QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of incorporation) | (I.R.S. Employer Identification No.) | ||||||||||||||||||||||
| |||||||||||||||||||||||
(Address of principal executive offices) | (Zip Code) | ||||||||||||||||||||||
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | Emerging growth company | ||||||||||||||||||||
Non-accelerated filer | ☐ | Small reporting company |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
ITEM 1. | FINANCIAL STATEMENTS |
Three Months | |||||||||||
2023 | 2022 | ||||||||||
Net sales | $ | $ | |||||||||
Cost of sales | |||||||||||
Gross profit | $ | $ | |||||||||
Research, development and engineering expenses | |||||||||||
Selling, general and administrative expenses | |||||||||||
Recall charges, net | |||||||||||
Amortization of intangible assets | |||||||||||
Total operating expenses | $ | $ | |||||||||
Operating income | $ | $ | |||||||||
Other income (expense), net | ( | ( | |||||||||
Earnings before income taxes | $ | $ | |||||||||
Income taxes | |||||||||||
Net earnings | $ | $ | |||||||||
Net earnings per share of common stock: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted-average shares outstanding (in millions): | |||||||||||
Basic | |||||||||||
Effect of dilutive employee stock compensation | |||||||||||
Diluted | |||||||||||
Cash dividends declared per share of common stock | $ | $ |
Three Months | |||||||||||
2023 | 2022 | ||||||||||
Net earnings | $ | $ | |||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Marketable securities | ( | ||||||||||
Pension plans | ( | ( | |||||||||
Unrealized gains (losses) on designated hedges | ( | ||||||||||
Financial statement translation | ( | ||||||||||
Total other comprehensive income (loss), net of tax | $ | ( | $ | ||||||||
Comprehensive income | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 1 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
March 31 | December 31 | ||||||||||
2023 | 2022 | ||||||||||
(Unaudited) | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Accounts receivable, less allowance of $ | |||||||||||
Inventories: | |||||||||||
Materials and supplies | |||||||||||
Work in process | |||||||||||
Finished goods | |||||||||||
Total inventories | $ | $ | |||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | $ | $ | |||||||||
Property, plant and equipment: | |||||||||||
Land, buildings and improvements | |||||||||||
Machinery and equipment | |||||||||||
Total property, plant and equipment | $ | $ | |||||||||
Less allowance for depreciation | |||||||||||
Property, plant and equipment, net | $ | $ | |||||||||
Goodwill | |||||||||||
Other intangibles, net | |||||||||||
Noncurrent deferred income tax assets | |||||||||||
Other noncurrent assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and shareholders' equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued compensation | |||||||||||
Income taxes | |||||||||||
Dividends payable | |||||||||||
Accrued product liabilities | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Current maturities of debt | |||||||||||
Total current liabilities | $ | $ | |||||||||
Long-term debt, excluding current maturities | |||||||||||
Income taxes | |||||||||||
Other noncurrent liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
Shareholders' equity | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total shareholders' equity | $ | $ | |||||||||
Total liabilities and shareholders' equity | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 2 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Three Months | |||||||||||
2023 | 2022 | ||||||||||
Common stock shares outstanding (in millions) | |||||||||||
Beginning | |||||||||||
Issuance of common stock under stock compensation and benefit plans | |||||||||||
Ending | |||||||||||
Common stock | |||||||||||
Beginning | $ | $ | |||||||||
Issuance of common stock under stock compensation and benefit plans | |||||||||||
Ending | $ | $ | |||||||||
Additional paid-in capital | |||||||||||
Beginning | $ | $ | |||||||||
Issuance of common stock under stock compensation and benefit plans | ( | ( | |||||||||
Share-based compensation | |||||||||||
Ending | $ | $ | |||||||||
Retained earnings | |||||||||||
Beginning | $ | $ | |||||||||
Net earnings | |||||||||||
Cash dividends declared | ( | ( | |||||||||
Ending | $ | $ | |||||||||
Accumulated other comprehensive income (loss) | |||||||||||
Beginning | $ | ( | $ | ( | |||||||
Other comprehensive income (loss) | ( | ||||||||||
Ending | $ | ( | $ | ( | |||||||
Total shareholders' equity | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 3 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Three Months | |||||||||||
2023 | 2022 | ||||||||||
Operating activities | |||||||||||
Net earnings | $ | $ | |||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation | |||||||||||
Amortization of intangible assets | |||||||||||
Asset impairments | |||||||||||
Share-based compensation | |||||||||||
Recall charges, net | |||||||||||
Sale of inventory stepped-up to fair value at acquisition | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | |||||||||||
Inventories | ( | ( | |||||||||
Accounts payable | ( | ( | |||||||||
Accrued expenses and other liabilities | ( | ( | |||||||||
Recall-related payments | ( | ( | |||||||||
Income taxes | ( | ||||||||||
Other, net | ( | ||||||||||
Net cash provided by operating activities | $ | $ | |||||||||
Investing activities | |||||||||||
