01—Abstract
Summary
Summary of the 10-K filed February 10, 2023. Cited figures are marked; the original filing is the authoritative source.
Stryker Corporation reported net sales of $18.45 billiona 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%b (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 millionc 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 billiond 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.
02—Key points
Key Highlights
- Stryker reported net sales of $18.45 billion for 2022, up 7.8% year-over-year (11.0% in constant currency), demonstrating continued revenue growth.
- The 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).
- Gross 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.
- A significant goodwill impairment charge of $216 million was recognized for the Spine business, reflecting market pressures and slower recovery post-pandemic.
- Net 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.
- The company completed the acquisition of Vocera Communications, Inc. for approximately $2.6 billion, strengthening its digital healthcare offerings.
- Stryker returned $1.05 billion to shareholders through dividends, and maintained its focus on strategic acquisitions as a key capital allocation priority.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Stryker Corp kept $0.13.
- Revenue$18.45B100.0%
- Cost of revenue−$6.87B37.2%
- Gross profit$11.58B62.8%
- Operating costs−$8.74B47.4%
- Operating income$2.84B15.4%
- Interest, other & tax−$483.0M2.6%
- Net income$2.36B12.8%
Where FY2022 revenue went
$18.45B- Cost of revenue: $6.87B, 37% of revenue
- SG&A: $6.39B, 35% of revenue
- Net income: $2.36B, 13% of revenue
- R&D: $1.45B, 7.9% of revenue
- Other operating costs: $897.0M, 4.9% of revenue
- Interest, other & tax: $483.0M, 2.6% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 10, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $18.45B$17.11B | +7.8% |
| Cost of Revenue | $6.87B$6.14B | +11.9% |
| Gross Profit | $11.58B$10.97B | +5.6% |
| R&D Expenses | $1.45B$1.24B | +17.7% |
| SG&A Expenses | $6.39B$6.43B | −0.6% |
| Operating Expenses | $8.74B$8.38B | +4.2% |
| Operating Income | $2.84B$2.58B | +9.9% |
| Interest Expense | $337.00M$337.00M | 0.0% |
| Net Income | $2.36B$1.99B | +18.3% |
| EPS (Basic) | $6.23$5.29 | +17.8% |
| EPS (Diluted) | $6.17$5.21 | +18.4% |
| Shares Outstanding (Basic) | 378.20M377.00M | +0.3% |
| Shares Outstanding (Diluted) | 382.20M382.30M | 0.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of Stryker's sales growth in 2022?
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.
What challenges did Stryker face in 2022 that impacted its profitability?
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.
What is the significance of the goodwill impairment charge for the Spine business?
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.
How is Stryker managing its capital allocation strategy?
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.
06—Continue