.62 in 2020 from $5.77 in 2019. The impact of foreign currency exchange rates reduced net earnings per diluted share by approximately $0.01 in 2020 and $0.12 in 2019.

					Percent Net Sales
Three Months	2020		2019		2020		2019
Reported	$	621	$	466	16.6	%	13.0	%
Inventory stepped-up to fair value	—		13		—		0.4
Other acquisition and integration-related	24		8		0.6		0.2
Amortization of purchased intangible assets	93		105		2.5		2.8
Restructuring-related and other charges	26		40		0.7		1.1
Medical device regulations	11		13		0.3		0.4
Recall-related matters	2		28		0.1		0.8
Regulatory and legal matters	—		14		—		0.4
Tax matters	35		38		0.9		1.1
Adjusted	$	812	$	725	21.7	%	20.2	%

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

					Percent Net Sales
Nine Months	2020		2019		2020		2019
Reported	$	1,031	$	1,358	10.2	%	12.6	%
Inventory stepped-up to fair value	6		42		0.1		0.4
Other acquisition and integration-related	60		126		0.6		1.2
Amortization of purchased intangible assets	277		294		2.6		2.8
Restructuring-related and other charges	238		122		2.4		1.1
Medical device regulations	47		28		0.5		0.3
Recall-related matters	(2)		144		—		1.3
Regulatory and legal matters	6		19		0.1		0.2
Tax matters	93		58		0.9		0.5
Adjusted	$	1,756	$	2,191	17.4	%	20.4	%

Non-GAAP Financial Measures

We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; percentage organic sales growth; adjusted gross profit; adjusted selling, general and administrative expenses; adjusted research, development and engineering expenses; adjusted operating income; adjusted other income (expense), net; adjusted effective income tax rate; adjusted net earnings; 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 and acquisitions, which affect the comparability and trend of sales. Percentage organic sales growth is calculated by translating current year results at prior year average foreign currency exchange rates excluding the impact of acquisitions. 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. 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 and specific costs (e.g., inventory step-up and deal costs) related to the consummation of the acquisition process.

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

3.Restructuring-related and other charges. Costs associated with the termination of sales relationships in certain countries, workforce reductions, elimination of product lines, certain long-lived asset impairments and associated costs and other restructuring-related activities.

4.Medical Device Regulations. 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 European Union and China regulations for medical devices.

5.Recall-related matters. Our best estimate of the minimum of the range of probable loss to resolve the Rejuvenate, LFIT V40 and other product recalls.

6.Regulatory and legal matters. Our best estimate of the minimum of the range of probable loss to resolve certain regulatory matters and other legal settlements.

7.Tax matters. Charges represent the impact of accounting for certain significant and discrete tax items.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, selling, general and administrative expenses, research, development and engineering expenses, operating income, other income (expense), net, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These 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 2020 Third Quarter Form 10-Q

Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Three Months 2020	Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other income (expense), net			Net Earnings			Effective Tax Rate		Diluted EPS
Reported	$	2,461		$	1,244		$	242		$	859		$	(79)		$	621		20.4	%	$	1.63
Reported percent net sales	65.9		%	33.3		%	6.5		%	23.0		%	(2.1)		%	16.6		%
Acquisition and integration-related charges:
Inventory stepped-up to fair value	—			—			—			—			—			—			—		—
Other acquisition and integration-related	—			(29)			—			29			—			24			0.1		0.07
Amortization of purchased intangible assets	—			—			—			114			—			93			0.4		0.25
Restructuring-related and other charges	—			(29)			—			29			—			26			(0.1)		0.06
Medical device regulations	—			—			(13)			14			—			11			0.1		0.03
Recall-related matters	—			—			—			2			—			2			(0.2)		0.01
Regulatory and legal matters	—			—			—			—			—			—			—		—
Tax matters	—			—			—			—			—			35			(4.6)		0.09
Adjusted	$	2,461		$	1,186		$	229		$	1,047		$	(79)		$	812		16.1	%	$	2.14
Adjusted percent net sales	65.9		%	31.7		%	6.1		%	28.0		%	(2.1)		%	21.7		%

Three Months 2019	Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other income (expense), net			Net Earnings			Effective Tax Rate		Diluted EPS
Reported	$	2,330		$	1,291		$	246		$	628		$	(47)		$	466		19.8	%	$	1.23
Reported percent net sales	65.0		%	36.0		%	6.9		%	17.5		%	(1.3)		%	13.0		%
Acquisition and integration-related charges:
Inventory stepped-up to fair value	17			—			—			17			—			13			0.2		0.03
Other acquisition and integration-related	—			(15)			—			15			—			8			0.6		0.02
Amortization of purchased intangible assets	—			—			—			116			—			105			(1.5)		0.28
Restructuring-related and other charges	10			(37)			—			48			—			40			0.1		0.11
Medical device regulations	—			—			(15)			15			—			13			—		0.03
Recall-related matters	—			—			—			49			—			28			2.2		0.07
Regulatory and legal matters	—			(25)			—			25			—			14			1.2		0.04
Tax matters	—			—			—			—			—			38			(6.5)		0.10
Adjusted	$	2,357		$	1,214		$	231		$	913		$	(47)		$	725		16.1	%	$	1.91
Adjusted percent net sales	65.7		%	33.8		%	6.5		%	25.4		%	(1.3)		%	20.2		%

Nine Months 2020	Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other income (expense), net			Net Earnings			Effective Tax Rate		Diluted EPS
Reported	$	6,340		$	3,799		$	729		$	1,474		$	(191)		$	1,031		19.6	%	$	2.71
Reported percent net sales	62.8		%	37.7		%	7.2		%	14.6		%	(1.9)		%	10.2		%
Acquisition and integration-related charges:
Inventory stepped-up to fair value	9			—			—			9			—			6			0.1		0.02
Other acquisition and integration-related	—			(76)			—			76			—			60			0.4		0.16
Amortization of purchased intangible assets	—			—			—			342			—			277			1.0		0.73
Restructuring-related and other charges	36			(256)			—			292			—			238			0.8		0.62
Medical device regulations	1			—			(59)			60			—			47			0.3		0.12
Recall-related matters	—			—			—			(4)			—			(2)			(0.2)		—
Regulatory and legal matters	—			(5)			—			5			—			6			(0.2)		0.02
Tax matters	—			—			—			—			7			93			(6.6)		0.24
Adjusted	$	6,386		$	3,462		$	670		$	2,254		$	(184)		$	1,756		15.2	%	$	4.62
Adjusted percent net sales	63.3		%	34.3		%	6.6		%	22.3		%	(1.8)		%	17.4		%

Nine Months 2019	Gross Profit			Selling, General & Administrative Expenses			Research, Development & Engineering Expenses			Operating Income			Other income (expense), net			Net Earnings			Effective Tax Rate		Diluted EPS
Reported	$	6,993		$	3,976		$	717		$	1,769		$	(143)		$	1,358		16.5	%	$	3.58
Reported percent net sales	65.0		%	37.0		%	6.7		%	16.5		%	(1.3)		%	12.6		%
Acquisition and integration-related charges:
Inventory stepped-up to fair value	55			—			—			55			—			42			0.3		0.11
Other acquisition and integration-related	—			(168)			—			168			—			126			1.0		0.33
Amortization of purchased intangible assets	—			—			—			352			—			294			0.1		0.78
Restructuring-related and other charges	21			(125)			—			146			—			122			0.1		0.32
Medical device regulations	1			—			(33)			34			—			28			0.1		0.07
Recall-related matters	—			—			—			179			—			144			0.4		0.38
Regulatory and legal matters	—			(35)			—			35			—			19			0.5		0.05
Tax matters	—			—			—			—			—			58			(3.5)		0.15
Adjusted	$	7,070		$	3,648		$	684		$	2,738		$	(143)		$	2,191		15.5	%	$	5.77
Adjusted percent net sales	65.7		%	33.9		%	6.4		%	25.5		%	(1.3)		%	20.4		%

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

FINANCIAL CONDITION AND LIQUIDITY

Nine Months	2020		2019
Net cash provided by operating activities	$	2,040	$	1,456
Net cash used in investing activities	(349)		(736)
Net cash provided by (used in) financing activities	1,046		(2,360)
Effect of exchange rate changes on cash and cash equivalents	9		(28)
Change in cash and cash equivalents	$	2,746	$	(1,668)

Operating Activities

Cash provided by operating activities was $2,040 and $1,456 in the nine months 2020 and 2019. The increase was primarily due to higher accounts receivable collections and less spending on inventory due to lower production from lower sales partially offset by decreased net earnings.

Investing Activities    

Cash used in investing activities was $349 and $736 in the nine months 2020 and 2019. The decrease in cash used was primarily due to decreased payments for acquisitions in 2020.

Financing Activities

Cash provided by (used in) financing activities was $1,046 and $2,360 in the nine months 2020 and 2019. The change in cash was primarily driven by the issuance of $2,300 of notes in June 2020, partially offset by the repayment of $500 of notes upon maturity in January 2020 compared to repayments of $1,341 of debt in the nine months 2019, along with the suspension of share repurchases.

Nine Months	2020		2019
Total dividends paid to common shareholders	$	647	$	585
Total amount paid to repurchase common stock	$	—	$	307
Shares of repurchased common stock (in millions)	—		1.9

Liquidity

Cash, cash equivalents and marketable securities were $7,161 and $4,425 on September 30, 2020 and December 31, 2019. Current assets exceeded current liabilities by $8,856 and $6,960 on September 30, 2020 and December 31, 2019. Despite the impact from the COVID-19 pandemic, we anticipate being able to support our short-term liquidity and operating needs from a variety of sources including cash from operations, commercial paper, existing credit lines and capital expenditure and operating expense reductions. We maintain a revolving credit facility with $1.5 billion of committed capital which expires in August 2023 and a $1.5 billion unsecured revolving credit facility that matures in April 2021.

We raised funds in the capital markets in 2020, 2019 and 2018 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 14% on September 30, 2020 compared to 25% on December 31, 2019.

Critical Accounting Policies

There were no changes to our critical accounting policies from those disclosed in our Annual Report on Form 10-K for 2019.