Acquisitions, net of cash acquired | ( | ||||||||||
Purchases of marketable securities | ( | ( | |||||||||
Proceeds from sales of marketable securities | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Other investing, net | ( | ||||||||||
Net cash used in investing activities | $ | ( | $ | ( | |||||||
Financing activities | |||||||||||
Proceeds (payments) on short-term borrowings, net | ( | ( | |||||||||
Proceeds from issuance of long-term debt | |||||||||||
Payments on long-term debt | ( | ||||||||||
Payments of dividends | ( | ( | |||||||||
Cash paid for taxes from withheld shares | ( | ( | |||||||||
Other financing, net | ( | ( | |||||||||
Net cash provided by (used in) financing activities | $ | ( | $ | ||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
Change in cash and cash equivalents | $ | ( | $ | ( | |||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 4 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Net Sales by Business | ||||||||
Three Months | ||||||||
2023 | 2022 | |||||||
MedSurg and Neurotechnology: | ||||||||
Instruments | $ | $ | ||||||
Endoscopy | ||||||||
Medical | ||||||||
Neurovascular | ||||||||
Neuro Cranial | ||||||||
$ | $ | |||||||
Orthopaedics and Spine: | ||||||||
Knees | $ | $ | ||||||
Hips | ||||||||
Trauma and Extremities | ||||||||
Spine | ||||||||
Other | ||||||||
$ | $ | |||||||
Total | $ | $ |
Net Sales by Geography | |||||||||||||||||
Three Months 2023 | Three Months 2022 | ||||||||||||||||
United States | International | United States | International | ||||||||||||||
MedSurg and Neurotechnology: | |||||||||||||||||
Instruments | $ | $ | $ | $ | |||||||||||||
Endoscopy | |||||||||||||||||
Medical | |||||||||||||||||
Neurovascular | |||||||||||||||||
Neuro Cranial | |||||||||||||||||
$ | $ | $ | $ | ||||||||||||||
Orthopaedics and Spine: | |||||||||||||||||
Knees | $ | $ | $ | $ | |||||||||||||
Hips | |||||||||||||||||
Trauma and Extremities | |||||||||||||||||
Spine | |||||||||||||||||
Other | |||||||||||||||||
$ | $ | $ | $ | ||||||||||||||
Total | $ | $ | $ | $ |
March 2023 | |||||
Beginning contract liabilities | $ | ||||
Revenue recognized from beginning of year contract liabilities | ( | ||||
Net advance consideration received during the period | |||||
Ending contract liabilities | $ |
Three Months 2023 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||||
Beginning | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||
OCI | ( | ( | |||||||||||||||
Income taxes | ( | ( | |||||||||||||||
Reclassifications to: | |||||||||||||||||
Cost of sales | ( | ( | |||||||||||||||
Other (income) expense, net | ( | ( | ( | ( | |||||||||||||
Income taxes | |||||||||||||||||
Net OCI | ( | ( | ( | ( | |||||||||||||
Ending | $ | ( | $ | $ | $ | ( | $ | ( |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 5 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Three Months 2022 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||||
Beginning | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||
OCI | ( | ( | |||||||||||||||
Income taxes | ( | ( | ( | ||||||||||||||
Reclassifications to: | |||||||||||||||||
Other (income) expense, net | ( | ( | ( | ||||||||||||||
Income taxes | ( | ||||||||||||||||
Net OCI | ( | ( | |||||||||||||||
Ending | $ | ( | $ | ( | $ | $ | ( | $ | ( |
March 2023 | Cash Flow | Net Investment | Non-Designated | Total | ||||||||||
Gross notional amount | $ | $ | $ | $ | ||||||||||
Maximum term in years | ||||||||||||||
Fair value: | ||||||||||||||
Other current assets | $ | $ | $ | $ | ||||||||||
Other noncurrent assets | ||||||||||||||
Other current liabilities | ( | ( | ( | |||||||||||
Other noncurrent liabilities | ( | ( | ||||||||||||
Total fair value | $ | $ | $ | ( | $ |
December 2022 | Cash Flow | Net Investment | Non-Designated | Total | ||||||||||
Gross notional amount | $ | $ | $ | $ | ||||||||||
Maximum term in years | ||||||||||||||
Fair value: | ||||||||||||||
Other current assets | $ | $ | $ | $ | ||||||||||
Other noncurrent assets | ||||||||||||||
Other current liabilities | ( | ( | ( | |||||||||||
Other noncurrent liabilities | ( | ( | ( | |||||||||||
Total fair value | $ | $ | $ | ( | $ |
Derivative | Three Months | ||||||||||
instrument: | Recorded in: | 2023 | 2022 | ||||||||
Cash Flow | Cost of sales | $ | $ | ||||||||
Net Investment | Other income (expense), net | ||||||||||
Non-Designated | Other income (expense), net | ( | |||||||||
Total | $ | $ |
Assets Measured at Fair Value | March | December | ||||||
2023 | 2022 | |||||||
Cash and cash equivalents | $ | $ | ||||||
Trading marketable securities | ||||||||
Level 1 - Assets | $ | $ | ||||||
Available-for-sale marketable securities: | ||||||||
Corporate and asset-backed debt securities | $ | $ | ||||||
Foreign government debt securities | ||||||||
United States agency debt securities | ||||||||
United States treasury debt securities | ||||||||
Certificates of deposit | ||||||||
Total available-for-sale marketable securities | $ | $ | ||||||
Foreign currency exchange forward contracts | ||||||||
Level 2 - Assets | $ | $ | ||||||
Total assets measured at fair value | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 6 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Liabilities Measured at Fair Value | March | December | ||||||
2023 | 2022 | |||||||
Deferred compensation arrangements | $ | $ | ||||||
Level 1 - Liabilities | $ | $ | ||||||
Foreign currency exchange forward contracts | $ | $ | ||||||
Level 2 - Liabilities | $ | $ | ||||||
