narrative.md

Published October 2, 2026

# Stryker Corporation (SYK) — Business, Risks and Management's Discussion

## Business

*From the FY2025 Annual Report on Form 10-K, accession 0000310764-26-000010.*

Stryker sells medical technology — surgical equipment and navigation systems, endoscopic
and communications systems, patient handling and emergency medical equipment, intensive
care disposables, clinical communication and AI-assisted virtual care platform technology,
products for brain and open skull-based surgery, minimally invasive devices for acute
ischemic and hemorrhagic stroke and for venous thromboembolism, implants used in joint
replacement and trauma surgery, and Mako robotic-arm assisted technology. Products are sold
in approximately 61 countries through company-owned subsidiaries and branches as well as
third-party dealers and distributors, and most are marketed directly to doctors, hospitals
and other healthcare facilities. Revenue is heavily weighted to the United States: of
$25,116 million of 2025 net sales, $19,006 million (76%) came from the United States and
$6,110 million from international markets (Europe/Middle East/Africa $3,181 million, Asia
Pacific $2,164 million, other countries $765 million). Roughly 24% of net sales are
denominated in foreign currencies. The company had approximately 56,000 employees globally
at December 31, 2025, about 28,000 of them in the United States, and operates approximately
27 company-owned and 306 leased locations worldwide including 55 manufacturing locations.
Stryker was incorporated in Michigan in 1946, as successor to a business founded in 1941 by
Dr. Homer H. Stryker, an orthopaedic surgeon.

The company reports two segments: **MedSurg and Neurotechnology** and **Orthopaedics**. As
presented in the 2025 Form 10-K, 2025 net sales split $15,647 million (62%) MedSurg and
Neurotechnology and $9,469 million (38%) Orthopaedics, versus $13,518 million / $9,077
million in 2024 and $12,163 million / $8,335 million in 2023.

Within MedSurg and Neurotechnology, the 10-K's 2025 composition was Medical $4,204 million
(27%), Endoscopy $3,807 million (24%), Instruments $3,183 million (20%), Neuro Cranial
$2,485 million (16%) and Vascular $1,968 million (13%). Instruments covers surgical
equipment, patient and caregiver safety technologies and navigation systems; Endoscopy
covers endoscopic and communications systems; Medical covers patient handling, emergency
medical equipment, intensive care disposables and the clinical communication / AI-assisted
virtual care platform; Vascular covers minimally invasive treatment of acute ischemic and
hemorrhagic stroke and of venous thromboembolism; Neuro Cranial covers brain and open
skull-based surgical products plus orthobiologics and biosurgery, including synthetic bone
grafts and vertebral augmentation. Stryker describes itself as one of five leading global
competitors in Instruments (with Zimmer Biomet, Medtronic, Johnson & Johnson MedTech and
ConMed Linvatec), one of seven in Endoscopy (with Karl Storz, Olympus, Smith & Nephew,
ConMed Linvatec, Arthrex and STERIS), one of five in Medical (with Baxter, Zoll, Medline and
Ferno-Washington), and one of five in Vascular and Neuro Cranial (with Medtronic, Johnson &
Johnson MedTech, Terumo and Penumbra).

Orthopaedics sells implants for total joint replacement — hip, knee, shoulder, ankle — and
for trauma and extremities surgery, with the specialized instrumentation and robotics that
go with them. The 10-K's 2025 composition was Trauma and Extremities $3,948 million (42%),
Knees $2,656 million (28%), Hips $1,865 million (20%), Other $815 million (9%) and Spinal
Implants $185 million (2%). Stryker describes itself as one of four leading global
competitors in joint replacement, trauma and extremities and robotics, with Zimmer Biomet,
Johnson & Johnson MedTech and Smith & Nephew.

