STRYKER CORP

Stryker Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

Anti-dilutive shares excluded from the calculation of dilutive employee stock options were de minimis in all periods.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 -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

September 30, 2025 and the results of operations for thethree

andnine months 2025. 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 2024.

New Accounting Pronouncements Not Yet Adopted

In September 2025 the Financial Accounting Standards Board

(FASB) issued Accounting Standards Update (ASU) 2025-07

(Topics 815 and 606): Derivatives and Hedging: Derivatives

Scope Refinementsand Revenue from Contracts with

Customers: Scope Clarification for Share-Based Noncash

Consideration from a Customer in a Revenue Contract. This

update expands the scope exception in Topic 815 to certain non-

exchange-traded contracts for which settlement is based on

operations or activities specific to one of the parties to the

contract. The update is effective for fiscal years beginning after

December 15, 2026 including interim periods within those fiscal

years. Early adoption is permitted. We are evaluating if the ASU

will have an impact on our Consolidated Financial Statements.

In September 2025 the FASB issued ASU 2025-06 (Subtopic

350-40): Intangibles - Goodwill and Other - Internal-Use

Software: Targeted Improvements to the Accounting for Internal-

Use Software. This update clarifies and modernizes the

accounting for costs related to internal-use software by removing

all references to project stages and clarifying that the probable-

to-complete threshold is not met if significant development

uncertainty exists. The update is effective for fiscal years

beginning after December 15, 2027 including interim periods

within those fiscal years. Early adoption is permitted. We are

evaluating if the ASU will have an impact on our Consolidated

In July 2025 the FASB issued ASU 2025-05 (Topic 326):

Financial Instruments - Credit Losses: Measurement of Credit

Losses for Accounts Receivable and Contract Assets. This

update provides a practical expedient allowing entities to assume

that current conditions as of the balance sheet date will remain

unchanged for the remaining life of the asset when estimating

expected credit losses for current accounts receivable and

current contract assets arising from transactions accounting for

under Accounting Standards Codification 606, Revenue from

Contracts with Customers. The update is effective for fiscal years

beginning after December 15, 2025 including interim periods

within those fiscal years. Early adoption is permitted. We are

evaluating if the ASU will have an impact on our Consolidated

In November 2024 the FASB issued ASU 2024-03 (Subtopic

220-40): Income Statement: Reporting Comprehensive Income -

Expense Disaggregation Disclosures which requires

disaggregation of certain expense captions into specified

categories in disclosures within the Notes to the Consolidated

Financial Statements. The new disclosure requirements are

effective for fiscal years beginning after December 15, 2026 and

interim periods within fiscal years beginning after December 15,

2027. Early adoption is permitted. We are evaluating these new

expanded disclosure requirements.

In December 2023 the FASB issued ASU 2023-09 (Topic 740):

Income Taxes: Improvements to Income Tax Disclosures which

expands the existing rules on income tax disclosures. This

update requires entities to disclose specific categories in the tax

rate reconciliation, provide additional information for reconciling

items that meet a quantitative threshold and disclose additional

information about income taxes paid on an annual basis. The

new disclosure requirements are effective for fiscal years

beginning after December 15, 2024 and we will adopt this ASU in

the fourth quarter 2025.

We evaluate all ASUs issued by the 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.

NOTE 2 -REVENUE RECOGNITION

Our policies for recognizing sales have not changed from those

described in our Annual Report on Form 10-K for 2024.

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.

In the first quarter 2025 we changed the name of our

Neurovascular business to Vascular due the acquisition of Inari

Medical, Inc. (Inari).

In the fourth quarter 2024 we reorganized our Spine business to

align with certain updates to our internal reporting structure. The

spine enabling technologies portfolio (Enabling Technologies)

was reclassified to Other Orthopaedics and Spine, the

interventional spine (IVS) portfolio was reclassified to Neuro

Cranial and the remaining Spine business was renamed to Spinal

Implants. In addition we changed the name of our "Orthopaedics

and Spine" operating segment to "Orthopaedics." Neuro Cranial

includes sales related to IVS of$100 and$296 for thethree and

nine months 2024. Other Orthopaedics includes sales related to

Enabling Technologies of$32 and$94 for thethree andnine

months 2024. We have reflected these changes in all historical

periods presented.

Costs to Obtain or Fulfill a Contract

We typically do not incur costs to fulfill a contract before a

product or service is provided to a customer due to the nature of

our products and services. Our costs to obtain contracts are

typically in the form of sales commissions paid to employees or

third-party agents. Certain sales commissions paid to employees

prior to recognition of sales are recorded as deferred contract

costs. We expense sales commissions associated with obtaining

a contract at the time of the sale or as incurred as the

amortization period is generally less than one year. These costs

have been presented within selling, general and administrative

expenses. On September 30, 2025 and December 31, 2024

deferred contracts costs recorded in our Consolidated Balance

Sheets were not significant.

Contract Assets and Liabilities

Our contract assets primarily relate to conditional rights to

consideration for work completed but not billed at the reporting

date. On September 30, 2025 and December 31, 2024 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$939 and$978 on

September 30, 2025 and December 31, 2024 are classified within

accrued expenses and other liabilities and other noncurrent

liabilities in our Consolidated Balance Sheets based on the timing

of when we expect to complete our performance obligations.