Contingent consideration: | ||||||||
Beginning | $ | $ | ||||||
Additions | ||||||||
Change in estimate and foreign exchange | ( | |||||||
Settlements | ( | ( | ||||||
Ending | $ | $ | ||||||
Level 3 - Liabilities | $ | $ | ||||||
Total liabilities measured at fair value | $ | $ |
Fair Value of Available for Sale Securities by Maturity | ||||||||
March 2023 | December 2022 | |||||||
Due in one year or less | $ | $ | ||||||
Due after one year through three years | $ | $ |
Leases | March | December | |||||||||
2023 | 2022 | ||||||||||
Right-of-use assets | $ | $ | |||||||||
Lease liabilities, current | $ | $ | |||||||||
Lease liabilities, non-current | $ | $ | |||||||||
Other information: | |||||||||||
Weighted-average remaining lease term (years) | |||||||||||
Weighted-average discount rate | % | % |
Three Months | |||||||||||
2023 | 2022 | ||||||||||
Operating lease cost | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 7 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Purchase Price Allocation of Acquired Net Assets | |||||
2022 | Vocera | ||||
Tangible assets acquired: | |||||
Accounts receivable | $ | ||||
Inventory | |||||
Deferred income tax assets | |||||
Other assets | |||||
Debt | ( | ||||
Deferred income tax liabilities | ( | ||||
Other liabilities | ( | ||||
Intangible assets: | |||||
Customer and distributor relationships | |||||
Developed technology | |||||
Trade name | |||||
Goodwill | |||||
Purchase price, net of cash acquired of $ | $ | ||||
Weighted average amortization period at acquisition (years): | |||||
Developed technologies | |||||
Customer relationships | |||||
Trademarks |
Consolidated Estimated Amortization Expense | ||||||||||||||
Remainder of 2023 | 2024 | 2025 | 2026 | 2027 | ||||||||||
$ | $ | $ | $ | $ |
Summary of Total Debt | March 2023 | December 2022 | ||||||||||||||||||
Rate | Due | |||||||||||||||||||
Senior unsecured notes: | ||||||||||||||||||||
$ | $ | |||||||||||||||||||
Term loan | ||||||||||||||||||||
Other | ||||||||||||||||||||
Total debt | $ | $ | ||||||||||||||||||
Less current maturities | ||||||||||||||||||||
Total long-term debt | $ | $ | ||||||||||||||||||
March 2023 | December 2022 | |||||||||||||||||||
Unamortized debt issuance costs | $ | $ | ||||||||||||||||||
Borrowing capacity on existing facilities | $ | $ | ||||||||||||||||||
Fair value of senior unsecured notes | $ | $ |
Three Months | ||||||||
2023 | 2022 | |||||||
MedSurg and Neurotechnology | $ | $ | ||||||
Orthopaedics and Spine | ||||||||
Net sales | $ | $ | ||||||
MedSurg and Neurotechnology | $ | $ | ||||||
Orthopaedics and Spine | ||||||||
Segment operating income | $ | $ | ||||||
Items not allocated to segments: | ||||||||
Corporate and other | $ | ( | $ | ( | ||||
Acquisition and integration-related costs | ( | ( | ||||||
Amortization of intangible assets | ( | ( | ||||||
Structural optimization and other special charges | ( | ( | ||||||
Medical device regulations | ( | ( | ||||||
Recall-related matters | ( | |||||||
Regulatory and legal matters | ( | ( | ||||||
Consolidated operating income | $ | $ |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 8 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 9 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
CONSOLIDATED RESULTS OF OPERATIONS | |||||||||||||||||
Three Months | |||||||||||||||||
Percent Net Sales | Percentage | ||||||||||||||||
2023 | 2022 | 2023 | 2022 | Change | |||||||||||||
Net sales | $ | 4,778 | $ | 4,275 | 100.0 | % | 100.0 | % | 11.8 | % | |||||||
Gross profit | 3,016 | 2,734 | 63.1 | 64.0 | 10.3 | ||||||||||||
Research, development and engineering expenses | 339 | 413 | 7.1 | 9.7 | (17.9) | ||||||||||||
Selling, general and administrative expenses | 1,781 | 1,710 | 37.3 | 40.0 | 4.2 | ||||||||||||
Recall charges, net | — | 14 | — | 0.3 | nm | ||||||||||||
Amortization of intangible assets | 161 | 150 | 3.4 | 3.5 | 7.3 | ||||||||||||
Other income (expense), net | (56) | (61) | (1.2) | (1.4) | (8.2) | ||||||||||||
Income taxes | 87 | 63 | nm | nm | 38.1 | ||||||||||||
Net earnings | $ | 592 | $ | 323 | 12.4 | % | 7.6 | % | 83.3 | % | |||||||
Net earnings per diluted share | $ | 1.54 | $ | 0.84 | 83.3 | % | |||||||||||
Adjusted net earnings per diluted share(1) | $ | 2.14 | $ | 1.97 | 8.6 | % |
Geographic and Segment Net Sales | Three Months | ||||||||||||||||
Percentage Change | |||||||||||||||||
2023 | 2022 | As Reported | Constant Currency | ||||||||||||||
Geographic: | |||||||||||||||||
United States | $ | 3,512 | $ | 3,105 | 13.1 | % | 13.1 | % | |||||||||
International | 1,266 | 1,170 | 8.2 | 16.5 | |||||||||||||
Total | $ | 4,778 | $ | 4,275 | 11.8 | % | 14.0 | % | |||||||||
Segment: | |||||||||||||||||
MedSurg and Neurotechnology | $ | 2,690 | $ | 2,423 | 11.0 | % | 13.1 | % | |||||||||
Orthopaedics and Spine | 2,088 | 1,852 | 12.7 | 15.1 | |||||||||||||
Total | $ | 4,778 | $ | 4,275 | 11.8 | % | 14.0 | % |
Supplemental Net Sales Growth Information | |||||||||||||||||||||||
Three Months | |||||||||||||||||||||||
Percentage Change | |||||||||||||||||||||||
United States | International | ||||||||||||||||||||||
2023 | 2022 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | |||||||||||||||||
MedSurg and Neurotechnology: | |||||||||||||||||||||||
Instruments | $ | 575 | $ | 528 | 8.9 | % | 10.7 | % | 8.9 | % | 8.8 | % | 17.6 | % | |||||||||
Endoscopy | 698 | 607 | 15.0 | 16.6 | 16.2 | 10.2 | 18.2 | ||||||||||||||||
Medical | 778 | 664 | 17.2 | 18.8 | 16.5 | 19.5 | 28.1 | ||||||||||||||||