New Accounting Pronouncements Not Yet Adopted

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

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 referring to us 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, which are intended to take advantage of the "safe harbor" provisions of the Reform Act, are based on current projections about operations, industry conditions, financial condition and liquidity. Words that identify forward-looking statements include 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, including uncertainties related to the impact of the COVID-19 pandemic on our operations and financial results. Therefore, actual results could differ materially and adversely from these forward-looking statements. Some important factors that could cause our actual results to differ from our expectations in any forward-looking statements include those risks discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for 2019 and in Part II, Item 1A. "Risk Factors" on Form 10-Q for the quarter ended March 31, 2020. 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 2019. 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We consider our greatest potential areas of market risk exposure to be exchange rate risk and the impacts of the COVID-19 pandemic on our operations and financial results. Quantitative and qualitative disclosures about exchange rate risk are included in Item 7A "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K for 2019. There were no material changes from the information provided therein. We are not able to quantify the impacts of the COVID-19 pandemic on our financial results. Qualitative disclosures about the COVID-19 pandemic are included in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition

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

and Results of Operations" and Part II, Item 1A "Risk Factors" of this Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer (the Certifying Officers), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) on September 30, 2020. Based on that evaluation, the Certifying Officers concluded the Company's disclosure controls and procedures were effective as of September 30, 2020.

Changes in Internal Control Over Financial Reporting

There was no change to our internal control over financial reporting during the three months 2020 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1A. RISK FACTORS

We are not aware of any material changes to the risk factors included in Item 1A. "Risk Factors" in our Annual Report on Form 10-K for 2019 and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In the three months 2020 we did not issue shares of our common stock as performance incentive awards to employees. When issued, these shares are not registered under the Securities Act of 1933 based on the conclusion that the awards would not be events of sale within the meaning of Section 2(a)(3) of the Act.

In March 2015 we announced that our Board of Directors had authorized us to purchase up to $2,000 of our common stock. 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.

In the nine months 2020 we did not repurchase any shares of our common stock under our authorized repurchase program. The total dollar value of shares of our common stock that could be acquired under our authorized repurchase program was $1,033 as of September 30, 2020. As previously announced we intend to maintain the suspension of our share repurchase program through 2021.

ITEM 6. EXHIBITS

31(i)*	Certification of Principal Executive Officer of Stryker Corporation pursuant to Rule 13a-14(a).
31(ii)*	Certification of Principal Financial Officer of Stryker Corporation pursuant to Rule 13a-14(a).
32(i)*	Certification by Principal Executive Officer of Stryker Corporation pursuant to 18 U.S.C. Section 1350.
32(ii)*	Certification by Principal Financial Officer of Stryker Corporation pursuant to 18 U.S.C. Section 1350.
101.INS	iXBRL Instance Document
101.SCH	iXBRL Schema Document
101.CAL	iXBRL Calculation Linkbase Document
101.DEF	iXBRL Definition Linkbase Document
101.LAB	iXBRL Label Linkbase Document
101.PRE	iXBRL Presentation Linkbase Document
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)
	† Filed with this Form 10-Q
	* Furnished with this Form 10-Q

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

STRYKER CORPORATION 2020 Third Quarter Form 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		STRYKER CORPORATION
		(Registrant)
Date:	October 30, 2020	/s/ KEVIN A. LOBO
		Kevin A. Lobo
		Chairman and Chief Executive Officer
Date:	October 30, 2020	/s/ GLENN S. BOEHNLEIN
		Glenn S. Boehnlein
		Vice President, Chief Financial Officer

18

EX-31.1

Exhibit 31(i)

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kevin A. Lobo, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 of Stryker Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	October 30, 2020	/s/ KEVIN A. LOBO
		Kevin A. Lobo
		Chairman and Chief Executive Officer

EX-31.2

Exhibit 31(ii)

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Glenn S. Boehnlein, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 of Stryker Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	October 30, 2020	/s/ GLENN S. BOEHNLEIN
		Glenn S. Boehnlein
		Vice President, Chief Financial Officer

EX-32.1

Exhibit 32(i)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Stryker Corporation (the "Company") for the quarter ended September 30, 2020 (the "Report"), I, Kevin A. Lobo, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	October 30, 2020	/s/ KEVIN A. LOBO
		Kevin A. Lobo
		Chairman and Chief Executive Officer

EX-32.2

Exhibit 32(ii)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Stryker Corporation (the "Company") for the quarter ended September 30, 2020 (the "Report"), I, Glenn S. Boehnlein, Vice President, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	October 30, 2020	/s/ GLENN S. BOEHNLEIN
		Glenn S. Boehnlein
		Vice President, Chief Financial Officer

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2020 shares
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-13149
Entity Registrant Name	STRYKER CORP
Entity Incorporation, State or Country Code	MI
Entity Tax Identification Number	38-1239739
Entity Address, Address Line One	2825 Airview Boulevard
Entity Address, City or Town	Kalamazoo,
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	49002
City Area Code	(269)
Local Phone Number	385-2600
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	375,790,657
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000310764
Current Fiscal Year End Date	--12-31
Common Stock
Document Information [Line Items]
Title of each class	Common Stock, $.10 Par Value
Trading Symbol	SYK
Security Exchange Name	NYSE
Senior Unsecured Notes 1.125% due 2021
Document Information [Line Items]
Title of each class	1.125% Notes due 2023
Trading Symbol	SYK23
Security Exchange Name	NYSE
Senior Unsecured Notes, 0.250% Due 2024
Document Information [Line Items]
Title of each class	0.250% Notes due 2024
Trading Symbol	SYK24A
Security Exchange Name	NYSE
Senior Unsecured Notes 2.125% due 2027
Document Information [Line Items]
Title of each class	2.125% Notes due 2027
Trading Symbol	SYK27
Security Exchange Name	NYSE
Senior Unsecured Notes, 0.750% Due 2029
Document Information [Line Items]
Title of each class	0.750% Notes due 2029
Trading Symbol	SYK29
Security Exchange Name	NYSE
Senior Unsecured Notes 2.625% due 2030
Document Information [Line Items]
Title of each class	2.625% Notes due 2030
Trading Symbol	SYK30
Security Exchange Name	NYSE
Senior Unsecured Notes, 1.000% Due 2031
Document Information [Line Items]
Title of each class	1.000% Notes due 2031
Trading Symbol	SYK31
Security Exchange Name	NYSE
Senior Unsecured Notes Variable due 2020
Document Information [Line Items]
Title of each class	Floating Rate Notes due 2020
Trading Symbol	SYK20A
Security Exchange Name	NYSE

XML

Consolidated Statements Of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Net sales	$ 3,737	$ 3,587	$ 10,089	$ 10,753
Cost of sales	1,276	1,257	3,749	3,760
Gross profit	2,461	2,330	6,340	6,993
Research, development and engineering expenses	242	246	729	717
Selling, general and administrative expenses	1,244	1,291	3,799	3,976
Recall charges	2	49	(4)	179
Amortization of intangible assets	114	116	342	352
Total operating expenses	1,602	1,702	4,866	5,224
Operating income	859	628	1,474	1,769
Other income (expense), net	(79)	(47)	(191)	(143)
Earnings before income taxes	780	581	1,283	1,626
Income taxes	159	115	252	268
Net earnings	$ 621	$ 466	$ 1,031	$ 1,358
Net earnings per share of common stock:
Basic	$ 1.66	$ 1.24	$ 2.75	$ 3.63
Diluted	$ 1.63	$ 1.23	$ 2.71	$ 3.58
Weighted-average shares outstanding (in millions):
Basic	375.7	374.2	375.3	373.8
Effect of dilutive employee stock compensation	4.5	6.1	4.7	6.0
Diluted	380.2	380.3	380.0	379.8
Cash dividends declared per share of common stock (in dollars per share)	$ 0.575	$ 0.52	$ 1.725	$ 1.56

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net earnings	$ 621	$ 466	$ 1,031	$ 1,358
Other comprehensive income (loss), net of tax:
Marketable securities	0	0	0	1
Pension plans	(6)	13	(14)	2
Unrealized gains (losses) on designated hedges	(2)	(15)	(58)	(28)
Financial statement translation	(194)	79	(239)	103
Total other comprehensive income (loss), net of tax	(202)	77	(311)	78
Comprehensive income	$ 419	$ 543	$ 720	$ 1,436

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 7,083	$ 4,337
Marketable securities	78	88
Accounts receivable, less allowance of $125 ($88 in 2019)	2,426	2,893
Inventories:
Materials and supplies	751	677
Work in process	174	178
Finished goods	2,534	2,427
Total inventories	3,459	3,282
Prepaid expenses and other current assets	499	760
Total current assets	13,545	11,360
Property, plant and equipment:
Land, buildings and improvements	1,443	1,263
Machinery and equipment	3,396	3,451
Total property, plant and equipment	4,839	4,714
Less accumulated depreciation	2,310	2,147
Property, plant and equipment, net	2,529	2,567
Goodwill	9,128	9,069
Other intangibles, net	3,917	4,227
Noncurrent deferred income tax assets	1,627	1,575
Other noncurrent assets	1,540	1,369
Total assets	32,286	30,167
Current liabilities
Accounts payable	647	675
Accrued compensation	680	955
Income taxes	261	171
Dividends payable	216	213
Accrued expenses and other liabilities	1,766	1,527
Current maturities of debt	1,119	859
Total current liabilities	4,689	4,400
Long-term debt, excluding current maturities	12,008	10,231
Income taxes	999	1,068
Other noncurrent liabilities	1,604	1,661
Total liabilities	19,300	17,360
Shareholders' equity
Common stock, $0.10 par value	38	37
Additional paid-in capital	1,736	1,628
Retained earnings	12,129	11,748
Accumulated other comprehensive loss	(917)	(606)
Total shareholders' equity	12,986	12,807
Total liabilities and shareholders' equity	$ 32,286	$ 30,167

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 125	$ 88
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10

