10-KPeriod: FY2022

STRYKER CORP Annual Report, Year Ended Dec 31, 2022

Filed February 10, 2023For Securities:SYK

Summary

Stryker Corporation reported net sales of $18.45 billion for the fiscal year ended December 30, 2022, a 7.8% increase from the prior year, or 11.0% in constant currency. The company's performance was driven by robust growth in its MedSurg and Neurotechnology segment, which increased 11.2% (14.1% in constant currency), while the Orthopaedics and Spine segment saw a more modest 3.5% increase (7.0% in constant currency). Despite top-line growth, profitability faced headwinds from inflationary pressures, primarily impacting labor, steel, and transportation costs, as well as electronic component shortages that constrained supply. These factors, coupled with unfavorable foreign exchange rates, led to a decrease in gross profit margin to 62.8% from 64.1% in the prior year. The company also recorded a significant goodwill impairment charge of $216 million related to its Spine business. Net earnings were $2.36 billion, or $6.17 per diluted share, representing an 18.3% increase year-over-year. Excluding certain items, adjusted net earnings per diluted share grew 2.8% to $9.34. Stryker continued its strategic capital allocation by investing $2.56 billion in acquisitions, notably the acquisition of Vocera Communications, Inc., and returning capital to shareholders through $1.05 billion in dividend payments. The company faces ongoing risks including supply chain disruptions, inflationary pressures, and regulatory complexities, particularly with the implementation of new medical device regulations in the EU and UK, and volume-based procurement programs in China.

Financial Highlights

51 data points
Beta

Revenue

$18.45B

62.8% Gross Margin

Net Income

$2.36B

12.8% Net Margin

EPS (Diluted)

$6.17

Total Assets

$36.88B

Cash & Equivalents

$1.84B

Free Cash Flow

$2.04B

Financial Statements
Beta
Revenue$18.45B
Cost of Revenue$6.87B
Gross Profit$11.58B
R&D Expenses$1.45B
SG&A Expenses$6.39B
Operating Expenses$8.74B
Operating Income$2.84B
Interest Expense$337.00M
Net Income$2.36B
EPS (Basic)$6.23
EPS (Diluted)$6.17
Shares Outstanding (Basic)378.20M
Shares Outstanding (Diluted)382.20M

Key Highlights

  • 1Stryker reported net sales of $18.45 billion for 2022, up 7.8% year-over-year (11.0% in constant currency), demonstrating continued revenue growth.
  • 2The MedSurg and Neurotechnology segment was the primary growth driver, increasing sales by 11.2% (14.1% in constant currency), while Orthopaedics and Spine grew by 3.5% (7.0% in constant currency).
  • 3Gross profit margin declined to 62.8% from 64.1% in 2021 due to inflationary pressures (labor, steel, transportation) and supply chain challenges impacting electronic component availability.
  • 4A significant goodwill impairment charge of $216 million was recognized for the Spine business, reflecting market pressures and slower recovery post-pandemic.
  • 5Net earnings were $2.36 billion, or $6.17 per diluted share, up 18.3% from the prior year; adjusted diluted EPS grew 2.8% to $9.34.
  • 6The company completed the acquisition of Vocera Communications, Inc. for approximately $2.6 billion, strengthening its digital healthcare offerings.
  • 7Stryker returned $1.05 billion to shareholders through dividends, and maintained its focus on strategic acquisitions as a key capital allocation priority.

Frequently Asked Questions

Stryker's net sales grew 7.8% to $18.45 billion, with the MedSurg and Neurotechnology segment being the primary driver, showing strong performance across its Instruments, Endoscopy, Medical, Neurovascular, and Neuro Cranial product categories. This growth was primarily attributed to increased unit volume, reflecting higher shipments across most of its product lines, partially offset by foreign currency headwinds.

Stryker experienced significant headwinds from increased inflationary pressures, particularly concerning labor, steel, and transportation costs. Additionally, global supply chain disruptions and shortages of electronic components led to higher costs and supply constraints, especially impacting capital products in the MedSurg businesses. These factors contributed to a decrease in the gross profit margin.

Stryker recorded a $216 million goodwill impairment charge for its Spine business. This was primarily attributed to a slower-than-anticipated recovery of surgery volumes post-pandemic, competitive pressures in the spine market, and the impact of rising interest rates. This impairment reflects a reassessment of the carrying value of the Spine reporting unit's assets.

Stryker continues to prioritize a capital allocation strategy focused on acquisitions, dividends, and share repurchases. In 2022, the company invested $2.56 billion in acquisitions, notably the significant acquisition of Vocera Communications, Inc. It also returned $1.05 billion to shareholders through dividend payments, demonstrating a commitment to both strategic growth and shareholder returns.