Neurovascular | 284 | 301 | (5.5) | (1.1) | 7.3 | (13.0) | (6.3) | ||||||||||||||||
Neuro Cranial | 355 | 323 | 9.9 | 11.4 | 9.1 | 13.7 | 22.7 | ||||||||||||||||
$ | 2,690 | $ | 2,423 | 11.0 | % | 13.1 | % | 13.0 | % | 5.3 | % | 13.3 | % | ||||||||||
Orthopaedics and Spine: | |||||||||||||||||||||||
Knees | $ | 566 | $ | 464 | 22.0 | % | 24.2 | % | 20.6 | % | 26.2 | % | 35.5 | % | |||||||||
Hips | 375 | 327 | 14.4 | 18.1 | 16.2 | 11.4 | 21.6 | ||||||||||||||||
Trauma and Extremities | 769 | 685 | 12.4 | 14.5 | 13.7 | 9.0 | 16.5 | ||||||||||||||||
Spine | 284 | 279 | 1.9 | 3.8 | 6.3 | (9.0) | (2.9) | ||||||||||||||||
Other | 94 | 97 | (3.4) | (1.0) | (14.8) | 28.5 | 41.5 | ||||||||||||||||
$ | 2,088 | $ | 1,852 | 12.7 | % | 15.1 | % | 13.2 | % | 11.6 | % | 20.2 | % | ||||||||||
Total | $ | 4,778 | $ | 4,275 | 11.8 | % | 14.0 | % | 13.1 | % | 8.2 | % | 16.5 | % |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 10 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Gross Profit Percent Net Sales | |||||
Three Months 2022 | 64.0 | % | |||
Sales pricing | 30 bps | ||||
Volume and mix | 100 bps | ||||
Manufacturing and supply chain costs | (230) bps | ||||
Inventory stepped up to fair value | 10 bps | ||||
Three Months 2023 | 63.1 | % |
Operating Income Percent Net Sales | ||||||||
MedSurg and Neurotechnology | Orthopaedics and Spine | |||||||
Three Months 2022 | 26.0 | % | 27.2 | % | ||||
Sales pricing | 140 bps | (60) bps | ||||||
Volume | 410 bps | 700 bps | ||||||
Manufacturing and supply chain costs | (400) bps | (20) bps | ||||||
Research, development and engineering expenses | (30) bps | 20 bps | ||||||
Selling, general and administrative expenses | (390) bps | (480) bps | ||||||
Three Months 2023 | 23.3 | % | 28.8 | % |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 11 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 12 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | |||||||||||||||||||||||||||||
Three Months 2023 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
Reported | $ | 3,016 | $ | 1,781 | $ | 339 | $ | 735 | $ | (56) | $ | 87 | $ | 592 | 12.8 | % | $ | 1.54 | |||||||||||
Reported percent net sales | 63.1 | % | 37.3 | % | 7.1 | % | 15.4 | % | (1.2) | % | nm | 12.4 | % | ||||||||||||||||
Acquisition and integration-related costs: | |||||||||||||||||||||||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Other acquisition and integration-related (a) | — | (6) | — | 6 | — | 1 | 5 | 0.1 | 0.01 | ||||||||||||||||||||
Amortization of purchased intangible assets | — | — | — | 161 | — | 34 | 127 | 2.0 | 0.33 | ||||||||||||||||||||
Structural optimization and other special charges (b) | 2 | (40) | — | 42 | — | 8 | 34 | 0.3 | 0.09 | ||||||||||||||||||||
Medical device regulations (c) | — | — | (28) | 28 | — | 5 | 23 | 0.2 | 0.06 | ||||||||||||||||||||
Recall-related matters (d) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Regulatory and legal matters (e) | — | (34) | — | 34 | — | 6 | 28 | 0.3 | 0.07 | ||||||||||||||||||||
Tax matters (f) | — | — | — | — | (9) | (20) | 11 | (2.9) | 0.04 | ||||||||||||||||||||
Adjusted | $ | 3,018 | $ | 1,701 | $ | 311 | $ | 1,006 | $ | (65) | $ | 121 | $ | 820 | 12.8 | % | $ | 2.14 | |||||||||||
Adjusted percent net sales | 63.2 | % | 35.6 | % | 6.5 | % | 21.1 | % | (1.4) | % | nm | 17.2 | % |
Three Months 2022 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
Reported | $ | 2,734 | $ | 1,710 | $ | 413 | $ | 447 | $ | (61) | $ | 63 | $ | 323 | 16.3 | % | $ | 0.84 | |||||||||||
Reported percent net sales | 64.0 | % | 40.0 | % | 9.7 | % | 10.5 | % | (1.4) | % | nm | 7.6 | % | ||||||||||||||||
Acquisition and integration-related costs: | |||||||||||||||||||||||||||||
Inventory stepped-up to fair value | 5 | — | — | 5 | — | 1 | 4 | 0.1 | 0.01 | ||||||||||||||||||||
Other acquisition and integration-related (a) | — | (144) | — | 144 | — | 39 | 105 | 4.9 | 0.27 | ||||||||||||||||||||
Amortization of purchased intangible assets | — | — | — | 150 | — | 35 | 115 | 3.6 | 0.30 | ||||||||||||||||||||
Structural optimization and other special charges (b) | 2 | (28) | (79) | 109 | — | 25 | 84 | 2.5 | 0.22 | ||||||||||||||||||||
Medical device regulations (c) | — | — | (28) | 28 | — | 4 | 24 | 0.2 | 0.06 | ||||||||||||||||||||
Recall-related matters (d) | — | — | — | 14 | — | 3 | 11 | 0.4 | 0.04 | ||||||||||||||||||||
Regulatory and legal matters (e) | — | (37) | — | 37 | — | 9 | 28 | 1.0 | 0.08 | ||||||||||||||||||||
Tax matters (f) | — | — | — | — | — | (58) | 58 | (15.1) | 0.15 | ||||||||||||||||||||
Adjusted | $ | 2,741 | $ | 1,501 | $ | 306 | $ | 934 | $ | (61) | $ | 121 | $ | 752 | 13.9 | % | $ | 1.97 | |||||||||||
Adjusted percent net sales | 64.1 | % | 35.1 | % | 7.2 | % | 21.8 | % | (1.4) | % | nm | 17.6 | % |
(a) | Charges represent certain acquisition and integration-related costs associated with acquisitions, including charges for termination of sales relationships ($0 in 2023, $8 in 2022), employee retention and workforce reductions ($0 in 2023, $4 in 2022), changes in the fair value of contingent consideration (($1) in 2023, ($16) in 2022), manufacturing integration costs ($2 in 2023, $9 in 2022), stock compensation payments upon a change in control ($0 in 2023, $132 in 2022) and other integration-related activities such as deal costs and costs associated with legal entity rationalization ($5 in 2023, $7 in 2022). | ||||