XML

Consolidated Statements Of Shareholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions	Total	Total Stryker shareholders' equity	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Non-controlling interest
Beginning balance at Dec. 31, 2018			$ 37	$ 1,559	$ 10,765	$ (631)
Beginning balance (in shares) at Dec. 31, 2018			374.4
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under stock compensation and benefit plans				(53)
Issuance of common stock under stock option and benefit plans (in shares)			1.9
Repurchase of common stock				(8)	(299)
Repurchase of common stock (in shares)			(1.9)
Share-based compensation				95
Net earnings	$ 1,358				1,358
Cash dividends declared					(586)
Other comprehensive income (loss)	78					78
Ending balance at Sep. 30, 2019	12,315	$ 12,315	$ 37	1,593	11,238	(553)	$ 0
Ending balance (in shares) at Sep. 30, 2019			374.4
Beginning balance at Jun. 30, 2019			$ 37	1,569	10,967	(630)
Beginning balance (in shares) at Jun. 30, 2019			374.1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under stock compensation and benefit plans				(8)
Issuance of common stock under stock option and benefit plans (in shares)			0.3
Repurchase of common stock (in shares)			0.0
Share-based compensation				32
Net earnings	466				466
Cash dividends declared					(195)
Other comprehensive income (loss)	77					77
Ending balance at Sep. 30, 2019	12,315	12,315	$ 37	1,593	11,238	(553)	0
Ending balance (in shares) at Sep. 30, 2019			374.4
Beginning balance at Dec. 31, 2019	12,807		$ 37	1,628	11,748	(606)
Beginning balance (in shares) at Dec. 31, 2019			374.5
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under stock compensation and benefit plans			$ 1	(7)
Issuance of common stock under stock option and benefit plans (in shares)			1.3
Repurchase of common stock (in shares)			0.0
Share-based compensation				115
Net earnings	1,031				1,031
Cash dividends declared					(650)
Other comprehensive income (loss)	(311)					(311)
Ending balance at Sep. 30, 2020	12,986	12,986	$ 38	1,736	12,129	(917)	0
Ending balance (in shares) at Sep. 30, 2020			375.8
Beginning balance at Jun. 30, 2020			$ 38	1,706	11,725	(715)
Beginning balance (in shares) at Jun. 30, 2020			375.6
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under stock compensation and benefit plans			$ 0	1
Issuance of common stock under stock option and benefit plans (in shares)			0.2
Repurchase of common stock (in shares)			0.0
Share-based compensation				29
Net earnings	621				621
Cash dividends declared					(217)
Other comprehensive income (loss)	(202)					(202)
Ending balance at Sep. 30, 2020	$ 12,986	$ 12,986	$ 38	$ 1,736	$ 12,129	$ (917)	$ 0
Ending balance (in shares) at Sep. 30, 2020			375.8

XML

Consolidated Statements Of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating activities
Net earnings	$ 1,031	$ 1,358
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	247	231
Amortization of intangible assets	342	352
Asset impairments	161	2
Share-based compensation	115	95
Recall charges	(4)	179
Sale of inventory stepped-up to fair value at acquisition	9	55
Changes in operating assets and liabilities:
Accounts receivable	467	(124)
Inventories	(154)	(414)
Accounts payable	(26)	37
Accrued expenses and other liabilities	(184)	64
Recall-related payments	(13)	(172)
Income taxes	5	(94)
Other, net	44	(113)
Net cash provided by operating activities	2,040	1,456
Investing activities
Acquisitions, net of cash acquired	(26)	(281)
Purchases of marketable securities	(34)	(57)
Proceeds from sales of marketable securities	44	52
Purchases of property, plant and equipment	(322)	(450)
Other investing, net	(11)	0
Net cash used in investing activities	(349)	(736)
Financing activities
Proceeds (payments) on short-term borrowings, net	3	(7)
Proceeds from issuance of long-term debt	2,293	0
Payments on long-term debt	(500)	(1,341)
Dividends paid	(647)	(585)
Repurchases of common stock	0	(307)
Cash paid for taxes from withheld shares	(79)	(130)
Other financing, net	(24)	10
Net cash provided by (used in) financing activities	1,046	(2,360)
Effect of exchange rate changes on cash and cash equivalents	9	(28)
Change in cash and cash equivalents	2,746	(1,668)
Cash and cash equivalents at beginning of period	4,337	3,616
Cash and cash equivalents at end of period	$ 7,083	$ 1,948

XML

Basis Of Presentation

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

General Information

Management believes the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring items, considered necessary to fairly present the financial position of Stryker Corporation and its consolidated subsidiaries ("Stryker," the "Company," "we," us" or "our") on September 30, 2020 and the results of operations for the three and nine months 2020. The results of operations included in these Consolidated Financial Statements may not necessarily be indicative of our annual results. These statements should be read in conjunction with our Annual Report on Form 10-K for 2019.

Certain prior year amounts have been reclassified to conform with current year presentation of segment results.

New Accounting Pronouncements Not Yet Adopted

We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.

Accounting Pronouncements Recently Adopted

On January 1, 2020 we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses for accounts receivables, loans and other financial instruments. The adoption of this update did not have a material impact on our Consolidated Financial Statements.

XML

Revenue Recognition

9 Months Ended

Sep. 30, 2020

Revenue Recognition [Abstract]

Revenue Recognition

REVENUE RECOGNITION

Our policies for recognizing sales have not changed from those described in our Annual Report on Form 10-K for 2019.

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.

Net Sales by Product Line
	Three Months				Nine Months
	2020		2019		2020		2019
Orthopaedics:
Knees	$	435	$	426	$	1,108	$	1,305
Hips	334		332		866		1,011
Trauma and Extremities	430		407		1,152		1,197
Other	118		97		307		272
	$	1,317	$	1,262	$	3,433	$	3,785
MedSurg:
Instruments	$	467	$	452	$	1,308	$	1,417
Endoscopy	467		474		1,238		1,424
Medical	600		554		1,819		1,627
Sustainability	66		72		181		212
	$	1,600	$	1,552	$	4,546	$	4,680
Neurotechnology and Spine:
Neurotechnology	$	518	$	490	$	1,370	$	1,443
Spine	302		283		740		845
	$	820	$	773	$	2,110	$	2,288
Total	$	3,737	$	3,587	$	10,089	$	10,753

Net Sales by Geography
	Three Months 2020				Three Months 2019
	United States		International		United States		International
Orthopaedics:
Knees	$	332	$	103	$	318	$	108
Hips	223		111		211		121
Trauma and Extremities	285		145		262		145
Other	97		21		81		16
	$	937	$	380	$	872	$	390
MedSurg:
Instruments	$	369	$	98	$	357	$	95
Endoscopy	380		87		377		97
Medical	455		145		442		112
Sustainability	65		1		71		1
	$	1,269	$	331	$	1,247	$	305
Neurotechnology and Spine:
Neurotechnology	$	323	$	195	$	316	$	174
Spine	219		83		209		74
	$	542	$	278	$	525	$	248
Total	$	2,748	$	989	$	2,644	$	943

Net Sales by Geography
	Nine Months 2020				Nine Months 2019
	United States		International		United States		International
Orthopaedics:
Knees	$	833	$	275	$	962	$	343
Hips	564		302		643		368
Trauma and Extremities	753		399		768		429
Other	262		45		223		49
	$	2,412	$	1,021	$	2,596	$	1,189
MedSurg:
Instruments	$	1,028	$	280	$	1,121	$	296
Endoscopy	997		241		1,136		288
Medical	1,363		456		1,288		339
Sustainability	179		2		210		2
	$	3,567	$	979	$	3,755	$	925
Neurotechnology and Spine:
Neurotechnology	$	835	$	535	$	929	$	514
Spine	543		197		638		207
	$	1,378	$	732	$	1,567	$	721
Total	$	7,357	$	2,732	$	7,918	$	2,835

Contract Assets and Liabilities

On September 30, 2020 there were no contract assets recorded on our Consolidated Balance Sheets.

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 $389 and $313 on September 30, 2020 and December 31, 2019.

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Accumulated Other Comprehensive (Loss) Income (AOCI)

9 Months Ended

Sep. 30, 2020

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive (Loss) Income (AOCI)

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI)

Three Months 2020	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(187)	$	(9)	$	(516)	$	(715)
OCI	—		(11)		2		(248)		(257)
Income taxes	—		3		(1)		59		61
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense	—		2		(1)		(7)		(6)
Income taxes	—		—		1		2		3
Net OCI	$	—	$	(6)	$	(2)	$	(194)	$	(202)
Ending	$	(3)	$	(193)	$	(11)	$	(710)	$	(917)

Three Months 2019	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(148)	$	37	$	(516)	$	(630)
OCI	—		11		(18)		116		109
Income taxes	—		1		10		(32)		(21)
Reclassifications to:
Cost of sales	—		—		(2)		—		(2)
Other (income) expense	—		1		—		(7)		(6)
Income taxes	—		—		(5)		2		(3)
Net OCI	$	—	$	13	$	(15)	$	79	$	77
Ending	$	(3)	$	(135)	$	22	$	(437)	$	(553)

Nine Months 2020	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(179)	$	47	$	(471)	$	(606)
OCI	—		(25)		(70)		(285)		(380)
Income taxes	—		5		18		61		84
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense	—		8		(4)		(20)		(16)
Income taxes	—		(2)		1		5		4
Net OCI	$	—	$	(14)	$	(58)	$	(239)	$	(311)
Ending	$	(3)	$	(193)	$	(11)	$	(710)	$	(917)

Nine Months 2019	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(4)	$	(137)	$	50	$	(540)	$	(631)
OCI	1		(5)		(34)		144		106
Income taxes	—		4		18		(36)		(14)
Reclassifications to:
Cost of sales	—		—		(4)		—		(4)
Other (income) expense	—		4		—		(7)		(3)
Income taxes	—		(1)		(8)		2		(7)
Net OCI	$	1	$	2	$	(28)	$	103	$	78
Ending	$	(3)	$	(135)	$	22	$	(437)	$	(553)

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Derivative Instruments

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTSWe 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 our counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum loss exposure is the asset balance of the instrument. We have not changed our hedging

strategies, accounting practices or objectives from those disclosed in our Annual Report on Form 10-K for 2019.

Foreign Currency Hedges

September 2020	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	$	824	$	1,169	$	5,619	$	7,612
Maximum term in days							1372
Fair value:
Other current assets	$	10	$	—	$	13	$	23
Other noncurrent assets	1		43		—		44
Other current liabilities	(6)		—		(97)		(103)
Other noncurrent liabilities	(2)		—		—		(2)
Total fair value	$	3	$	43	$	(84)	$	(38)

December 2019	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	$	801	$	1,113	$	6,174	$	8,088
Maximum term in days							1646
Fair value:
Other current assets	$	5	$	—	$	180	$	185
Other noncurrent assets	1		40		—		41
Other current liabilities	(10)		—		(11)		(21)
Other noncurrent liabilities	(2)		—		—		(2)
Total fair value	$	(6)	$	40	$	169	$	203

In December 2019 and November 2018 we designated the issuance of €2,400 and €2,250 of senior unsecured notes 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. On September 30, 2020 the total after tax gain (loss) amount in AOCI related to these designated net investment hedges was ($179).

