Stryker reports third quarter 2024 operating results
Stryker (SYK) reported strong Q3 2024 results with net sales increasing 11.9% to $5.5 billion. The company achieved an organic net sales growth of 11.5%, driven by 10.3% from increased unit volume and 1.2% from higher prices. The reported operating income margin reached 19.7%, while adjusted operating income margin improved by 130 basis points to 24.7%. Reported EPS grew 20.0% to $2.16, and adjusted EPS increased 16.7% to $2.87. Based on strong performance, Stryker raised its full-year 2024 organic net sales growth guidance to 9.5-10.0% and adjusted EPS guidance to $12.00-$12.10.
Stryker (SYK) ha riportato risultati solidi per il terzo trimestre del 2024 con vendite nette in aumento dell'11,9% a 5,5 miliardi di dollari. L'azienda ha raggiunto una crescita delle vendite nette organiche del 11,5%, sostenuta da un aumento del volume delle unità del 10,3% e da un incremento dei prezzi dell'1,2%. Il margine di reddito operativo riportato ha raggiunto il 19,7%, mentre il margine di reddito operativo rettificato è migliorato di 130 punti base, raggiungendo il 24,7%. L'EPS riportato è cresciuto del 20,0% a 2,16 dollari, e l'EPS rettificato è aumentato del 16,7% a 2,87 dollari. Sulla base delle performance solide, Stryker ha alzato le previsioni di crescita delle vendite nette organiche per l'intero anno 2024 al 9,5-10,0% e le previsioni per l'EPS rettificato a 12,00-12,10 dollari.
Stryker (SYK) informó resultados sólidos para el tercer trimestre de 2024, con un incremento del 11,9% en las ventas netas, alcanzando los 5,5 mil millones de dólares. La compañía logró un crecimiento de ventas netas orgánicas del 11,5%, impulsado por un aumento del volumen de unidades del 10,3% y un incremento de precios del 1,2%. El margen de ingreso operativo reportado alcanzó el 19,7%, mientras que el margen de ingreso operativo ajustado mejoró en 130 puntos básicos, alcanzando el 24,7%. El EPS reportado creció un 20,0% hasta 2,16 dólares, y el EPS ajustado aumentó un 16,7% a 2,87 dólares. Basándose en un desempeño sólido, Stryker elevó su guía de crecimiento de ventas netas orgánicas para el año completo 2024 a un 9,5-10,0% y la guía del EPS ajustado a 12,00-12,10 dólares.
스트라이커 (SYK)는 2024년 3분기 결과를 강하게 보고하며 순매출이 11.9% 증가하여 55억 달러에 달했습니다. 이 회사는 10.3%의 단위 수량 증가와 1.2%의 가격 인상에 힘입어 유기적 순매출 성장률이 11.5%에 달했습니다. 보고된 운영소득률은 19.7%에 도달했으며, 조정된 운영소득률은 130 베이시스 포인트 개선되어 24.7%에 이르렀습니다. 보고된 EPS는 20.0% 성장하여 2.16달러에 달했으며, 조정된 EPS는 16.7% 증가하여 2.87달러에 도달했습니다. 강력한 성과를 기반으로 스트라이커는 2024년 전체 유기적 순매출 성장률 전망을 9.5-10.0%로 조정하고, 조정 EPS 전망을 12.00-12.10달러로 상향 조정했습니다.
Stryker (SYK) a rapporté de solides résultats pour le troisième trimestre 2024, avec une augmentation des ventes nettes de 11,9% à 5,5 milliards de dollars. L'entreprise a réalisé une croissance organique des ventes nettes de 11,5%, tirée par une augmentation du volume des unités de 10,3% et une hausse des prix de 1,2%. La marge de revenu opérationnel rapportée a atteint 19,7%, tandis que la marge de revenu opérationnel ajustée a amélioré de 130 points de base pour atteindre 24,7%. Le BPA rapporté a augmenté de 20,0% à 2,16 dollars, et le BPA ajusté a grimpé de 16,7% à 2,87 dollars. Sur la base de cette solide performance, Stryker a relevé ses prévisions de croissance des ventes nettes organiques pour l'année complète 2024 à 9,5-10,0% et ses prévisions de BPA ajusté à 12,00-12,10 dollars.