(b) | Charges represent the costs associated with employee retention and workforce reductions ($21 in 2023, $9 in 2022), the closure/transfer of manufacturing and other facilities, including site closure costs, contract termination costs and redundant employee costs during the work transfers ($12 in 2023, $17 in 2022), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs) ($3 in 2023, $0 in 2022), certain long-lived and intangible asset write-offs and impairments ($1 in 2023, $80 in 2022) and other charges ($5 in 2023, $3 in 2022). | ||||
(c) | Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union. | ||||
(d) | Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain recall-related matters. | ||||
(e) | Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements. | ||||
(f) | Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the transfer of certain intellectual properties between tax jurisdictions (charges of $47 in 2023 and $46 in 2022) and certain tax audit settlements (benefit of $9 included in Other Income (Expense), Net and benefit of $28 included in Income Taxes for 2023, $0 for 2022). |
Three Months | 2023 | 2022 | ||||||
Net cash provided by operating activities | $ | 445 | $ | 203 | ||||
Net cash used in investing activities | (132) | (2,682) | ||||||
Net cash provided by (used in) financing activities | (481) | 993 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (5) | — | ||||||
Change in cash and cash equivalents | $ | (173) | $ | (1,486) |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 13 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
Change in selected assumption | Amount | ||||
100 bps increase in discount rate | 220 | ||||
100 bps decrease in long-term revenue growth | 130 | ||||
100 bps decrease in long-term operating margin | 40 |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 14 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 6. | EXHIBITS |
31(i) | |||||
31(ii) | |||||
32(i)* | |||||
32(ii)* | |||||
101.INS | iXBRL Instance Document | ||||
101.SCH | iXBRL Schema Document | ||||
101.CAL | iXBRL Calculation Linkbase Document | ||||
101.DEF | iXBRL Definition Linkbase Document | ||||
101.LAB | iXBRL Label Linkbase Document | ||||
101.PRE | iXBRL Presentation Linkbase Document | ||||
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) | ||||
* Furnished with this Form 10-Q |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 15 |
STRYKER CORPORATION | 2023 First Quarter Form 10-Q |
STRYKER CORPORATION | |||||||||||
(Registrant) | |||||||||||
Date: | May 2, 2023 | /s/ KEVIN A. LOBO | |||||||||
Kevin A. Lobo | |||||||||||
Chair, Chief Executive Officer and President | |||||||||||
Date: | May 2, 2023 | /s/ GLENN S. BOEHNLEIN | |||||||||
Glenn S. Boehnlein | |||||||||||
Vice President, Chief Financial Officer |
16 |
Date: | May 2, 2023 | /s/ KEVIN A. LOBO | ||||||
Kevin A. Lobo | ||||||||
Chair, Chief Executive Officer and President |
Date: | May 2, 2023 | /s/ GLENN S. BOEHNLEIN | ||||||
Glenn S. Boehnlein | ||||||||
Vice President, Chief Financial Officer |
Date: | May 2, 2023 | /s/ KEVIN A. LOBO | ||||||
Kevin A. Lobo | ||||||||
Chair, Chief Executive Officer and President |
Date: | May 2, 2023 | /s/ GLENN S. BOEHNLEIN | ||||||
Glenn S. Boehnlein | ||||||||
Vice President, Chief Financial Officer |
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CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Statement [Abstract] | ||
Net sales | $ 4,778 | $ 4,275 |
Cost of sales | 1,762 | 1,541 |
Gross profit | 3,016 | 2,734 |
Research, development and engineering expenses | 339 | 413 |
Selling, general and administrative expenses | 1,781 | 1,710 |
Recall charges, net | 0 | 14 |
Goodwill impairment | 161 | 150 |
Total operating expenses | 2,281 | 2,287 |
Operating income | 735 | 447 |
Other income (expense), net | (56) | (61) |
Earnings before income taxes | 679 | 386 |
Income taxes | 87 | 63 |
Net earnings | $ 592 | $ 323 |
Net earnings per share of common stock: | ||
Basic | $ 1.56 | $ 0.86 |
Diluted | $ 1.54 | $ 0.84 |
Weighted-average shares outstanding (in millions): | ||
Basic | 379.0 | 377.7 |
Effect of dilutive employee stock compensation | 4.2 | 5.0 |
Diluted | 383.2 | 382.7 |
Cash dividends declared per share of common stock (in dollars per share) | $ 0.750 | $ 0.695 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 592 | $ 323 |
Other comprehensive income (loss), net of tax: | ||
Marketable securities | 0 | (1) |
Pension plans | (2) | (1) |
Unrealized gains (losses) on designated hedges | (9) | 1 |
Financial statement translation | (73) | 53 |
Total other comprehensive income (loss), net of tax | (84) | 52 |
Comprehensive income | $ 508 | $ 375 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 180 | $ 154 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Basis Of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION General Information Management believes the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring items, considered necessary to fairly present the financial position of Stryker Corporation and its consolidated subsidiaries ("Stryker," the "Company," "we," "us" or "our") on March 31, 2023 and the results of operations for the three months 2023. 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 2022. Certain immaterial reclassifications have been made to prior year's segment operating income to conform with current year presentation in our Consolidated Financial Statements. 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.