Changes in contract liabilities during thenine months 2025 were

as follows:

Transfers and Servicing of Financial Assets

We sell certain customer lease agreements and the related

leased assets to third-party financial institutions to accelerate our

cash collection cycle. The lease receivables are sold without

recourse and are derecognized from our Consolidated Balance

Sheets at the time of sale. Under the terms of our arrangements,

we collect lease payments on behalf of the financial institutions

but maintain no other form of continuing involvement. Sales of

these lease agreements are classified as operating activities in

our Consolidated Statements of Cash Flows. Fees earned for our

servicing activities are immaterial. Revenue related to customer

lease agreements sold under these arrangements represented

less than 4% of our total revenue for thethree andnine months

2025 and 2024.

NOTE 3 -ACCUMULATED OTHER COMPREHENSIVE (LOSS)

INCOME (AOCI)

NOTE 4 -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 2024.

We had€2.3 billion at September 30, 2025 and December 31,

2024 in certain forward currency contracts designated as net

investment hedges, for which the maximum term is 9.0 years, 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€5.0 billion at September 30, 2025 and

December 31, 2024 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.

In thenine months 2024 we settled certain foreign currency

forward contracts designated as net investment hedges resulting

in cash proceeds of$99. The amounts in AOCI related to settled

net investment hedges will remain in AOCI until the hedged

investment is either sold or substantially liquidated.

The total after-tax gain (loss) recognized in OCI related to

designated net investment hedges was($709) in thenine months

Currency Exchange Rate Gains (Losses) Recognized in Net

Earnings

Pretax gains (losses) on derivatives designated as cash flow

hedges of$39 and net investment hedges of$35 recorded in

AOCI are expected to be reclassified to cost of sales and other

income (expense), net in earnings within 12 months of

September 30, 2025. 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 (losses) of$5 recorded in AOCI related to 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 September 30, 2025. The cash flow

effect of interest rate hedges is recorded in cash flow from

operations.

NOTE 5 -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 2024.

In thenine months 2025 we assumed contingent consideration

liabilities with a fair value of$90 related to previous acquisitions

made by Inari. Refer to Note 7 for further information on the

acquisition of Inari.

In 2024 we recorded$208 of contingent consideration related to

various acquisitions described in Note 7.

There were no significant transfers into or out of any level of the

fair value hierarchy in 2025.

On September 30, 2025 and December 31, 2024 the aggregate

difference between the cost and fair value of available-for-sale

marketable securities was nominal. Interest income on cash and

cash equivalents and short-term investments and income from

marketable securities was$28 and$30 in thethree months 2025

and 2024, and$90 and$92 in thenine months 2025 and 2024,

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.

NOTE 6 -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.

We are currently investigating whether certain business activities

in certain foreign countries violated provisions of the Foreign

Corrupt Practices Act (FCPA) and have engaged outside counsel

to conduct these investigations. We have been contacted by the

United States Securities and Exchange Commission, United

States Department of Justice (DOJ) and certain other regulatory

authorities and are cooperating with these agencies. On April 1,

2025 we were informed by the DOJ that it had closed its inquiry

into potential FCPA violations without further action. At this time

we are unable to predict the outcome of the remaining

investigations or the potential impact, if any, on our financial

statements.

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. 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. Based on the information that has been received related

to the matters discussed above, our accrual for these matters

was$147 at September 30, 2025, representing our best estimate

of probable loss. 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.

Other Contractual Obligations and Commitments

Our outstanding balances of confirmed invoices in the supplier

financing program were$75 and$71 at September 30, 2025 and

December 31, 2024 and are included within accounts payable in

our Consolidated Balance Sheets.

NOTE 7 -ACQUISITIONS

We acquire stock in companies and various assets that continue

to support our capital deployment and product development

strategies. In thenine months 2025 and 2024 cash paid for

acquisitions, net of cash acquired was$4,950 and$1,598.

In February 2025 we completed the acquisition of Inari for$80

per share, or an aggregate purchase price of$4,810, net of cash

acquired. Inari's product portfolio includes minimally invasive

products for the treatment of venous thromboembolism. Inari is

part of our Vascular business within MedSurg and

Neurotechnology. The purchase price allocation for Inari is based

on preliminary valuations, primarily related to developed

technology and customer relationships. Goodwill attributable to

the acquisition reflects the strategic benefits of expanding our

market presence, diversifying our product portfolio and advancing

innovations. This goodwill is not deductible for tax purposes.

Share-based awards for Inari employees vested upon our

acquisition and a charge of$139 was recorded in selling, general

and administrative expenses in thenine months 2025.