In July 2019 we entered into €1.0 billion in certain forward currency contracts and designated these as net investment hedges to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros.

Net Currency Exchange Rate Gains (Losses)

		Three Months				Nine Months
Derivative instrument	Recorded in:	2020		2019		2020		2019
Cash Flow	Cost of sales	$	3	$	2	$	3	$	4
Net Investment	Other income (expense), net	7		7		20		7
Non-Designated	Other income (expense), net	(3)		(6)		(12)		(10)
	Total	$	7	$	3	$	11	$	1

Pretax gains (losses) on derivatives designated as cash flow of $6 and net investment hedges of $27 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense) in earnings within 12 months as of September 30, 2020. 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

In conjunction with our offerings of senior unsecured notes in December 2019 and June 2020 we terminated cash flow hedges with gross notional amounts of €600 and $500 designated as

forward starting interest rate swaps of our interest rates, the impact of which will be recognized over time within interest expense. Pretax gains recorded in AOCI related to closed interest rate hedges of $6 are expected to be reclassified to other income (expense) in earnings within 12 months of September 30, 2020.

On September 30, 2020 we had interest rate swap agreements with notional amounts of $750 designated as forward starting interest rate swaps in anticipation of future debt issuances. Pretax losses of $66 were recorded in AOCI as of September 30, 2020. Upon the probable issuance of the debt, these amounts will be released to interest expense over the term of the debt. The cash flow effect of these hedges is recorded in cash flow from operations.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Our policies for managing risk related to foreign currency, interest rates, credit and markets and our process for determining fair value have not changed from those described in our Annual Report on Form 10-K for 2019.

There were no significant transfers into or out of any level in 2020.

Assets Measured at Fair Value	September		December
	2020		2019
Cash and cash equivalents	$	7,083	$	4,337
Trading marketable securities	154		149
Level 1 - Assets	$	7,237	$	4,486
Available-for-sale marketable securities:
Corporate and asset-backed debt securities	$	37	$	32
United States agency debt securities	6		2
United States Treasury debt securities	34		49
Certificates of deposit	1		5
Total available-for-sale marketable securities	$	78	$	88
Foreign currency exchange forward contracts	67		226
Interest rate swap asset	—		17
Level 2 - Assets	$	145	$	331
Total assets measured at fair value	$	7,382	$	4,817

Liabilities Measured at Fair Value	September		December
	2020		2019
Deferred compensation arrangements	$	154	$	149
Level 1 - Liabilities	$	154	$	149
Foreign currency exchange forward contracts	$	105	$	23
Interest rate swap liability	65		—
Level 2 - Liabilities	$	170	$	23
Contingent consideration:
Beginning	$	306	$	117
Additions	5		298
Change in estimate	6		(10)
Settlements	(30)		(99)
Ending	$	287	$	306
Level 3 - Liabilities	$	287	$	306
Total liabilities measured at fair value	$	611	$	478

Fair Value of Available for Sale Securities by Maturity
	September 2020		December 2019
Due in one year or less	$	40	$	50
Due after one year through three years	$	38	$	38

On September 30, 2020 and December 31, 2019 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest and marketable securities income recorded in other income (expense), net, was $19 and $36 in the three months and $84 and $109 in the nine months 2020 and 2019.

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

investments before recovery of their amortized cost basis, which may be maturity.

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Contingencies and Commitments

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Commitments

CONTINGENCIES AND COMMITMENTS

We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters, the most significant of which are more fully described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings, the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management had sufficient information to reasonably estimate our future obligations, a liability representing management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for product liability 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.

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. We continue to offer support for recall-related care and reimburse patients who are not eligible to enroll in the settlement program for testing and treatment services, including any necessary revision surgeries. In addition, 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. The specific terms of the settlement agreement, including the financial terms, are confidential.

We have incurred, and expect to incur in the future, costs associated with the defense and settlement of these matters. Based on the information that has been received, we have estimated the remaining range of probable loss related to these matters globally to be approximately $280 to $515. We have recorded charges to earnings representing the 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	September			December
	2020			2019
Right-of-use assets	$	401		$	384
Lease liabilities, current	$	100		$	86
Lease liabilities, non-current	$	310		$	301
Other information
Weighted-average remaining lease term	5.5 years			6.2 years
Weighted-average discount rate	2.87		%	3.34		%

	Three Months			Nine Months
	2020		2019	2020	2019
Operating lease cost	$	27	34	94	102

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Acquisitions

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Acquisitions

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 $26 and $446 in the nine months 2020 and 2019.

In October 2019 we completed the acquisition of Mobius Imaging and Cardan Robotics for net cash consideration of $360 and future regulatory and commercial milestone payments of up to $130. Mobius Imaging is a leader in point-of-care imaging technology focused on integrating advanced imaging technologies into medical workflow. Cardan Robotics is working to develop innovative robotics and navigation technology systems for surgical and interventional radiology procedures. Mobius Imaging and Cardan Robotics (Mobius) are part of our Spine business within Neurotechnology and Spine. For income tax purposes the acquisition was treated as an asset purchase. Goodwill attributable to the acquisition is deductible for tax purposes.

In March 2019 we completed the acquisition of OrthoSpace, Ltd. (OrthoSpace) for net cash consideration of $110 and future regulatory milestone payments of up to $110. OrthoSpace is a medical device company specializing in orthopaedic biodegradable technology for the treatment of irreparable rotator cuff tears. OrthoSpace is part of our Endoscopy business within MedSurg. Goodwill attributable to the acquisition is not deductible for tax purposes.

In November 2019 we announced a definitive agreement to acquire all of the issued and outstanding ordinary shares of Wright Medical Group N.V. (Wright) for $30.75 per share, or an aggregate purchase price of approximately $5.4 billion (including convertible notes). Pursuant to the agreement, on December 13, 2019 our wholly owned subsidiary, Stryker B.V., commenced a tender offer to purchase all of the outstanding ordinary shares, par value €0.03 per share, of Wright at a price of $30.75 per share, without interest, but subject to any applicable withholding of taxes. We expect the acquisition to close in the fourth quarter of 2020, subject to the expiration of the waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other required approvals and clearances under applicable antitrust laws and other customary conditions. Wright is a global medical device company focused on extremities and biologics. Following closing, we plan to integrate Wright into our Trauma and Extremities business within Orthopaedics.

Purchase price allocations for our significant acquisitions are:

Purchase Price Allocation of Acquired Net Assets
	2019
	Mobius		OrthoSpace
Tangible assets:
Accounts receivable	$	3	$	1
Inventory	6		1
Other assets	2		1
Contingent consideration	(4)		—
Other liabilities	(10)		(29)
Intangible assets:
Customer relationship	7		—
Developed technology and patents	59		120
In-process research and development	98		—
Non-compete agreements	9		—
Goodwill	303		114
Purchase price, net of cash acquired	$	473	$	208
Weighted-average life of intangible assets	12		18

The purchase price allocation for Mobius is based on preliminary valuations, primarily related to intangible assets that are subject to change within the measurement period. The purchase price allocation for OrthoSpace was finalized in 2020.

Estimated Amortization Expense
Remainder of 2020		2021		2022		2023		2024
$	115	$	446	$	436	$	421	$	390

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Debt and Credit Facilities

9 Months Ended

Sep. 30, 2020

Long-term Debt, Unclassified [Abstract]

Debt And Credit Facilities

DEBT AND CREDIT FACILITIES

We have lines of credit issued by various financial institutions that are available to fund our day-to-day operating needs. Certain of our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on September 30, 2020.

Our commercial paper program allows us to have a maximum of $1,500 in commercial paper outstanding with maturities up to 397 days from the date of issuance. On September 30, 2020 there were no amounts outstanding under our commercial paper program.

Summary of Total Debt			September 2020		December 2019
Senior unsecured notes:
	Rate	Due
	4.375%	January 15, 2020	$	—	$	500
	Variable	November 30, 2020	351		333
	2.625%	March 15, 2021	750		749
	1.125%	November 30, 2023	640		609
	3.375%	May 15, 2024	590		587
	0.250%	December 3, 2024	987		938
	1.150%	June 15, 2025	644		—
	3.375%	November 1, 2025	747		746
	3.500%	March 15, 2026	992		991
	2.125%	November 30, 2027	871		829
	3.650%	March 7, 2028	596		596
	0.750%	March 1, 2029	929		884
	1.950%	June 15, 2030	988		—
	2.625%	November 30, 2030	749		712
	1.000%	December 3, 2031	865		823
	4.100%	April 1, 2043	392		391
	4.375%	May 15, 2044	395		395
	4.625%	March 15, 2046	981		981
	2.900%	June 15, 2050	641		—
Other			19		26
Total debt			$	13,127	$	11,090
Less current maturities of debt			1,119		859
Total long-term debt			$	12,008	$	10,231

	September 2020		December 2019
Unamortized debt issuance costs	$	71	$	58
Available secured borrowing capacity	$	2,904	$	1,403
Fair value of senior unsecured notes	$	14,366	$	11,910

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.

In January 2020 we repaid $500 of senior unsecured notes with a coupon of 4.375% that were due on January 15, 2020.

On April 30, 2020 we amended our primary credit facility. The principal change was to increase the leverage ratio financial covenant from 3.5:1 to 4.5:1 at the end of each fiscal quarter ending on or prior to June 30, 2021.

On April 30, 2020 we entered into a credit agreement that provides for up to $1,500 of borrowings in United States Dollars pursuant to a 364-day revolving credit facility, which matures on April 29, 2021 and is available for working capital and general corporate purposes.

In June 2020 we issued $650 of senior unsecured notes with a fixed interest rate of 1.150% due on June 15, 2025, $1,000 of senior unsecured notes with a fixed interest rate of 1.950% due on June 15, 2030 and $650 of senior unsecured notes with a fixed interest rate of 2.900% due on June 15, 2050. The 2025 and 2030 notes are subject to a special mandatory redemption feature in which we will be required to redeem the notes in whole at a price equal to 101% of the aggregate principal amount plus accrued and unpaid interest if we do not consummate the Wright tender offer on or before February 4, 2021.