|
Revenue Recognition |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 2022. We disaggregate our net sales by business and geographic location for each of our segments as we believe it best depicts how the nature, amount, timing and certainty of our net sales and cash flows are affected by economic factors. Beginning in the first quarter of 2023, we consolidated Other MedSurg and Neurotechnology into Endoscopy as Other MedSurg and Neurotechnology (primarily Sustainability Solutions) has been fully integrated into our Endoscopy business. Endoscopy includes sales related to Other of $81 and $69 for the three months 2023 and 2022. We have reflected these changes in all historical periods presented.
Contract Assets and Liabilities On March 31, 2023 and December 31, 2022 contract assets recorded in our Consolidated Balance Sheets were not significant. Our contract liabilities arise as a result of consideration received from customers at inception of contracts for certain businesses or where the timing of billing for services precedes satisfaction of our performance obligations. This occurs primarily when payment is received upfront for certain multi-period extended service contracts. Our contract liabilities of $757 and $741 on March 31, 2023 and December 31, 2022 are classified within accrued expenses and other liabilities and other noncurrent liabilities within our consolidated balance sheets based on the timing of when we expect to complete our performance obligations.
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Accumulated Other Comprehensive (Loss) Income (AOCI) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive (Loss) Income (AOCI) | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (AOCI)
|
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | DERIVATIVE INSTRUMENTS We use operational and economic hedges, foreign currency exchange forward contracts, net investment hedges (both derivative and non-derivative financial instruments) and interest rate derivative instruments to manage the impact of currency exchange and interest rate fluctuations on earnings, cash flow and equity. We do not enter into derivative instruments for speculative purposes. We are exposed to potential credit loss in the event of nonperformance by counterparties on our outstanding derivative instruments but do not anticipate nonperformance by any of our counterparties. Should a counterparty default, our maximum loss exposure is the asset balance of the instrument. We have not changed our hedging strategies, accounting practices or objectives from those disclosed in our Annual Report on Form 10-K for 2022. Foreign Currency Hedges
We had €1.5 billion at March 31, 2023 and December 31, 2022 in certain forward currency contracts designated as net investment hedges to hedge a portion of our investments in certain of our entities with functional currencies denominated in Euros. In addition to these derivative financial instruments designated as net investment hedges, we had €4.4 billion at March 31, 2023 and December 31, 2022 of senior unsecured notes designated as net investment hedges to selectively hedge portions of our investment in certain international subsidiaries. The currency effects of our Euro-denominated senior unsecured notes are reflected in AOCI within shareholders' equity where they offset gains and losses recorded on our net investment in international subsidiaries. The total after-tax gain (loss) recognized in OCI related to designated net investment hedges was ($106) in the three months 2023. Net Currency Exchange Rate Gains (Losses)
Pretax gains (losses) on derivatives designated as cash flow hedges of $20 and net investment hedges of $34 recorded in AOCI are expected to be reclassified to cost of sales and other income (expense), net in earnings within 12 months as of March 31, 2023. This cash flow hedge reclassification is primarily due to the sale of inventory that includes previously hedged purchases. A component of the AOCI amounts related to net investment hedges is reclassified over the life of the hedge instruments as we elected to exclude the initial value of the component related to the spot-forward difference from the effectiveness assessment. Interest Rate Hedges Pretax gains of $5 recorded in AOCI related to other interest rate hedges closed in conjunction with debt issuances are expected to be reclassified to other income (expense), net in earnings within 12 months of March 31, 2023. The cash flow effect of interest rate hedges is recorded in cash flow from operations.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS Our policies for managing risk related to foreign currency, interest rates, credit and markets and our process for determining fair value have not changed from those described in our Annual Report on Form 10-K for 2022. In the third quarter 2022 we determined that certain commercial and regulatory milestones related to technology acquired in the purchase of Mobius Imaging and Cardan Robotics were no longer probable of being achieved and recorded a $110 reduction in the fair value of contingent consideration reflected in selling, general and administrative expenses. There were no significant transfers into or out of any level of the fair value hierarchy in 2023.