**The segment composition changed after the 10-K was filed.** In the first quarter of 2026
Stryker reorganized: a new **Ortho Tech** business combines the orthopaedic instruments
portfolio from Instruments with the Mako and enabling technologies portfolio from Other
Orthopaedics, while Neuro Cranial and the spine enabling technologies portfolio were
combined with the remaining Instruments business. The two reportable segments are unchanged
in name, but the dividing line between them moved. On the recast basis — filed on a Form
8-K on June 26, 2026, accession 0000310764-26-000041, which restated the 2023–2025 segment
presentation without restating the audited consolidated statements — 2025 net sales split
MedSurg and Neurotechnology $13,692 million (54%) and Orthopaedics $11,424 million (46%).
Recast 2025 Orthopaedics comprised Trauma and Extremities $3,948 million, Ortho Tech $2,770
million, Knees $2,656 million, Hips $1,865 million and Spinal Implants $185 million; recast
MedSurg and Neurotechnology comprised Medical $4,204 million, Endoscopy $3,807 million,
Neuro Cranial $2,485 million, Vascular $1,968 million and Instruments $1,228 million. Any
comparison of segment figures across the first quarter of 2026 has to be made on one basis
or the other, not across them.

Product and portfolio activity disclosed for 2025: Instruments launched Steri-Shield 8, a
lighter operating-room personal protection system, and Stryker completed the acquisition of
Guard Medical Inc. (negative pressure wound therapy for surgical patients). Endoscopy
continued rolling out the 4K 1788 camera platform and launched the Connected OR IP BRAVoE
integration portfolio. Medical continued the global launch of the LIFEPAK 35
monitor/defibrillator, launched the Vocera Sync Badge, and completed the acquisition of
Advanced Medical Balloons (AMB), an indwelling fecal management system complementary to the
Stryker Sage incontinence portfolio. The Neurovascular business was renamed Vascular on
the acquisition of Inari Medical, Inc., and launched the Broadway System in the United
States and accelerated the launch of the Surpass Elite Flow Diverting Stent in the United
States, Europe and parts of Asia-Pacific. Neuro Cranial launched OptaBlate BVN, a
radiofrequency basivertebral nerve ablation system. In Orthopaedics, Mako SmartRobotics is
now available in more than 45 countries, with over one million robotic Mako Total Knee
procedures and more than two million Mako procedures performed worldwide to date; Stryker
introduced the Mako 4 platform built around its Q-Guidance system, received 510(k)
clearance for Mako Total Hip with Advanced Primary and Revision (full market release in the
third quarter of 2025, its first-to-market robotically enabled revision hip arthroplasty
procedure), and kept Mako Shoulder — integrating Tornier implants, Blueprint planning
software and Mako SmartRobotics — in limited market release through 2025 with full United
States commercial launch planned for the first quarter of 2026.

Stated capital allocation priorities, in order: acquisitions, dividends, share
repurchases, with the goal of sales growth at the high end of the medical technology
industry. On December 31, 2025 Stryker owned approximately 5,600 United States patents and
approximately 9,000 patents in other countries. The business is not strongly seasonal,
though orthopaedic implant surgeries are typically lower in summer months and capital
equipment sales are generally higher in the fourth quarter. Raw materials are generally
available from multiple sources, but certain materials, components, finished devices and
services are sole-sourced. Principal manufacturing and distribution sites are in Arizona,
California, Florida, Illinois, Indiana, Michigan, Minnesota, New Jersey, Puerto Rico,
Tennessee, Texas, Utah and Washington, and outside the United States in China, France,
Germany, Ireland, Mexico, the Netherlands, Poland, Switzerland and Turkey.

## Risk factors

*Condensed from the FY2025 Form 10-K, accession 0000310764-26-000010.*

**Supply chain and sole-source dependence.** Reliance on certain suppliers for raw
materials, components and finished devices, and on third-party services such as
sterilization, exposes Stryker to shortages and price increases from inflation, regulatory
change, litigation, tariffs or geopolitical tension. The company has previously experienced
limited product availability from an electronic component shortage. Several inputs are
sole-sourced.

**Pricing and reimbursement pressure.** Changes in coverage or reimbursement, or adverse
decisions by payer administrators, could cut reimbursement for procedures using Stryker
products or deny it. Public and private payers have challenged, and are expected to keep
challenging, prices for medical products. Stryker has already reduced prices on certain
products because of competition, and further reductions would reduce profitability.
Healthcare industry consolidation has produced larger customers with more bargaining power.