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Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax [Abstract]

Income Taxes

INCOME TAXES

Our effective tax rates were 20.4% and 19.8% in the three months and 19.6% and 16.5% in the nine months 2020 and 2019. The changes in the effective tax rates were primarily due to a change in geographic profit mix in the three months and a favorable audit settlement recorded in 2019 in the nine months.

In March 2020 the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law in the United States. We do not expect the provisions of the CARES Act to have a material impact on our annual effective tax rate or Consolidated Financial Statements in 2020.

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Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

	Three Months				Nine Months
	2020		2019		2020		2019
Orthopaedics	$	1,317	$	1,262	$	3,433	$	3,785
MedSurg	1,600		1,552		4,546		4,680
Neurotechnology and Spine	820		773		2,110		2,288
Net sales	$	3,737	$	3,587	$	10,089	$	10,753
Orthopaedics	$	472	$	437	$	1,027	$	1,322
MedSurg	451		394		1,085		1,179
Neurotechnology and Spine	228		199		513		608
Segment operating income	$	1,151	$	1,030	$	2,625	$	3,109
Items not allocated to segments:
Corporate and other	(104)		(117)		(371)		(371)
Acquisition and integration-related charges	(29)		(32)		(85)		(223)
Amortization of intangible assets	(114)		(116)		(342)		(352)
Restructuring-related and other charges	(29)		(48)		(292)		(146)
Medical device regulations	(14)		(15)		(60)		(34)
Recall-related matters	(2)		(49)		4		(179)
Regulatory and legal matters	—		(25)		(5)		(35)
Consolidated operating income	$	859	$	628	$	1,474	$	1,769

There were no significant changes to total assets by segment from information provided in our Annual Report on Form 10-K for 2019.

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Asset Impairments	9 Months Ended
	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Asset Impairments	ASSET IMPAIRMENTSThe significant negative impact the COVID-19 pandemic has had on Stryker’s operations and financial results has led to the decision to suspend certain in-process investments resulting in charges of $189 to impair certain long-lived assets (primarily the portion of our investment in a new global ERP system that was in-process of being developed for future deployment) and product line and other exit costs in the second quarter of 2020. These charges were included in cost of sales and selling, general and administrative expenses.

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Basis Of Presentation (Policies)

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

New Accounting Pronouncements Not Yet Adopted

New Accounting Pronouncements Not Yet Adopted

We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.

Accounting Pronouncements Recently Adopted

Accounting Pronouncements Recently Adopted

On January 1, 2020 we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses for accounts receivables, loans and other financial instruments. The adoption of this update did not have a material impact on our Consolidated Financial Statements.

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2020

Revenue Recognition [Abstract]

Schedule of Disaggregated Revenue

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.

Net Sales by Product Line
	Three Months				Nine Months
	2020		2019		2020		2019
Orthopaedics:
Knees	$	435	$	426	$	1,108	$	1,305
Hips	334		332		866		1,011
Trauma and Extremities	430		407		1,152		1,197
Other	118		97		307		272
	$	1,317	$	1,262	$	3,433	$	3,785
MedSurg:
Instruments	$	467	$	452	$	1,308	$	1,417
Endoscopy	467		474		1,238		1,424
Medical	600		554		1,819		1,627
Sustainability	66		72		181		212
	$	1,600	$	1,552	$	4,546	$	4,680
Neurotechnology and Spine:
Neurotechnology	$	518	$	490	$	1,370	$	1,443
Spine	302		283		740		845
	$	820	$	773	$	2,110	$	2,288
Total	$	3,737	$	3,587	$	10,089	$	10,753

Net Sales by Geography
	Three Months 2020				Three Months 2019
	United States		International		United States		International
Orthopaedics:
Knees	$	332	$	103	$	318	$	108
Hips	223		111		211		121
Trauma and Extremities	285		145		262		145
Other	97		21		81		16
	$	937	$	380	$	872	$	390
MedSurg:
Instruments	$	369	$	98	$	357	$	95
Endoscopy	380		87		377		97
Medical	455		145		442		112
Sustainability	65		1		71		1
	$	1,269	$	331	$	1,247	$	305
Neurotechnology and Spine:
Neurotechnology	$	323	$	195	$	316	$	174
Spine	219		83		209		74
	$	542	$	278	$	525	$	248
Total	$	2,748	$	989	$	2,644	$	943

Net Sales by Geography
	Nine Months 2020				Nine Months 2019
	United States		International		United States		International
Orthopaedics:
Knees	$	833	$	275	$	962	$	343
Hips	564		302		643		368
Trauma and Extremities	753		399		768		429
Other	262		45		223		49
	$	2,412	$	1,021	$	2,596	$	1,189
MedSurg:
Instruments	$	1,028	$	280	$	1,121	$	296
Endoscopy	997		241		1,136		288
Medical	1,363		456		1,288		339
Sustainability	179		2		210		2
	$	3,567	$	979	$	3,755	$	925
Neurotechnology and Spine:
Neurotechnology	$	835	$	535	$	929	$	514
Spine	543		197		638		207
	$	1,378	$	732	$	1,567	$	721
Total	$	7,357	$	2,732	$	7,918	$	2,835

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Accumulated Other Comprehensive (Loss) Income (AOCI) (Tables)

9 Months Ended

Sep. 30, 2020

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

Three Months 2020	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(187)	$	(9)	$	(516)	$	(715)
OCI	—		(11)		2		(248)		(257)
Income taxes	—		3		(1)		59		61
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense	—		2		(1)		(7)		(6)
Income taxes	—		—		1		2		3
Net OCI	$	—	$	(6)	$	(2)	$	(194)	$	(202)
Ending	$	(3)	$	(193)	$	(11)	$	(710)	$	(917)

Three Months 2019	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(148)	$	37	$	(516)	$	(630)
OCI	—		11		(18)		116		109
Income taxes	—		1		10		(32)		(21)
Reclassifications to:
Cost of sales	—		—		(2)		—		(2)
Other (income) expense	—		1		—		(7)		(6)
Income taxes	—		—		(5)		2		(3)
Net OCI	$	—	$	13	$	(15)	$	79	$	77
Ending	$	(3)	$	(135)	$	22	$	(437)	$	(553)

Nine Months 2020	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(179)	$	47	$	(471)	$	(606)
OCI	—		(25)		(70)		(285)		(380)
Income taxes	—		5		18		61		84
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense	—		8		(4)		(20)		(16)
Income taxes	—		(2)		1		5		4
Net OCI	$	—	$	(14)	$	(58)	$	(239)	$	(311)
Ending	$	(3)	$	(193)	$	(11)	$	(710)	$	(917)

Nine Months 2019	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(4)	$	(137)	$	50	$	(540)	$	(631)
OCI	1		(5)		(34)		144		106
Income taxes	—		4		18		(36)		(14)
Reclassifications to:
Cost of sales	—		—		(4)		—		(4)
Other (income) expense	—		4		—		(7)		(3)
Income taxes	—		(1)		(8)		2		(7)
Net OCI	$	1	$	2	$	(28)	$	103	$	78
Ending	$	(3)	$	(135)	$	22	$	(437)	$	(553)

Reclassification out of Accumulated Other Comprehensive Income

Three Months 2020	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(187)	$	(9)	$	(516)	$	(715)
OCI	—		(11)		2		(248)		(257)
Income taxes	—		3		(1)		59		61
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense	—		2		(1)		(7)		(6)
Income taxes	—		—		1		2		3
Net OCI	$	—	$	(6)	$	(2)	$	(194)	$	(202)
Ending	$	(3)	$	(193)	$	(11)	$	(710)	$	(917)

Three Months 2019	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(148)	$	37	$	(516)	$	(630)
OCI	—		11		(18)		116		109
Income taxes	—		1		10		(32)		(21)
Reclassifications to:
Cost of sales	—		—		(2)		—		(2)
Other (income) expense	—		1		—		(7)		(6)
Income taxes	—		—		(5)		2		(3)
Net OCI	$	—	$	13	$	(15)	$	79	$	77
Ending	$	(3)	$	(135)	$	22	$	(437)	$	(553)

Nine Months 2020	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(3)	$	(179)	$	47	$	(471)	$	(606)
OCI	—		(25)		(70)		(285)		(380)
Income taxes	—		5		18		61		84
Reclassifications to:
Cost of sales	—		—		(3)		—		(3)
Other (income) expense	—		8		(4)		(20)		(16)
Income taxes	—		(2)		1		5		4
Net OCI	$	—	$	(14)	$	(58)	$	(239)	$	(311)
Ending	$	(3)	$	(193)	$	(11)	$	(710)	$	(917)

Nine Months 2019	Marketable Securities		Pension Plans		Hedges		Financial Statement Translation		Total
Beginning	$	(4)	$	(137)	$	50	$	(540)	$	(631)
OCI	1		(5)		(34)		144		106
Income taxes	—		4		18		(36)		(14)
Reclassifications to:
Cost of sales	—		—		(4)		—		(4)
Other (income) expense	—		4		—		(7)		(3)
Income taxes	—		(1)		(8)		2		(7)
Net OCI	$	1	$	2	$	(28)	$	103	$	78
Ending	$	(3)	$	(135)	$	22	$	(437)	$	(553)

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Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

September 2020	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	$	824	$	1,169	$	5,619	$	7,612
Maximum term in days							1372
Fair value:
Other current assets	$	10	$	—	$	13	$	23
Other noncurrent assets	1		43		—		44
Other current liabilities	(6)		—		(97)		(103)
Other noncurrent liabilities	(2)		—		—		(2)
Total fair value	$	3	$	43	$	(84)	$	(38)

December 2019	Cash Flow		Net Investment		Non-Designated		Total
Gross notional amount	$	801	$	1,113	$	6,174	$	8,088
Maximum term in days							1646
Fair value:
Other current assets	$	5	$	—	$	180	$	185
Other noncurrent assets	1		40		—		41
Other current liabilities	(10)		—		(11)		(21)
Other noncurrent liabilities	(2)		—		—		(2)
Total fair value	$	(6)	$	40	$	169	$	203

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location

		Three Months				Nine Months
Derivative instrument	Recorded in:	2020		2019		2020		2019
Cash Flow	Cost of sales	$	3	$	2	$	3	$	4
Net Investment	Other income (expense), net	7		7		20		7
Non-Designated	Other income (expense), net	(3)		(6)		(12)		(10)
	Total	$	7	$	3	$	11	$	1