On March 31, 2023 and December 31, 2022 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest on cash and cash equivalents, short-term investments and marketable securities income was $14 and $15 in the three months 2023 and 2022, which was recorded in other income (expense), net. Our investments in available-for-sale marketable securities had a minimum credit quality rating of A2 (Moody's), A (Standard & Poor's) and A (Fitch). We do not plan to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.
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Contingencies and Commitments |
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Contingencies and Commitments | CONTINGENCIES AND COMMITMENTS We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters, the most significant of which are more fully described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management had sufficient information to reasonably estimate our future obligations, a liability representing management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for certain claims and expenses. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, results of operations and cash flows. In April 2022 the United States District Court for the District of Delaware issued a judgment following a jury verdict in favor of PureWick Corporation (PureWick) for its 2019 complaint seeking patent infringement damages related to our PrimaFit and PrimoFit products. Following a jury trial, the court awarded damages related to this complaint and we recorded charges of $28 in March 2022. Stryker plans to appeal the results of the trial. In June 2022 PureWick filed a motion to enhance the damages awarded, which the court denied in March 2023. In 2022 PureWick also filed a separate complaint seeking additional patent infringement damages related to our PrimaFit products. We are currently investigating whether certain business activities in a foreign country violated provisions of the Foreign Corrupt Practices Act (FCPA) and have engaged outside counsel to conduct this investigation. We have been contacted by the United States Securities and Exchange Commission and United States Department of Justice and are cooperating with both agencies. At this time we are unable to predict the outcome of the investigation or the potential impact, if any, on our financial statements. Recall Matters We have conducted voluntary recalls of certain products, including our Rejuvenate and ABG II Modular-Neck hip stems and certain lot-specific sizes and offsets of LFIT Anatomic CoCr V40 Femoral Heads. Additionally, we are responsible for certain product liability claims, primarily related to certain hip products sold by Wright Medical Group N.V. (Wright) prior to its 2014 divestiture of the OrthoRecon business. We have incurred, and expect to incur in the future, costs associated with the defense and settlement of claims and lawsuits related to our recalls. Based on the information that has been received, we have recorded reserves of $202, representing our best estimate of probable loss related to recall matters globally. The final outcomes of these matters are dependent on many factors that are difficult to predict. Accordingly the ultimate cost related to these matters may be materially different than the amount of our current estimate and accruals and could have a material adverse effect on our results of operations and cash flows.
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Acquisitions |
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Acquisitions | ACQUISITIONS We acquire stock in companies and various assets that continue to support our capital deployment and product development strategies. There were no acquisitions in the three months 2023. The aggregate purchase price of our acquisitions, net of cash acquired was $2,563 in the three months 2022. In February 2022 we completed the acquisition of Vocera Communications, Inc. (Vocera) for $79.25 per share, or an aggregate purchase price of $2.6 billion, net of cash acquired ($3.0 billion including convertible notes). Vocera is a leader in the digital care coordination and communication category. Vocera is part of our Medical business within MedSurg and Neurotechnology. Goodwill attributable to the acquisition reflects the strategic benefits of expanding our presence in adjacent markets, diversifying our product portfolio, advancing innovations, and accelerating our digital aspirations. This goodwill is not deductible for tax purposes. In the three months 2022 note holders elected to redeem the 1.50% and 0.50% convertible notes assumed in the Vocera acquisition for $101 and $324. These repayments are classified as financing activities in the Consolidated Statements of Cash Flows. Share-based awards for Vocera employees vested upon our acquisition and a charge of $132 was recorded in selling, general and administrative expenses in 2022. Purchase price allocations for our significant acquisitions are:
The purchase price allocation for Vocera was finalized in the three months 2023 without material adjustments. On May 2, 2023 we acquired Cerus Endovascular Limited (Cerus) for $300 in cash and up to $225 in future milestone payments. Cerus designs, develops and manufactures neurovascular products used for the treatment of hemorrhagic stroke. We plan to integrate Cerus into our Neurovascular business within MedSurg and Neurotechnology.
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Debt and Credit Facilities |
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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. Our credit facilities require us to comply with financial and other covenants. We were in compliance with all covenants on March 31, 2023. In February 2022 we entered into a $1.5 billion term loan agreement that matures on February 22, 2025 and bears interest at a base rate based on the Term Secured Overnight Financing Rate (SOFR) plus 0.725%. Through March 31, 2023 we have repaid $750 on the term loan. In the first quarter of 2022 our Board of Directors approved an increase to the maximum amount of commercial paper that can be outstanding from $1,500 to $2,250. On March 31, 2023 there were no borrowings outstanding under our revolving credit facility or our commercial paper program which allows for maturities up to 397 days from the date of issuance.
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Income Taxes |
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Mar. 31, 2023 | |
Income Tax [Abstract] | |
Income Taxes | INCOME TAXESOur effective tax rates were 12.8% and 16.3% in the three months 2023 and 2022. The effective tax rates for the three months 2023 and 2022 reflect the continued lower effective income tax rates as a result of our European operations and certain discrete tax items. |
Segment Information |
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Segment Information | SEGMENT INFORMATION
There were no significant changes to total assets by segment from information provided in our Annual Report on Form 10-K for 2022.
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Basis Of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements | 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.
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Revenue Recognition (Tables) |
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Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregated Revenue | We disaggregate our net sales by business and geographic location for each of our segments as we believe it best depicts how the nature, amount, timing and certainty of our net sales and cash flows are affected by economic factors. Beginning in the first quarter of 2023, we consolidated Other MedSurg and Neurotechnology into Endoscopy as Other MedSurg and Neurotechnology (primarily Sustainability Solutions) has been fully integrated into our Endoscopy business. Endoscopy includes sales related to Other of $81 and $69 for the three months 2023 and 2022. We have reflected these changes in all historical periods presented.