**Competition and innovation risk.** Markets are highly competitive and the strategy depends
on innovation. Existing products could be rendered obsolete by internal or external
technological advances; competitors or new entrants may respond faster to robotics, AI and
machine learning, market more extensively, or have greater resources.

**Relationships with healthcare professionals and distributors.** Product development
depends on working relationships with physicians and medical personnel that regulatory or
hospital-access restrictions could impair. In many markets Stryker relies on independent
indirect distribution channels that may become insolvent, switch to competing products or
exit medical technology.

**Global operations.** Exposure includes reimbursement changes, evolving regulation such as
the staggered phase-in of the European Union Medical Device Regulation through December
2028, local product preferences, weaker intellectual property protection in some countries,
tariffs and other trade measures, localization and protectionism, trade disputes,
difficulty staffing foreign operations, political and economic instability, current
geopolitical conflicts including China–Taiwan tensions and the wars in Ukraine and the
Middle East, transport and port disruption, energy and transport costs, currency swings and
supply-chain security threats. The 10-K notes the United States has recently enacted and
proposed new tariffs, and that these developments may materially affect global economic
conditions and significantly reduce global trade.

**Acquisition execution.** Stryker invests in new products and technologies through
acquisitions, including Inari in 2025. Risks include integration resource demands, slower
integration than projected, diversion of management time, failure to realize expected
benefits or synergies, loss of key personnel, acquisition-related litigation, unexpected
liabilities of acquired companies, and antitrust review that may delay, block or condition
deals. Acquired businesses may not become or remain profitable.

**Information technology failure or breach.** Stryker relies extensively on IT systems,
cloud and software-as-a-service solutions, data hosting and third-party-managed platforms.
Numerous and evolving cybersecurity threats pose risk to systems, networks and product
offerings and to the confidentiality, availability and integrity of data; generative AI may
be used by malicious actors for more targeted phishing and stronger social engineering.
Some products, services and IT systems contain or use open-source software, with security,
licensing and quality risk. The 10-K states that Stryker, its customers and third-party
hosting services have experienced, and expect to continue to experience, security breaches,
unauthorized access and disruptions, that such events had not had a material effect to
date, and that the company cannot guarantee any future breach will not be material. It also
notes that a cyberattack could persist for an extended period before detection, that the
extent of an incident may not be immediately clear, and that new regulations may require
disclosure of a material incident before it is resolved or fully investigated. Item 1C of
the same 10-K states that cybersecurity risks had not materially affected the company,
including its business strategy, results of operations or financial condition, to date;
primary responsibility for cybersecurity risk rests with the chief information security
officer, with oversight by the full Board and, primarily, the Audit Committee. (A
cybersecurity incident identified on March 11, 2026 — after this 10-K was filed — was
subsequently determined to have had a material impact on operations; see Current period
below.)

**ERP implementation.** Stryker is implementing a new commercial global ERP system that will
replace many existing operating and financial systems. Disruptions, delays or design
deficiencies could affect its ability to process orders, ship products, provide service and
support, invoice, track payments and meet contractual obligations.

**Talent.** Performance depends on sales, technical and other key personnel and on senior
management. Inflation, labor demand and shortages have increased labor cost; increased
unionization could affect labor costs and culture; recent legal and regulatory changes
limit enforcement of non-competition, non-solicitation and confidentiality obligations
after termination. Succession planning and the integration of new or promoted executives
are called out specifically.

**Manufacturing concentration.** Certain product lines are manufactured in one or a few
plants or regions. Natural disasters, fire, failure to follow internal protocols, quality
system compliance concerns, equipment breakdown, IT failures or cybersecurity incidents at
Stryker's or suppliers' facilities, or at central distribution centers, could interrupt
supply.

**Artificial intelligence.** Incorporating AI increases regulatory, cybersecurity and other
risks; disruption or failure in AI functionality could delay or introduce errors into
product offerings; the legal and regulatory landscape for AI is rapidly evolving and
uncertain across intellectual property, cybersecurity and privacy.

**Pandemics and public health emergencies**, and the fear of them, have materially adversely
affected operations, supply chain, manufacturing, distribution and customers in the past and
could again.