In 2024 we completed various acquisitions for total consideration

that includes$1,628 in upfront payments, net of cash acquired,

and$400 contingent upon the achievement of certain commercial

or clinical milestones. The combined acquisition-date fair values

of the contingent milestone payments totaled$208. Goodwill of

$306 and$845 was recorded within our Orthopaedics and our

MedSurg and Neurotechnology segments respectively. The

acquired companies expand the product portfolios of our

Instruments, Endoscopy, Medical and Neuro Cranial businesses

within MedSurg and Neurotechnology and our Trauma and

Extremities and Joint Replacement businesses within

Orthopaedics. The purchase price allocation for certain of our

acquisitions are based on preliminary valuations, primarily related

to customer relationships. Goodwill attributable to the acquisitions

reflects the strategic benefits of expanding our market presence,

diversifying our product portfolio and advancing innovations. This

goodwill is not deductible for tax purposes.

The purchase price allocations for Inari and the acquisitions

completed in the full year 2024 are:

NOTE 8 - 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. Certain of

our credit facilities require us to comply with financial and other

covenants. We were in compliance with all covenants on

September 30, 2025.

In February 2025 we entered into a new revolving credit

agreement that replaces our previous agreement dated October

2021. The primary changes included increasing the aggregate

principal amount of the facility by$750 to$3,000 and extending

the maturity date to February 25, 2030. On September 30, 2025

there wereno 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. The

maximum amount of our commercial paper that can be

outstanding at any time is$3,000.

In February 2025 we issued$500 of 4.550% senior unsecured

notes due February 10, 2027,$700 of 4.700% senior unsecured

notes due February 10, 2028,$800 of 4.850% senior unsecured

notes due February 10, 2030 and$1,000 of 5.200% senior

unsecured notes due February 10, 2035. In June 2025 we repaid

$650 of 1.150% senior unsecured notes.

The fair value of the senior unsecured notes was estimated using

quoted interest rates, maturities and amounts of borrowings

based on quoted active market prices and yields that took into

account the underlying terms of the debt instruments.

Substantially all of our debt is classified within Level 2 of the fair

value hierarchy.

Interest expense on outstanding debt and credit facilities,

including required fees incurred, that were included in other

income (expense), net, totaled$157 and$98 for thethree

months 2025 and 2024 and$453 and$292 for thenine months

2025 and 2024.

NOTE 9 -INCOME TAXES

Our effective tax rates were 16.5% and 14.7% in thethree and

nine months 2025 and 20.0% and 17.4% in thethree andnine

months 2024. The effective income tax rate for thethree months

2025 decreased from three months 2024 due to certain discrete

tax items. The effective tax rate for thenine months 2025

decreased from nine months 2024 due to the 2025 tax benefit

related to the sale of the Spinal Implants business and certain

discrete tax items. The effective tax rates for thethree andnine

months 2025 and 2024 reflect the continued lower effective

income tax rates as a result of our European operations.

In the normal course of business, income tax authorities in

various income tax jurisdictions both within the United States and

internationally conduct routine audits of our income tax returns

filed in prior years. These audits are generally designed to

determine if individual income tax authorities are in agreement

with our interpretations of complex income tax regulations

regarding the allocation of income to the various income tax

jurisdictions. Any income tax audit assessment or draft income

tax audit assessment received at the conclusion of an audit is

reviewed and evaluated for proper financial statement treatment.

We have not received any audit assessments or draft

assessments that have not been reviewed and evaluated.

NOTE 10 -SEGMENT INFORMATION

We segregate our operations intotwo reportable business

segments: (i) MedSurg and Neurotechnology and (ii)

Orthopaedics which aligns to our internal reporting structure and

how our Chief Operating Decision Maker (CODM) assesses the

performance of and allocates resources. The CODM is the Chief

Executive Officer. The CODM makes decisions on resource

allocation, assesses performance of the business, and monitors

budget versus actual results using segment operating income.

Our reportable segments and related disclosures reflect certain

reclassifications of prior year amounts from our Orthopaedics

segment to our MedSurg and Neurotechnology segment due to

changes in our internal reporting structure.

NOTE 11 -SALE OF SPINAL IMPLANTS BUSINESS

During the fourth quarter 2024 management committed to a plan

to sell certain assets associated with the Spinal Implants

business (disposal group) and such assets were classified as

held for sale beginning November 2024. As a result we recorded

a valuation allowance of$362 to record the disposal group at its

fair value less cost to sell.

In April 2025 we completed the sale of the disposal group to the

Viscogliosi Brothers, LLC. In the first half of 2025 we recognized

immaterial impairment charges to record the disposal group at its

fair value less cost to sell within goodwill and other impairments

in our Consolidated Statements of Earnings. The fair value of the

disposal group and consideration received was measured using a

discounted cash flow analysis based upon the selling price and

unobservable inputs, such as market conditions and the rate

used to discount the estimated future cash flows to their present

value based on factors including the disposal group’s cost of

equity and market yield rates, which are Level 3 inputs.

Consideration could increase by up to$57 or decrease by up to

$245 based on the amount received.

The assets associated with the disposal group are reported in our

Orthopaedics segment at December 31, 2024. The assets and

liabilities held for sale at December 31, 2024 are classified within

prepaid expenses and other current assets and accrued

expenses and other liabilities in our Consolidated Balance

Sheets. The assets and liabilities of the disposal group at the

date of sale and at December 31, 2024 were as follows: