8-KMaterial AgreementsOther EventsExhibits & Filings

STRYKER CORP 8-K Report, Material Agreement (Nov 3, 2014)

Filed November 3, 2014For Securities:SYK

Summary

Stryker Corporation, through its subsidiary Howmedica Osteonics Corp., has entered into a significant Settlement Agreement on November 2, 2014, to resolve litigation related to its Rejuvenate Modular-Neck and ABG II Modular-Neck hip stems. This agreement aims to compensate eligible U.S. patients who underwent revision surgery for these devices prior to November 3, 2014. Stryker has already recorded charges totaling $1.425 billion for these matters, representing the lower end of the estimated probable loss. No additional charge is being recognized upon the agreement's execution. While this settlement is expected to conclude a substantial portion of the U.S. litigation, some lawsuits will persist, and the company will continue to defend against them. The ultimate financial impact could differ from current accruals, and further charges may be necessary as patient enrollment in the settlement program unfolds. A majority of the payments are anticipated by the end of 2015.

Key Highlights

  • 1Stryker enters into a Settlement Agreement to resolve litigation concerning Rejuvenate Modular-Neck and ABG II Modular-Neck hip stems.
  • 2The settlement is for eligible U.S. patients who had revision surgery for these specific hip stems before November 3, 2014.
  • 3Stryker has already recorded $1.425 billion in charges related to these litigations, representing the lower end of the probable loss range.
  • 4No additional charge to earnings is recorded at the time of this filing due to the settlement agreement.
  • 5The agreement is expected to resolve a significant portion of U.S. litigation, though some claims will remain and be defended.
  • 6Further charges may be recorded in the future depending on patient enrollment and the ultimate resolution costs.
  • 7Majority of settlement payments are anticipated to be made by the end of 2015.

Frequently Asked Questions

This filing announces Stryker Corporation's entry into a Settlement Agreement to resolve litigation concerning its Rejuvenate Modular-Neck and ABG II Modular-Neck hip stems. It also confirms that $1.425 billion has already been accrued for these matters and that no additional charges are recognized at this time.

Stryker has recorded charges totaling $1.425 billion to earnings, which represents the actuarially determined low end of the range of probable loss to resolve these litigations. No additional charge is being recorded in connection with entering into the Settlement Agreement.

No, the agreement is expected to resolve a significant portion of the U.S. litigation activity for these specific hip stems. However, some lawsuits will remain, and Howmedica Osteonics Corp. (a Stryker subsidiary) will continue to defend against those remaining claims.

It is expected that a majority of the payments under the Settlement Agreement will be made by the end of 2015.