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Contract with Customer, Contract Asset, Contract Liability, and Receivable | Changes in contract liabilities during the year were as follows:
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Accumulated Other Comprehensive (Loss) Income (AOCI) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) |
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Reclassification out of Accumulated Other Comprehensive Income |
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Derivative Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value |
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Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location |
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
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Investments Classified by Contractual Maturity Date |
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Contingencies and Commitments (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost |
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Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | Purchase price allocations for our significant acquisitions are:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense |
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Debt and Credit Facilities (Tables) |
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Long-Term Debt, Unclassified [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments |
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and Other Financial Information by Business Segment |
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Revenue Recognition - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
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Revenue Recognition [Abstract] | ||
Contract liabilities | $ 757 | $ 741 |
Revenue Recognition - Changes in Contract Liabilities (Details) $ in Millions |
3 Months Ended |
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Mar. 31, 2023
USD ($)
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Movement In Contract Liabilities [Roll Forward] | |
Beginning contract liabilities | $ 741 |
Revenue recognized from beginning of year contract liabilities | (129) |
Net advance consideration received during the period | 145 |
Ending contract liabilities | $ 757 |
Derivative Instruments (Narrative) (Details) $ in Millions |
3 Months Ended | |||
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Mar. 31, 2023
USD ($)
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Mar. 31, 2023
EUR (€)
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Dec. 31, 2022
USD ($)
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Dec. 31, 2022
EUR (€)
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Foreign Exchange Contract | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Notional amount | $ 6,013 | $ 6,068 | ||
Designated as Hedging Instrument | Foreign Exchange Contract | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, notional amount | € | € 1,500,000,000 | € 1,500,000,000 | ||
Notional amount | € | € 4,400,000,000 | € 4,400,000,000 | ||
After-tax gain (loss) recognized in AOCI related to designated net investment hedges | (106) | |||
Cash flow hedge gain (loss) to be reclassified within twelve months | 20 | |||
Net investment hedges expected to be reclassified to cost of sales and other income (expense) | 34 | |||
Designated as Hedging Instrument | Interest Rate Swap | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Cash flow hedge gain (loss) to be reclassified within twelve months | $ 5 |
Derivative Instruments (Income Statement Location) (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2023 |
Mar. 31, 2022 |
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Foreign Exchange Contract | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net currency exchange rate gains (losses) | $ 17 | $ 12 |
Foreign Exchange Contract | Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net currency exchange rate gains (losses) | 13 | 0 |
Foreign Exchange Contract | Other income (expense), net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net currency exchange rate gains (losses) | (4) | 1 |
Net Investment | Other income (expense), net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net currency exchange rate gains (losses) | $ 8 | $ 11 |
Fair Value Measurements (Assets and Liabilities Measured At Fair Value On A Recurring Basis Using Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Due in one year or less | $ 51 | $ 53 |
Due after one year through three years | $ 35 | $ 31 |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Fair Value Disclosures [Abstract] | ||
Reduction of contingent consideration | $ 110 | |
Gain on sale of marketable securities | $ 14 | $ 15 |
Contingencies and Commitments (Narrative) (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Loss Contingencies [Line Items] | |||
Estimate of possible loss | $ 202 | ||
Recall-related payments | (14) | $ (9) | |
Recall charges, net | $ 0 | $ 14 | |
PureWick | |||
Loss Contingencies [Line Items] | |||
Charges during period | $ 28 |
Contingencies and Commitments - Leases (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Right-of-use assets | $ 489 | $ 473 | |
Lease liabilities, current | 132 | 121 | |
Lease liabilities, non-current | $ 367 | $ 357 | |
Other information: | |||
Weighted-average remaining lease term (years) | 5 years 3 months 18 days | 5 years 6 months | |
Weighted-average discount rate | 3.40% | 3.22% | |
Operating lease cost | $ 38 | $ 31 |
Acquisitions (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
May 02, 2023 |
Feb. 28, 2022 |
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Business Acquisition [Line Items] | ||||
Aggregate purchase price of acquisitions | $ 2,563 | |||
Payments of long-term debt | $ 100 | $ 0 | ||
Vocera | ||||
Business Acquisition [Line Items] | ||||
Aggregate purchase price of acquisitions | $ 2,600 | |||
Consideration transferred (in dollars per share) | $ 79.25 | |||
Business combination, consideration transferred, including convertible notes | $ 3,000 | |||
Share-based payment expense | $ 132 | |||
Vocera | 1.50% Convertible Notes | ||||
Business Acquisition [Line Items] | ||||
Stated interest rate | 1.50% | |||
Payments of long-term debt | $ 101 | |||
Vocera | 0.50% Convertible Notes | ||||
Business Acquisition [Line Items] | ||||
Stated interest rate | 0.50% | |||
Payments of long-term debt | $ 324 | |||
Cerus | Subsequent Event | ||||
Business Acquisition [Line Items] | ||||
Aggregate purchase price of acquisitions | $ 300 | |||
Business acquisition, future milestone payments (up to) | $ 225 |
Acquisitions (Future Amortization Expense) (Details) $ in Millions |
Mar. 31, 2023
USD ($)
|
---|---|
Business Combinations [Abstract] | |
Remainder of 2023 | $ 463 |
2023 | 590 |
2024 | 571 |
2025 | 514 |
2026 | $ 493 |
Income Taxes (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Tax [Abstract] | ||
Effective income tax rate reconciliation, percent | 12.80% | 16.30% |
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