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Assets Measured at Fair Value	September		December
	2020		2019
Cash and cash equivalents	$	7,083	$	4,337
Trading marketable securities	154		149
Level 1 - Assets	$	7,237	$	4,486
Available-for-sale marketable securities:
Corporate and asset-backed debt securities	$	37	$	32
United States agency debt securities	6		2
United States Treasury debt securities	34		49
Certificates of deposit	1		5
Total available-for-sale marketable securities	$	78	$	88
Foreign currency exchange forward contracts	67		226
Interest rate swap asset	—		17
Level 2 - Assets	$	145	$	331
Total assets measured at fair value	$	7,382	$	4,817

Liabilities Measured at Fair Value	September		December
	2020		2019
Deferred compensation arrangements	$	154	$	149
Level 1 - Liabilities	$	154	$	149
Foreign currency exchange forward contracts	$	105	$	23
Interest rate swap liability	65		—
Level 2 - Liabilities	$	170	$	23
Contingent consideration:
Beginning	$	306	$	117
Additions	5		298
Change in estimate	6		(10)
Settlements	(30)		(99)
Ending	$	287	$	306
Level 3 - Liabilities	$	287	$	306
Total liabilities measured at fair value	$	611	$	478

Investments Classified by Contractual Maturity Date

Fair Value of Available for Sale Securities by Maturity
	September 2020		December 2019
Due in one year or less	$	40	$	50
Due after one year through three years	$	38	$	38

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Contingencies and Commitments (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Lease, Cost

Leases	September			December
	2020			2019
Right-of-use assets	$	401		$	384
Lease liabilities, current	$	100		$	86
Lease liabilities, non-current	$	310		$	301
Other information
Weighted-average remaining lease term	5.5 years			6.2 years
Weighted-average discount rate	2.87		%	3.34		%

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition

Purchase Price Allocation of Acquired Net Assets
	2019
	Mobius		OrthoSpace
Tangible assets:
Accounts receivable	$	3	$	1
Inventory	6		1
Other assets	2		1
Contingent consideration	(4)		—
Other liabilities	(10)		(29)
Intangible assets:
Customer relationship	7		—
Developed technology and patents	59		120
In-process research and development	98		—
Non-compete agreements	9		—
Goodwill	303		114
Purchase price, net of cash acquired	$	473	$	208
Weighted-average life of intangible assets	12		18

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Estimated Amortization Expense
Remainder of 2020		2021		2022		2023		2024
$	115	$	446	$	436	$	421	$	390

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Debt and Credit Facilities (Tables)

9 Months Ended

Sep. 30, 2020

Long-term Debt, Unclassified [Abstract]

Schedule of Long-term Debt Instruments

Summary of Total Debt			September 2020		December 2019
Senior unsecured notes:
	Rate	Due
	4.375%	January 15, 2020	$	—	$	500
	Variable	November 30, 2020	351		333
	2.625%	March 15, 2021	750		749
	1.125%	November 30, 2023	640		609
	3.375%	May 15, 2024	590		587
	0.250%	December 3, 2024	987		938
	1.150%	June 15, 2025	644		—
	3.375%	November 1, 2025	747		746
	3.500%	March 15, 2026	992		991
	2.125%	November 30, 2027	871		829
	3.650%	March 7, 2028	596		596
	0.750%	March 1, 2029	929		884
	1.950%	June 15, 2030	988		—
	2.625%	November 30, 2030	749		712
	1.000%	December 3, 2031	865		823
	4.100%	April 1, 2043	392		391
	4.375%	May 15, 2044	395		395
	4.625%	March 15, 2046	981		981
	2.900%	June 15, 2050	641		—
Other			19		26
Total debt			$	13,127	$	11,090
Less current maturities of debt			1,119		859
Total long-term debt			$	12,008	$	10,231

	September 2020		December 2019
Unamortized debt issuance costs	$	71	$	58
Available secured borrowing capacity	$	2,904	$	1,403
Fair value of senior unsecured notes	$	14,366	$	11,910

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Sales and Other Financial Information by Business Segment

	Three Months				Nine Months
	2020		2019		2020		2019
Orthopaedics	$	1,317	$	1,262	$	3,433	$	3,785
MedSurg	1,600		1,552		4,546		4,680
Neurotechnology and Spine	820		773		2,110		2,288
Net sales	$	3,737	$	3,587	$	10,089	$	10,753
Orthopaedics	$	472	$	437	$	1,027	$	1,322
MedSurg	451		394		1,085		1,179
Neurotechnology and Spine	228		199		513		608
Segment operating income	$	1,151	$	1,030	$	2,625	$	3,109
Items not allocated to segments:
Corporate and other	(104)		(117)		(371)		(371)
Acquisition and integration-related charges	(29)		(32)		(85)		(223)
Amortization of intangible assets	(114)		(116)		(342)		(352)
Restructuring-related and other charges	(29)		(48)		(292)		(146)
Medical device regulations	(14)		(15)		(60)		(34)
Recall-related matters	(2)		(49)		4		(179)
Regulatory and legal matters	—		(25)		(5)		(35)
Consolidated operating income	$	859	$	628	$	1,474	$	1,769

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Revenue Recognition - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Revenue Recognition [Abstract]
Contract liabilities	$ 389	$ 313

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Revenue Recognition - Disaggregated Sales Analysis (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Net sales	$ 3,737	$ 3,587	$ 10,089	$ 10,753
United States
Disaggregation of Revenue [Line Items]
Net sales	2,748	2,644	7,357	7,918
International
Disaggregation of Revenue [Line Items]
Net sales	989	943	2,732	2,835
Orthopaedics
Disaggregation of Revenue [Line Items]
Net sales	1,317	1,262	3,433	3,785
Orthopaedics | United States
Disaggregation of Revenue [Line Items]
Net sales	937	872	2,412	2,596
Orthopaedics | International
Disaggregation of Revenue [Line Items]
Net sales	380	390	1,021	1,189
Orthopaedics | Knees
Disaggregation of Revenue [Line Items]
Net sales	435	426	1,108	1,305
Orthopaedics | Knees | United States
Disaggregation of Revenue [Line Items]
Net sales	332	318	833	962
Orthopaedics | Knees | International
Disaggregation of Revenue [Line Items]
Net sales	103	108	275	343
Orthopaedics | Hips
Disaggregation of Revenue [Line Items]
Net sales	334	332	866	1,011
Orthopaedics | Hips | United States
Disaggregation of Revenue [Line Items]
Net sales	223	211	564	643
Orthopaedics | Hips | International
Disaggregation of Revenue [Line Items]
Net sales	111	121	302	368
Orthopaedics | Trauma and Extremities
Disaggregation of Revenue [Line Items]
Net sales	430	407	1,152	1,197
Orthopaedics | Trauma and Extremities | United States
Disaggregation of Revenue [Line Items]
Net sales	285	262	753	768
Orthopaedics | Trauma and Extremities | International
Disaggregation of Revenue [Line Items]
Net sales	145	145	399	429
Orthopaedics | Other
Disaggregation of Revenue [Line Items]
Net sales	118	97	307	272
Orthopaedics | Other | United States
Disaggregation of Revenue [Line Items]
Net sales	97	81	262	223
Orthopaedics | Other | International
Disaggregation of Revenue [Line Items]
Net sales	21	16	45	49
MedSurg
Disaggregation of Revenue [Line Items]
Net sales	1,600	1,552	4,546	4,680
MedSurg | United States
Disaggregation of Revenue [Line Items]
Net sales	1,269	1,247	3,567	3,755
MedSurg | International
Disaggregation of Revenue [Line Items]
Net sales	331	305	979	925
MedSurg | Instruments
Disaggregation of Revenue [Line Items]
Net sales	467	452	1,308	1,417
MedSurg | Instruments | United States
Disaggregation of Revenue [Line Items]
Net sales	369	357	1,028	1,121
MedSurg | Instruments | International
Disaggregation of Revenue [Line Items]
Net sales	98	95	280	296
MedSurg | Endoscopy
Disaggregation of Revenue [Line Items]
Net sales	467	474	1,238	1,424
MedSurg | Endoscopy | United States
Disaggregation of Revenue [Line Items]
Net sales	380	377	997	1,136
MedSurg | Endoscopy | International
Disaggregation of Revenue [Line Items]
Net sales	87	97	241	288
MedSurg | Medical
Disaggregation of Revenue [Line Items]
Net sales	600	554	1,819	1,627
MedSurg | Medical | United States
Disaggregation of Revenue [Line Items]
Net sales	455	442	1,363	1,288
MedSurg | Medical | International
Disaggregation of Revenue [Line Items]
Net sales	145	112	456	339
MedSurg | Sustainability
Disaggregation of Revenue [Line Items]
Net sales	66	72	181	212
MedSurg | Sustainability | United States
Disaggregation of Revenue [Line Items]
Net sales	65	71	179	210
MedSurg | Sustainability | International
Disaggregation of Revenue [Line Items]
Net sales	1	1	2	2
Neurotechnology and Spine
Disaggregation of Revenue [Line Items]
Net sales	820	773	2,110	2,288
Neurotechnology and Spine | United States
Disaggregation of Revenue [Line Items]
Net sales	542	525	1,378	1,567
Neurotechnology and Spine | International
Disaggregation of Revenue [Line Items]
Net sales	278	248	732	721
Neurotechnology and Spine | Neurotechnology
Disaggregation of Revenue [Line Items]
Net sales	518	490	1,370	1,443
Neurotechnology and Spine | Neurotechnology | United States
Disaggregation of Revenue [Line Items]
Net sales	323	316	835	929
Neurotechnology and Spine | Neurotechnology | International
Disaggregation of Revenue [Line Items]
Net sales	195	174	535	514
Neurotechnology and Spine | Spine
Disaggregation of Revenue [Line Items]
Net sales	302	283	740	845
Neurotechnology and Spine | Spine | United States
Disaggregation of Revenue [Line Items]
Net sales	219	209	543	638
Neurotechnology and Spine | Spine | International
Disaggregation of Revenue [Line Items]
Net sales	$ 83	$ 74	$ 197	$ 207

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Accumulated Other Comprehensive (Loss) Income (AOCI) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period	$ (715)	$ (630)	$ (606)	$ (631)
OCI	(257)	109	(380)	106
Income taxes	61	(21)	84	(14)
Cost of sales	1,276	1,257	3,749	3,760
Other (income) expense	(79)	(47)	(191)	(143)
Income taxes	(159)	(115)	(252)	(268)
Net OCI	(202)	77	(311)	78
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period	(917)	(553)	(917)	(553)
Reclassification out of Accumulated Other Comprehensive Income
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cost of sales	(3)	(2)	(3)	(4)
Other (income) expense	(6)	(6)	(16)	(3)
Income taxes	3	(3)	4	(7)
Net OCI	(202)	77	(311)	78
Marketable Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period	(3)	(3)	(3)	(4)
OCI	0	0	0	1
Income taxes	0	0	0	0
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period	(3)	(3)	(3)	(3)
Marketable Securities | Reclassification out of Accumulated Other Comprehensive Income
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cost of sales	0	0	0	0
Other (income) expense	0	0	0	0
Income taxes	0	0	0	0
Net OCI	0	0	0	1
Pension Plans
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period	(187)	(148)	(179)	(137)
OCI	(11)	11	(25)	(5)
Income taxes	3	1	5	4
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period	(193)	(135)	(193)	(135)
Pension Plans | Reclassification out of Accumulated Other Comprehensive Income
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cost of sales	0	0	0	0
Other (income) expense	2	1	8	4
Income taxes	0	0	(2)	(1)
Net OCI	(6)	13	(14)	2
Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period	(9)	37	47	50
OCI	2	(18)	(70)	(34)
Income taxes	(1)	10	18	18
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period	(11)	22	(11)	22
Hedges | Reclassification out of Accumulated Other Comprehensive Income
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cost of sales	(3)	(2)	(3)	(4)
Other (income) expense	(1)	0	(4)	0
Income taxes	1	(5)	1	(8)
Net OCI	(2)	(15)	(58)	(28)
Financial Statement Translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax at beginning of period	(516)	(516)	(471)	(540)
OCI	(248)	116	(285)	144
Income taxes	59	(32)	61	(36)
Accumulated Other Comprehensive Income (Loss), Net of Tax at end of period	(710)	(437)	(710)	(437)
Financial Statement Translation | Reclassification out of Accumulated Other Comprehensive Income
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Cost of sales	0	0	0	0
Other (income) expense	(7)	(7)	(20)	(7)
Income taxes	2	2	5	2
Net OCI	$ (194)	$ 79	$ (239)	$ 103

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Derivative Instruments (Forward Currency Exchange Contracts) (Details) € in Millions, $ in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 EUR (€)	Jul. 31, 2019 USD ($)	Nov. 30, 2018 EUR (€)
Foreign Exchange Contract
Derivative [Line Items]
Notional Amount		$ 7,612	$ 8,088
Maximum term in days	1646 days	1372 days
Derivative, Fair Value, Net		$ (38)	203
Foreign Exchange Contract | Other current assets
Derivative [Line Items]
Derivative assets		23	185
Foreign Exchange Contract | Other noncurrent assets
Derivative [Line Items]
Derivative assets		44	41
Foreign Exchange Contract | Other current liabilities
Derivative [Line Items]
Derivative liabilities		(103)	(21)
Foreign Exchange Contract | Other noncurrent liabilities
Derivative [Line Items]
Derivative liabilities		(2)	(2)
Foreign Exchange Contract | Net Investment
Derivative [Line Items]
Notional Amount		824	1,113	€ 2,400	$ 1,000	€ 2,250
Derivative, Fair Value, Net		3	40
Foreign Exchange Contract | Net Investment | Other current assets
Derivative [Line Items]
Derivative assets		10	0
Foreign Exchange Contract | Net Investment | Other noncurrent assets
Derivative [Line Items]
Derivative assets		1	40
Foreign Exchange Contract | Net Investment | Other current liabilities
Derivative [Line Items]
Derivative liabilities		(6)	0
Foreign Exchange Contract | Net Investment | Other noncurrent liabilities
Derivative [Line Items]
Derivative liabilities		(2)	0
Foreign Exchange Contract | Non-Designated
Derivative [Line Items]
Notional Amount		5,619	6,174
Derivative, Fair Value, Net		(84)	169
Foreign Exchange Contract | Non-Designated | Other current assets
Derivative [Line Items]
Derivative assets		13	180
Foreign Exchange Contract | Non-Designated | Other noncurrent assets
Derivative [Line Items]
Derivative assets		0	0
Foreign Exchange Contract | Non-Designated | Other current liabilities
Derivative [Line Items]
Derivative liabilities		(97)	(11)
Foreign Exchange Contract | Non-Designated | Other noncurrent liabilities
Derivative [Line Items]
Derivative liabilities		0	0
Cash Flow | Foreign Exchange Contract | Net Investment
Derivative [Line Items]
Notional Amount			801
Derivative, Fair Value, Net			(6)
Cash Flow | Foreign Exchange Contract | Net Investment | Other current assets
Derivative [Line Items]
Derivative assets			5
Cash Flow | Foreign Exchange Contract | Net Investment | Other noncurrent assets
Derivative [Line Items]
Derivative assets			1
Cash Flow | Foreign Exchange Contract | Net Investment | Other current liabilities
Derivative [Line Items]
Derivative liabilities			(10)
Cash Flow | Foreign Exchange Contract | Net Investment | Other noncurrent liabilities
Derivative [Line Items]
Derivative liabilities			$ (2)
Net Investment | Net Investment
Derivative [Line Items]
Notional Amount		1,169
Derivative, Fair Value, Net		43
Net Investment | Net Investment | Other current assets
Derivative [Line Items]
Derivative assets		0
Net Investment | Net Investment | Other noncurrent assets
Derivative [Line Items]
Derivative assets		43
Net Investment | Net Investment | Other current liabilities
Derivative [Line Items]
Derivative liabilities		0
Net Investment | Net Investment | Other noncurrent liabilities
Derivative [Line Items]
Derivative liabilities		$ 0

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Derivative Instruments (Narrative) (Details) € in Millions, $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2020 EUR (€)	Dec. 31, 2019 EUR (€)	Nov. 30, 2019 EUR (€)	Jul. 31, 2019 USD ($)	Nov. 30, 2018 EUR (€)
Foreign Exchange Contract
Notional amount	$ 7,612	$ 8,088
Designated as Hedging Instrument | Foreign Exchange Contract
Notional amount	824	1,113		€ 2,400		$ 1,000	€ 2,250
Derivative, fair value	(179)
Cash flow hedge gain (loss) to be reclassified within twelve months	6
Other Income	27
Designated as Hedging Instrument | Interest Rate Swap
Notional amount	750
Cash flow hedge gain (loss) to be reclassified within twelve months		$ 6
Notional amount terminated | €			€ 500		€ 600
Net Investment | Designated as Hedging Instrument
Notional amount	1,169
Accrued Expenses | Designated as Hedging Instrument | Interest Rate Swap
Pretax losses recorded in AOCI	$ 66

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Derivative Instruments (Income Statement Location) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Foreign Exchange Contract
Derivative Instruments, Gain (Loss) [Line Items]
Net currency exchange rate gains (losses)	$ 7	$ 3	$ 11	$ 1
Foreign Exchange Contract | Cost of sales
Derivative Instruments, Gain (Loss) [Line Items]
Net currency exchange rate gains (losses)	3	2	3	4
Foreign Exchange Contract | Other income (expense), net
Derivative Instruments, Gain (Loss) [Line Items]
Net currency exchange rate gains (losses)	(3)	(6)	(12)	(10)
Net Investment | Other income (expense), net
Derivative Instruments, Gain (Loss) [Line Items]
Net currency exchange rate gains (losses)	$ 7	$ 7	$ 20	$ 7

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Fair Value Measurements (Valuation Of Financial Instruments By Pricing Categories) (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 7,083	$ 4,337
Assets
Available-for-sale securities, current	78	88
Investments Fair Value Disclosure	7,382	4,817
Contingent consideration:
Total liabilities measured at fair value	611	478
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	7,083	4,337
Trading marketable securities	154	149
Assets
Investments Fair Value Disclosure	7,237	4,486
Deferred compensation arrangements	154	149
Contingent consideration:
Total liabilities measured at fair value	154	149
Fair Value, Inputs, Level 2
Assets
Available-for-sale securities, current	78	88
Investments Fair Value Disclosure	145	331
Contingent consideration:
Total liabilities measured at fair value	170	23
Fair Value, Inputs, Level 2 | Foreign currency exchange forward contracts
Assets
Derivative asset	67	226
Liabilities
Foreign currency exchange forward contracts	105	23
Fair Value, Inputs, Level 2 | Interest Rate Swap
Assets
Derivative asset	0	17
Liabilities
Foreign currency exchange forward contracts	65	0
Fair Value, Inputs, Level 2 | Corporate and asset-backed debt securities
Assets
Available-for-sale securities, current	37	32
Fair Value, Inputs, Level 2 | United States agency debt securities
Assets
Available-for-sale securities, current	6	2
Fair Value, Inputs, Level 2 | United States Treasury debt securities
Assets
Available-for-sale securities, current	34	49
Fair Value, Inputs, Level 2 | Certificates of deposit
Assets
Available-for-sale securities, current	1	5
Fair Value, Inputs, Level 3
Contingent consideration:
Beginning	306	117
Additions	5	298
Change in estimate	6	(10)
Settlements	(30)	(99)
Ending	287	306
Total liabilities measured at fair value	$ 287	$ 306

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Fair Value Measurements (Assets and Liabilities Measured At Fair Value On A Recurring Basis Using Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Due in one year or less	$ 40	$ 50
Due after one year through three years	38	38
Fair Value, Inputs, Level 2 | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency exchange forward contracts	65	0
Fair Value, Inputs, Level 2 | Foreign Exchange Contract
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency exchange forward contracts	$ 105	$ 23

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Fair Value Disclosures [Abstract]
Gain on sale of marketable securities	$ 19	$ 36	$ 84	$ 109

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Contingencies and Commitments (Narrative) (Details) $ in Millions	Sep. 30, 2020 USD ($)
Minimum
Loss Contingencies [Line Items]
Estimate of possible loss	$ 280
Maximum
Loss Contingencies [Line Items]
Estimate of possible loss	$ 515