**Tax.** Results could be affected by changes in tax laws, regulations and judicial rulings,
including the OECD base erosion and profit shifting work; several countries have enacted
Pillar 2 legislation, and in January 2026 the OECD released Administrative Guidance
containing the Side-by-Side system and two new Pillar 2 safe harbors for multinationals
headquartered in jurisdictions including the United States, which must now be legislated
domestically. Stryker operates in multiple tax jurisdictions and is regularly audited;
audits over income allocation, inventory transfer pricing, cost sharing, product royalty
and foreign branch arrangements can take years and produce significant assessments,
interest and penalties. Specifically, Stryker received a final audit report and assessments
from the German Federal Central Tax Office covering tax years 2010 through 2017 of $754
million and expects additional assessments of $11 million based on that report; it intends
to defend its filing positions through the appeals process and litigation as necessary, and
its unrecognized tax benefits for the matter are unchanged from 2024.

**Healthcare reform** in the United States and abroad could change reimbursement programs,
coverage decisions or patient access in ways that reduce demand or price.

**Device regulation.** Classification, manufacturing, sterilization, licensing, labeling,
marketing and sale are subject to extensive and evolving regulation and rigorous
enforcement by the FDA, state governments, the European Union and others; authorities may
impose further requirements on manufacturing and sterilization methods, including possible
restrictions on per- and polyfluoroalkyl substances. Clearance and approval can be slow,
costly and uncertain. Non-compliance exposes Stryker to fines, warning letters, product
seizures, recalls, import restrictions, suspension of manufacturing or sales, revocation of
approvals, exclusion from government healthcare programs and criminal prosecution.

**Healthcare fraud and abuse, anti-bribery and anti-corruption.** Relationships with
physicians, hospitals and healthcare organizations are scrutinized under state and federal
fraud and abuse laws, and enforcement of the Foreign Corrupt Practices Act and comparable
laws has increased. Stryker settled FCPA claims brought by the SEC in 2013 and 2018, paying
fines and penalties and retaining an independent compliance consultant. It had previously
been contacted by the SEC, the Department of Justice and other regulators about whether
certain business activities in certain foreign countries violated the FCPA and analogous
local laws; its investigation is complete, and it was informed on April 1, 2025 by the DOJ
and on December 16, 2025 by the SEC that each agency had closed its inquiry. Stryker is
responding to inquiries from certain foreign authorities in the normal course and does not
expect those to have a material effect on its financial statements.

**Privacy and data protection** obligations span HIPAA and HITECH in the United States, the
European Union's GDPR and comparable regimes, with rising monetary penalties.

**Product liability and collective redress.** The revised European Product Liability
Directive, to be adopted into member states' national laws by December 9, 2026, and the
Collective Redress Directive expose Stryker to additional litigation risk and legal
expense. Stryker has conducted voluntary recalls including Rejuvenate and ABG II
Modular-Neck hip stems and certain lot-specific LFIT Anatomic CoCr V40 femoral heads, and
is responsible for certain product liability claims primarily related to hip products sold
by Wright before its 2014 divestiture of the OrthoRecon business. The accrual for these
matters was $144 million at December 31, 2025, representing management's best estimate of
probable loss; the ultimate cost may be materially different.

**Intellectual property.** The medical device industry sees extensive IP litigation; Stryker
is periodically the subject of infringement or misappropriation claims, which are expensive
to defend regardless of outcome and could result in significant damages, royalties or loss
of the ability to sell products in a category. Failure to obtain or maintain adequate IP
protection, successful validity challenges to issued patents, or patent expiry could
increase competition.

**Market and financing.** Currency exposure runs through cross-border transactions,
non-dollar financing and intercompany relationships; hedging may not succeed. Future
capital needs depend on operations, acquisitions and refinancing; access and cost could be
hurt by debt levels, economic conditions, capital market uncertainty or credit rating
changes. Stryker has experienced, and could again, lost sales and profits from delayed
payments or insolvency of customers and suppliers facing liquidity issues, and notes it may
be compelled to preserve cash flow including by reducing operating expenses or suspending
dividend payments.

**Sustainability and climate.** Evolving and diverging expectations and disclosure
requirements on corporate responsibility carry legal, regulatory and reputational risk, and
Stryker cannot guarantee it will achieve announced initiatives. Weather events — hurricanes,
tornadoes, wildfires, drought, extreme temperatures, flooding — could damage facilities and
products, disrupt manufacturing and distribution, reduce workforce availability and raise
input costs.

## Management's discussion — fiscal year 2025

*From the FY2025 Form 10-K, accession 0000310764-26-000010. Dollar amounts in millions.*

Net sales grew 11.2% as reported to $25,116, or 10.7% in constant currency, with foreign
exchange adding 0.5%. Excluding a 0.4% impact from acquisitions and divestitures, constant
currency sales rose 9.9% on unit volume and 0.4% on higher prices, with higher shipments
across all businesses. By geography, United States sales rose 12.2% to $19,006 and
international sales rose 8.1% as reported (6.4% constant currency) to $6,110. MedSurg and
Neurotechnology sales rose 15.7% as reported and 15.4% in constant currency, with a 4.7%
contribution from acquisitions and divestitures leaving 10.0% from volume and 0.7% from
price. Orthopaedics sales rose 4.3% as reported and 3.8% in constant currency; excluding a
5.7% drag from acquisitions and divestitures, constant currency sales rose 9.6% on volume
partly offset by 0.1% lower prices. The Orthopaedics headline reflects the April 2025 sale
of the Spinal Implants business — Spinal Implants revenue fell from $707 in 2024 to $185 in
2025, a 73.9% decline.

Gross profit was $16,065 (64.0% of sales) against $14,440 (63.9%) in 2024 and $13,058
(63.7%) in 2023. The 2025 improvement came from higher sales pricing (10 bps) and favorable
volume and mix (70 bps), with manufacturing and supply chain costs flat, offset by
inventory stepped up to fair value (60 bps) — the single largest offset in the year — and
structural optimization and other special charges (10 bps). Management attributes the rise
from 63.9% to 64.0% primarily to higher sales pricing and favorable volume, partially
offset by higher amortization of inventory stepped up to fair value. Management expects
segment mix to be an unfavorable influence on gross margin for
the foreseeable future, anticipating faster growth in the lower-gross-margin MedSurg and
Neurotechnology segment than in Orthopaedics.

Research, development and engineering expense was $1,623, flat at 6.5% of sales. Selling,
general and administrative expense was $8,651, rising to 34.4% of sales from 34.0%, on
higher acquisition-related costs and continued growth investment; it includes a $139 charge
for share-based awards for Inari employees that vested on the acquisition. Amortization of
intangible assets rose 17.5% to $732, reflecting intangibles acquired from Inari. Goodwill
and other impairments were $170, against $977 in 2024 — the prior year carried a $456
goodwill impairment on the Spine business and a $362 estimated loss on classifying Spinal
Implants assets as held for sale. Other impairments were $109 in 2025.

Operating income was $4,889, or 19.5% of sales, up from $3,689 (16.3%) in 2024 and $3,888
(19.0%) in 2023. On the segment basis presented in the 10-K, MedSurg and Neurotechnology
operating margin rose to 29.9% from 29.6% — higher volumes and prices and lower
manufacturing and supply chain costs, partly offset by higher SG&A from the Inari
acquisition — and Orthopaedics rose to 29.8% from 28.5% on lower SG&A and higher volumes,
partly offset by manufacturing and supply chain costs. On the recast segment basis filed in
June 2026 (accession 0000310764-26-000041), the same year's margins read 27.0% for MedSurg
and Neurotechnology (from 26.7%) and 33.2% for Orthopaedics (from 31.8%); the consolidated
total is identical on both bases.

Interest expense rose 48.4% to $607 on the 2025 debt issuances. Other income was $232, up
from $212, on higher interest income. The effective tax rate was 28.1%, up from 14.3%,
driven by the 2025 tax effect of transfers of intellectual property between tax
jurisdictions and the 2024 tax effect of the Spinal Implants sale. Net earnings were $3,246
($8.40 per diluted share), up 8.5% and 8.2%; adjusted net earnings were $5,267 and adjusted
net earnings per diluted share $13.63, up 11.8%.

Capital allocation: $4,960 invested in acquisitions, net of cash acquired, and $1,284 paid
in dividends ($3.36 per share, versus $3.20 in 2024 and $3.00 in 2023). The February 2025
Inari Medical acquisition was the dominant item at $80 per share, or $4,810 net of cash
acquired, bringing $1,458 of developed technologies, $330 of customer relationships and
$3,191 of goodwill. The Spinal Implants disposal group was sold to Viscogliosi Brothers,
LLC in April 2025; consideration could increase by up to $57 or decrease by up to $245
depending on the amount received.

Financing: in February 2025 Stryker replaced its October 2021 revolving credit agreement,
raising the facility by $750 to $3,000 and extending maturity to February 25, 2030, with no
borrowings outstanding under the revolver or the commercial paper program at December 31,
2025. It issued $500 of 4.550% notes due 2027, $700 of 4.700% notes due 2028, $800 of
4.850% notes due 2030 and $1,000 of 5.200% notes due 2035; it repaid $650 of 1.150% notes in
the second quarter and $750 of 3.375% notes in the fourth quarter.

Cash flow: operating activities provided $5,044 (from $4,242 in 2024) on higher cash
earnings and working capital improvement; investing used $4,866, mainly the Inari purchase
and capital expenditure, partly offset by proceeds from short-term investments and the
Spinal Implants sale; financing provided $113. Cash, cash equivalents and marketable
securities were $4,100 at year end, with current assets exceeding current liabilities by
$6,961; about 20% of that liquidity was held outside the United States. Contractual debt
repayments were scheduled at $1,000 in 2026, $1,382 in 2027, $2,606 in 2028, $1,691 in 2029,
$2,565 in 2030 and $6,729 thereafter. Defined benefit pension plans were underfunded, and
the reserve for uncertain income tax positions is discussed with the German tax assessment
above.

On the macro environment, the 10-K notes new United States tariffs announced in 2025 on
goods from dozens of countries including China and European Union member states, reciprocal
measures by other governments, and an expectation that tariffs would continue to raise
certain product costs or adversely affect demand and supply chains.

## Current period — second quarter and first half of 2026

*From the Form 10-Q for the quarterly period ended June 30, 2026, accession
0000310764-26-000050, and the second quarter results release furnished on Form 8-K dated
July 30, 2026, accession 0000310764-26-000048. Dollar amounts in millions except per share
amounts.*

**The quarter.** Net sales rose 9.4% to $6,589 ($6,022 a year earlier), 9.0% in constant
currency with 0.4% of foreign exchange help; organic growth was also 9.0%, entirely from
unit volume, on higher shipments across most MedSurg and Neurotechnology businesses and all
Orthopaedics businesses. MedSurg and Neurotechnology sales rose 9.7% to $3,625 (9.2%
constant currency and organic: 9.1% volume, 0.1% price). Orthopaedics rose 9.1% to $2,964
(8.7% constant currency, 8.6% organic, all volume). United States sales rose 8.9% to $4,959
and international 11.0% to $1,630.

Gross profit was $4,498, or 68.3% of sales, against 63.8% a year earlier. The 450 basis
point move is dominated by two items: a 260 basis point benefit from the reversal of 2025
tariffs and 110 basis points from lower amortization of inventory stepped up to fair value,
with 70 basis points from volume and mix and 40 basis points from structural optimization
and other special charges, less 30 basis points of manufacturing and supply chain costs.
The tariff reversal appears in the segment reconciliation as a $158 credit not allocated to
segments. Adjusted gross margin, which excludes these items, was 66.0%.

Research, development and engineering expense rose $27, or 6.6%, to $434 (6.6% of sales
against 6.8%). Selling, general and administrative expense rose $150, or 7.2%, to $2,229,
falling to 33.8% of sales from 34.5% on spend discipline and lower acquisition and
integration charges, partly offset by higher structural optimization and other special
charges. Amortization of intangibles fell 6.4% to $175. Goodwill and other impairments were
$1, against $55.

Operating income was $1,659, 25.2% of sales against 18.5%, up 49.1%. Interest expense fell
11.3% to $141 on lower outstanding debt and credit facilities; other income fell to $46
from $62 on lower interest income. The effective tax rate was 18.4% against 13.0%, the
increase reflecting the prior-year tax benefit on the Spinal Implants sale; both periods
reflect continued lower rates from European operations and discrete items. Net earnings were
$1,276, up 44.3%, and $3.30 per diluted share, up 44.1%. Adjusted net earnings were $1,424
and adjusted earnings per diluted share $3.69, up 17.9%, with adjusted operating margin up
170 basis points to 27.4%.

By segment on the current structure, segment operating income was $1,019 for MedSurg and
Neurotechnology (from $846) and $1,008 for Orthopaedics (from $900). MedSurg and
Neurotechnology operating margin improved on lower SG&A, lower manufacturing and supply
chain costs and higher volumes, partly offset by higher research and development spend;
Orthopaedics improved on higher volumes and lower research and SG&A costs, partly offset by
manufacturing and supply chain costs.

**The half, and the cybersecurity incident.** First-half net sales rose 6.1% to $12,609,
5.0% in constant currency with 1.1% of currency help; excluding a negative 0.8% impact from
acquisitions and divestitures, organic growth was 5.8% (5.6% volume, 0.2% price). Operating
income was $2,595 (20.6% of sales against 16.4%), net earnings $2,021 ($5.23 per diluted
share, up 31.4%), and adjusted earnings per diluted share $6.29, up 5.4%, with adjusted
operating margin up 10 basis points to 24.4%. The gap between the two quarters is the
reason the half looks so different from the quarter: first-quarter 2026 reported sales rose
2.6% to $6.0 billion with organic growth of 2.4%, adjusted operating margin contracted 180
basis points to 21.1%, and adjusted earnings per diluted share fell 8.5% to $2.60 (results
release furnished April 30, 2026, accession 0000310764-26-000025).

On March 11, 2026 Stryker identified a cybersecurity incident affecting certain information
technology systems that caused a global disruption to its Microsoft environment; it
activated its response plan and engaged external advisors, and later disclosed that
operations including order processing, manufacturing and shipping were disrupted while
patient-related services and connected products were not (Forms 8-K dated March 11 and
March 12, 2026, accessions 0001193125-26-102460 and 0001193125-26-104431). Investigation
alongside Palo Alto Networks' Unit 42 established that the threat actor used a malicious
file to run commands and hide activity but that the file could not spread, and identified no
malicious activity directed at customers, suppliers, vendors or partners (Form 8-K dated
March 23, 2026, accession 0001193125-26-118634). On April 9, 2026 Stryker determined that
the incident had a material impact on its operations, with resulting impact on first-quarter
2026 financial results, while stating that it has not had and is not reasonably likely to
have a material impact on 2026 full-year guidance, and that the company was fully
operational across its global manufacturing network with commercial, ordering and
distribution systems restored (Form 8-K/A, Amendment No. 1, accession 0001193125-26-149607).
The 10-Q's own quantification of the incident is confined to gross margin: first-half
manufacturing and supply chain costs cost 100 basis points of gross margin "primarily due
to idle production time related to the cybersecurity incident in the first quarter 2026."
Management's second-quarter commentary framed the quarter as recovery: "We made significant
progress in our recovery from the cyber incident, delivering strong growth in sales,
earnings per share and operating cash flow in the second quarter," said Chair and CEO
Kevin A. Lobo, adding that Stryker enters the second half "with regained momentum."

**Acquisitions.** Cash paid for acquisitions, net of cash acquired, was $459 in the first
half of 2026 against $4,814 in the first half of 2025. In May 2026 Stryker completed the
acquisition of Amplitude Vascular Systems, Inc. (AVS) for net cash consideration of $435
plus up to $400 in future milestone payments carrying an acquisition-date fair value of
$271 — a total purchase price of $706 net of $10 of cash acquired. AVS is developing a next-generation intravascular lithotripsy
platform for complex peripheral arterial disease and sits in the Peripheral Vascular
business within MedSurg and Neurotechnology. The preliminary allocation is $404 of
in-process research and development and $398 of goodwill, which is not deductible for tax
purposes.