Stryker (SYK) berichtete über starke Ergebnisse im dritten Quartal 2024 mit einem Anstieg des Nettoumsatzes um 11,9% auf 5,5 Milliarden Dollar. Das Unternehmen erzielte ein organisches Nettoumsatzwachstum von 11,5%, das sich aus einem Anstieg des Verkaufsvolumens von 10,3% und einer Preiserhöhung von 1,2% speist. Die berichtete operative Ertragsmarge erreichte 19,7%, während die angepasste operative Ertragsmarge um 130 Basispunkte auf 24,7% verbessert wurde. Der berichtete EPS wuchs um 20,0% auf 2,16 Dollar, und angepasster EPS stieg um 16,7% auf 2,87 Dollar. Angesichts der starken Leistung hob Stryker die Prognose für das organische Nettoumsatzwachstum für das gesamte Jahr 2024 auf 9,5-10,0% und die angepasste EPS-Prognose auf 12,00-12,10 Dollar an.
- Net sales increased 11.9% to $5.5 billion
- Organic net sales grew 11.5%
- Operating income margin expanded 130 basis points to 24.7%
- EPS increased 20.0% to $2.16
- Raised full-year guidance for organic sales growth to 9.5-10.0%
- Increased adjusted EPS guidance to $12.00-$12.10
- Slight unfavorable impact expected from foreign exchange rates on full-year net sales
Insights
Stryker delivered exceptional Q3 2024 results with 11.9% revenue growth to
Profitability metrics were equally impressive, with adjusted operating margin expanding
The results demonstrate Stryker's market leadership in MedTech, with growth significantly outpacing industry averages. Unit volume increases of
The sustained demand for capital equipment and healthy procedure volumes suggest hospitals are maintaining investment in critical medical technology despite economic pressures. The margin expansion while growing revenue shows effective cost management and operating leverage, positioning Stryker well for continued market share gains.
Portage, Michigan, Oct. 29, 2024 (GLOBE NEWSWIRE) -- reported operating results for the third quarter of 2024:
Third Quarter Results
- Reported net sales increased
11.9% to$5.5 billion - Organic net sales increased
11.5% - Reported operating income margin of
19.7% - Adjusted operating income margin(1) increased 130 bps to
24.7% - Reported EPS increased
20.0% to$2.16 - Adjusted EPS(1) increased
16.7% to$2.87
| Third Quarter Net Sales Growth Overview | ||||||||||||||
| Reported | Foreign Currency Exchange | Constant Currency | Acquisitions / Divestitures | Organic | ||||||||||
| MedSurg and Neurotechnology | 12.8 | % | (0.1) % | 12.9 | % | 0.2 | % | 12.7 | % | |||||
| Orthopaedics and Spine | 10.7 | (0.1) | 10.8 | 1.1 | 9.7 | |||||||||
| Total | 11.9 | % | (0.1) % | 12.0 | % | 0.5 | % | 11.5 | % | |||||
"We delivered another strong quarter across our businesses and geographies and are on track to achieve our adjusted operating margin expansion goals," said Kevin A. Lobo, Chair and CEO. "Our product innovation and acquisitions will help to sustain our growth at the high end of MedTech."
Sales Analysis
Consolidated net sales of
MedSurg and Neurotechnology net sales of
Orthopaedics and Spine net sales of
Earnings Analysis
Reported net earnings of
2024 Outlook
Based on our year-to-date performance, sustained demand for our capital products and healthy procedural volumes, we now expect full year 2024 organic net sales growth(2) to be in the range of
(1) A reconciliation of the non-GAAP financial measures: adjusted gross profit margin, adjusted operating income and adjusted operating income margin, adjusted net earnings and adjusted net earnings per diluted share, to the most directly comparable GAAP measures: gross profit margin, operating income and operating income margin, net earnings and net earnings per diluted share, and other important information accompanies this press release.
(2) We are unable to present a quantitative reconciliation of our expected net sales growth to expected organic net sales growth as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of acquisitions and divestitures and the impact of foreign currency exchange rates. We are unable to present a quantitative reconciliation of our expected net earnings per diluted share to expected adjusted net earnings per diluted share as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of structural optimization and other special charges, acquisition-related expenses and the outcome of certain regulatory, legal and tax matters. The financial impact of these items is uncertain and is dependent on various factors, including timing, and could be material to our Consolidated Statements of Earnings.
Conference Call on Tuesday, October 29, 2024
As previously announced, we will host a conference call on Tuesday, October 29, 2024 at 4:30 p.m., Eastern Time, to discuss our operating results for the quarter ended September 30, 2024 and provide an operational update.
Please register for this conference call at: https://www.veracast.com/webcasts/stryker/events/SYK3Q24.cfm. After registering, a confirmation will be sent via email, including dial-in details and unique conference call access codes required for call entry. Registration is open throughout the live call. To ensure you are connected prior to the beginning of the call, we suggest registering a minimum of 15 minutes before the start of the call.