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Contingencies and Commitments - Leases (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Right-of-use assets	$ 401		$ 401		$ 384
Lease liabilities, current	100		100		86
Lease liabilities, non-current	$ 310		$ 310		$ 301
Other information
Weighted-average remaining lease term	5 years 6 months		5 years 6 months		6 years 2 months 12 days
Weighted-average discount rate	2.87%		2.87%		3.34%
Operating lease cost	$ 27	$ 34	$ 94	$ 102

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Acquisitions (Narrative) (Details) $ / shares in Units, $ in Millions	1 Months Ended				9 Months Ended
	Nov. 30, 2019 USD ($) $ / shares	Nov. 30, 2019 € / shares	Oct. 31, 2019 USD ($)	Mar. 31, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)
Business Acquisition [Line Items]
Aggregate purchase price of acquisitions					$ 26	$ 446
Acquisitions, net of cash acquired					$ 26	$ 281
Mobius
Business Acquisition [Line Items]
Aggregate purchase price of acquisitions			$ 360
Future milestone payments			$ 130
OrthoSpace, Ltd.
Business Acquisition [Line Items]
Aggregate purchase price of acquisitions				$ 110
Future milestone payments				$ 110
Wright
Business Acquisition [Line Items]
Consideration transferred (in dollars per share) | $ / shares	$ 30.75
Acquisitions, net of cash acquired	$ 5,400
Par value of ordinary shares of acquiree (in EUR per share) | € / shares		€ 0.03

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Acquisitions (Allocation Of The Preliminary Purchase Price To The Acquired Net Assets (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Sep. 30, 2020	Dec. 31, 2019
Goodwill		$ 9,128	$ 9,069
Mobius
Accounts receivable			3
Inventory			6
Other assets			2
Contingent consideration			(4)
Other liabilities			(10)
Goodwill			303
Purchase price, net of cash acquired			473
Weighted-average life of intangible assets	12 years
Mobius | Customer relationship
Intangible assets acquired			7
Mobius | Developed technology and patents
Intangible assets acquired			59
Mobius | In-process research and development
Intangible assets acquired			98
Mobius | Non-compete agreements
Intangible assets acquired			9
OrthoSpace, Ltd.
Accounts receivable			1
Inventory			1
Other assets			1
Contingent consideration			0
Other liabilities			(29)
Goodwill			114
Purchase price, net of cash acquired			208
Weighted-average life of intangible assets	18 years
OrthoSpace, Ltd. | Customer relationship
Intangible assets acquired			0
OrthoSpace, Ltd. | Developed technology and patents
Intangible assets acquired			120
OrthoSpace, Ltd. | In-process research and development
Intangible assets acquired			0
OrthoSpace, Ltd. | Non-compete agreements
Intangible assets acquired			$ 0

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Acquisitions (Future Amortization Expense) (Details) $ in Millions	Sep. 30, 2020 USD ($)
Business Combinations [Abstract]
Remainder of 2020	$ 115
2021	446
2022	436
2023	421
2024	$ 390

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Debt and Credit Facilities (Details)		1 Months Ended	9 Months Ended
	Apr. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2020 Rate	Sep. 30, 2020	Jan. 31, 2020 USD ($) Rate	Dec. 31, 2019 USD ($)
Amounts outstanding under commercial paper program			$ 0
Other Long-term Debt			19,000,000				$ 26,000,000
Total debt			13,127,000,000				11,090,000,000
Less current maturities of debt			1,119,000,000				859,000,000
Total long-term debt			12,008,000,000				10,231,000,000
Unamortized debt issuance costs			71,000,000				58,000,000
Available secured borrowing capacity			2,904,000,000				1,403,000,000
Fair value of senior unsecured notes			$ 14,366,000,000				11,910,000,000
Commercial Paper
Debt instrument, maturity			397 days
Commercial Paper | Maximum
Commercial paper			$ 1,500,000,000
Senior Unsecured Notes 4.375% due 2020
Stated interest rate | Rate				4.375%		4.375%
Maturity Date			Jan. 15, 2020
Unsecured Debt			$ 0				500,000,000
Debt instrument, repurchased face amount						$ 500,000,000
Senior Unsecured Notes Variable due 2020
Maturity Date			Nov. 30, 2020
Unsecured Debt			$ 351,000,000				333,000,000
Senior Unsecured Notes 2.625% due 2021
Stated interest rate | Rate				2.625%
Maturity Date			Mar. 15, 2021
Unsecured Debt			$ 750,000,000				749,000,000
Senior Unsecured Notes 1.125% due 2021
Stated interest rate | Rate				1.125%
Maturity Date			Nov. 30, 2023
Unsecured Debt			$ 640,000,000				609,000,000
Senior Unsecured Notes 3.375% due 2024
Stated interest rate | Rate				3.375%
Maturity Date			May 15, 2024
Unsecured Debt			$ 590,000,000				587,000,000
Senior Unsecured Notes, 0.250% Due 2024
Stated interest rate					0.25%
Maturity Date			Dec. 03, 2024
Unsecured Debt			$ 987,000,000				938,000,000
Senior Unsecured Notes, 1.150% Due 2025
Stated interest rate					1.15%
Maturity Date			Jun. 15, 2025
Unsecured Debt			$ 644,000,000				0
Proceeds from issuance of debt		$ 650,000,000
Redemption price of notes (as a percent)		101.00%
Senior Unsecured Notes 3.375% due 2025
Stated interest rate | Rate				3.375%
Maturity Date			Nov. 01, 2025
Unsecured Debt			$ 747,000,000				746,000,000
Senior Unsecured Notes 3.50% due 2026
Stated interest rate | Rate				3.50%
Maturity Date			Mar. 15, 2026
Unsecured Debt			$ 992,000,000				991,000,000
Senior Unsecured Notes 2.125% due 2027
Stated interest rate | Rate				2.125%
Maturity Date			Nov. 30, 2027
Unsecured Debt			$ 871,000,000				829,000,000
Senior Unsecured Notes 3.650% due 2028
Stated interest rate | Rate				3.65%
Maturity Date			Mar. 07, 2028
Unsecured Debt			$ 596,000,000				596,000,000
Senior Unsecured Notes, 0.750% Due 2029
Stated interest rate					0.75%
Maturity Date			Mar. 01, 2029
Unsecured Debt			$ 929,000,000				884,000,000
Senior Unsecured Notes, 1.950% Due 2030
Stated interest rate					1.95%
Maturity Date			Jun. 15, 2030
Unsecured Debt			$ 988,000,000				0
Proceeds from issuance of debt		$ 1,000,000,000
Senior Unsecured Notes 2.625% due 2030
Stated interest rate | Rate				2.625%
Maturity Date			Nov. 30, 2030
Unsecured Debt			$ 749,000,000				712,000,000
Senior Unsecured Notes, 1.000% Due 2031
Stated interest rate					1.00%
Maturity Date			Dec. 03, 2031
Unsecured Debt			$ 865,000,000				823,000,000
Senior Unsecured Notes 4.100% due 2043
Stated interest rate | Rate				4.10%
Maturity Date			Apr. 01, 2043
Unsecured Debt			$ 392,000,000				391,000,000
Senior Unsecured Notes 4.375% due 2044
Stated interest rate | Rate				4.375%
Maturity Date			May 15, 2044
Unsecured Debt			$ 395,000,000				395,000,000
Senior Unsecured Notes 4.625% due 2046
Stated interest rate | Rate				4.625%
Maturity Date			Mar. 15, 2046
Unsecured Debt			$ 981,000,000				981,000,000
Senior Unsecured Notes, 2.900% due 2050
Stated interest rate				2.90%	2.90%
Maturity Date			Jun. 15, 2050
Unsecured Debt			$ 641,000,000				$ 0
Proceeds from issuance of debt		$ 650,000,000
Revolving Credit Facility
Leverage ratio	4.5				3.5
Revolving Credit Facility | Credit Agreement
Debt instrument, maturity	364 days
Line of credit facility, maximum borrowing capacity	$ 1,500,000,000

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Income Taxes (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2020 Rate	Sep. 30, 2019 Rate	Sep. 30, 2020 Rate	Sep. 30, 2019 Rate
Income Tax [Abstract]
Effective income tax rate reconciliation, percent	20.40%	19.80%	19.60%	16.50%

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Segment Information (Sales And Other Financial Information By Business Segment) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting Information [Line Items]
Net sales	$ 3,737	$ 3,587	$ 10,089	$ 10,753
Segment operating income	859	628	1,474	1,769
Amortization of intangible assets	(114)	(116)	(342)	(352)
Recall-related matters	(2)	(49)	4	(179)
Orthopaedics
Segment Reporting Information [Line Items]
Net sales	1,317	1,262	3,433	3,785
MedSurg
Segment Reporting Information [Line Items]
Net sales	1,600	1,552	4,546	4,680
Neurotechnology and Spine
Segment Reporting Information [Line Items]
Net sales	820	773	2,110	2,288
Operating Segments
Segment Reporting Information [Line Items]
Net sales	3,737	3,587	10,089	10,753
Segment operating income	1,151	1,030	2,625	3,109
Operating Segments | Orthopaedics
Segment Reporting Information [Line Items]
Net sales	1,317	1,262	3,433	3,785
Segment operating income	472	437	1,027	1,322
Operating Segments | MedSurg
Segment Reporting Information [Line Items]
Net sales	1,600	1,552	4,546	4,680
Segment operating income	451	394	1,085	1,179
Operating Segments | Neurotechnology and Spine
Segment Reporting Information [Line Items]
Net sales	820	773	2,110	2,288
Segment operating income	228	199	513	608
Corporate and other
Segment Reporting Information [Line Items]
Segment operating income	(104)	(117)	(371)	(371)
Segment Reconciling Items
Segment Reporting Information [Line Items]
Acquisition and integration-related charges	(29)	(32)	(85)	(223)
Amortization of intangible assets	(114)	(116)	(342)	(352)
Restructuring-related and other charges	(29)	(48)	(292)	(146)
Medical device regulations	(14)	(15)	(60)	(34)
Recall-related matters	(2)	(49)	4	(179)
Regulatory and legal matters	$ 0	$ (25)	$ (5)	$ (35)

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Asset Impairments (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019
Property, Plant and Equipment [Abstract]
Asset impairments	$ 189	$ 161	$ 2