**Balance sheet, cash and debt.** Operating cash flow was $1,842 against $1,361, the
increase attributed to changes in working capital accounts. Investing used $824 (against
$4,240, which included the Inari purchase), essentially capital expenditure of $368.
Financing used $1,605 (against $1,545 provided), driven by $1,000 of repayments on maturing
unsecured notes and dividend payments of $674. In March 2026 Stryker repaid $1,000 of
3.500% senior unsecured notes. Total debt was $14,942 at June 30, 2026 against $15,859 at
December 31, 2025, with $14,192 long-term; $250 of commercial paper was outstanding against
a $3,000 maximum, and borrowing capacity on existing facilities was $2,910. Interest expense
on debt and credit facilities was $136 in the quarter and $278 in the half, against $159 and
$296. Cash, cash equivalents, short-term investments and marketable securities were $3,476
against $4,100 at year end, and current assets exceeded current liabilities by $7,734
against $6,961. The share of that liquidity held outside the United States was 51% at
June 30, 2026, against 20% at December 31, 2025. Total assets were $47,930 and shareholders'
equity $23,988. Estimated amortization of definite-lived intangibles is $351 for the
remainder of 2026, then $715, $634, $617 and $599 for 2027 through 2030.

**Reorganization accounting.** The first-quarter 2026 reorganization changed the composition
of the Instruments and Joint Replacement reporting units and created a new Ortho Tech
reporting unit; goodwill was reallocated on a relative fair value basis, moving $518 from
the MedSurg and Neurotechnology segment to Orthopaedics. All historical segment information
has been recast. The reserve for legal matters, the recall-related accrual and the German
tax assessment discussed above remain the significant contingencies; the 10-Q adds no new
named proceeding.

**Guidance.** In the July 30, 2026 release Stryker narrowed full-year 2026 guidance and
said it now expects organic net sales growth of 8.3% to 9.3% and adjusted net earnings per
diluted share of $14.95 to $15.10, with a modestly positive pricing impact assumed in the
sales guidance and a slightly favorable foreign exchange effect on both sales and adjusted
earnings per diluted share should rates hold near then-current levels. The prior guidance,
maintained at the first-quarter release on April 30, 2026, was organic net sales growth of
8.0% to 9.5% and adjusted earnings per diluted share of $14.90 to $15.10.

## Subsequent events

Neither the Form 10-Q for the quarter ended June 30, 2026 (accession 0000310764-26-000050)
nor the FY2025 Form 10-K (accession 0000310764-26-000010) contains a subsequent-events note;
the 10-Q's notes run to Note 11 on goodwill and other intangible assets, and the 10-K's to
Note 16 on the sale of the Spinal Implants business. The developments disclosed for the
period after June 30, 2026 are these:

- **Second quarter results and narrowed 2026 guidance, July 30, 2026.** Stryker released
  second-quarter results and narrowed its full-year 2026 guidance; the ranges are set out
  under Guidance above (Form 8-K dated July 30, 2026, accession 0000310764-26-000048).
- **Chief accounting officer transition, effective September 1, 2026.** Announced May 20,
  2026 and taking effect after the quarter end: William E. Berry, Jr. retires as Vice
  President, Chief Accounting Officer effective September 1, 2026, and Emily Baculik, Vice
  President, Corporate Controller since November 2024, also serves as chief accounting
  officer from that date. Mr. Berry continues as Advisor to the Chief Financial Officer from
  September 1, 2026 until August 15, 2027 under a transition agreement, at his current
  annual base salary rate of $510,000 and eligible for a 2026 incentive bonus with a 50%
  target, with no new equity awards and no 2027 bonus. Ms. Baculik's annualized base salary
  rises to $420,000 effective September 1, 2026 with a 45% bonus target prorated for 2026,
  and a recommendation will be made for long-term incentive awards in February 2027 with an
  aggregate target value of approximately $400,000, split evenly between stock options and
  restricted stock units (Form 8-K dated May 20, 2026, accession 0001193125-26-232643).

No post-period acquisition, divestiture, financing, borrowing or litigation outcome is
disclosed in the filings covered here.