A simultaneous webcast of the call will be accessible via the Investor Relations page of our website at www.stryker.com. For those not planning to ask a question of management, we recommend listening via the webcast. Please allow 15 minutes to register, download and install any necessary software.
Following the conference call, a replay will be available on our website up to one year from the time of the earnings call.
Caution Concerning Forward-Looking Statements
This press release contains information that includes or is based on forward-looking statements within the meaning of the federal securities law that are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions, or the anticipation thereof, that could adversely affect the level of demand for our products; geopolitical risks, including from international conflicts and elections in the United States and other countries, which could, among other things, lead to increased market volatility; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; changes in foreign currency exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect approval of new products by the United States Food and Drug Administration and foreign regulatory agencies; inflationary pressures; increased interest rates or interest rate volatility; supply chain disruptions; changes in labor markets; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the ultimate total cost with respect to recall-related and other regulatory and quality matters; the impact of investigative and legal proceedings and compliance risks; resolution of tax audits; changes in tax laws and regulations; the impact of legislation to reform the healthcare system in the United States or other countries; costs to comply with medical device regulations; changes in financial markets; changes in our credit ratings; changes in the competitive environment; our ability to integrate and realize the anticipated benefits of acquisitions in full or at all or within the expected timeframes; our ability to realize anticipated cost savings; potential negative impacts resulting from climate change or other environmental, social and governance and sustainability related matters; the impact on our operations and financial results of any public health emergency and any related policies and actions by governments or other third parties; and breaches or failures of our or our vendors' or customers' information technology systems or products, including by cyber-attack, data leakage, unauthorized access or theft. Additional information concerning these and other factors is contained in our filings with the United States Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that affect the likelihood that actual results will differ from those contained in the forward-looking statements.
Stryker is a global leader in medical technologies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in MedSurg, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes. Alongside our customers around the world, we impact more than 150 million patients annually. More information is available at www.stryker.com.
For investor inquiries please contact:
Jason Beach, Vice President, Finance and Investor Relations at 269-385-2600 or jason.beach@stryker.com
For media inquiries please contact:
Yin Becker, Vice President, Chief Corporate Affairs Officer at 269-385-2600 or yin.becker@stryker.com
| STRYKER CORPORATION | |||||||||||||||||||||
| For the Three and Nine Months September 30 | |||||||||||||||||||||
| (Unaudited - Millions of Dollars, Except Per Share Amounts) | |||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||
| 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||
| Net sales | $ | 5,494 | $ | 4,909 | 11.9 | % | $ | 16,159 | $ | 14,683 | 10.1 | % | |||||||||
| Cost of sales | 1,977 | 1,751 | 12.9 | 5,893 | 5,328 | 10.6 | |||||||||||||||
| Gross profit | $ | 3,517 | $ | 3,158 | 11.4 | % | $ | 10,266 | $ | 9,355 | 9.7 | % | |||||||||
| % of sales | 64.0 | % | 64.3 | % | 63.5 | % | 63.7 | % | |||||||||||||
| Research, development and engineering expenses | 377 | 353 | 6.8 | 1,108 | 1,038 | 6.7 | |||||||||||||||
| Selling, general and administrative expenses | 1,896 | 1,710 | 10.9 | 5,583 | 5,200 | 7.4 | |||||||||||||||
| Amortization of intangible assets | 159 | 164 | (3.0) | 467 | 486 | (3.9) | |||||||||||||||
| Total operating expenses | $ | 2,432 | $ | 2,227 | 9.2 | % | $ | 7,158 | $ | 6,724 | 6.5 | % | |||||||||
| Operating income | $ | 1,085 | $ | 931 | 16.5 | % | $ | 3,108 | $ | 2,631 | 18.1 | % | |||||||||
| % of sales | 19.7 | % | 19.0 | % | 19.2 | % | 17.9 | % | |||||||||||||
| Other income (expense), net | (42) | (62) | (32.3) | (144) | (184) | (21.7) | |||||||||||||||
| Earnings before income taxes | $ | 1,043 | $ | 869 | 20.0 | % | $ | 2,964 | $ | 2,447 | 21.1 | % | |||||||||
| Income taxes | 209 | 177 | 18.1 | 517 | 425 | 21.6 | |||||||||||||||
| Net earnings | $ | 834 | $ | 692 | 20.5 | % | $ | 2,447 | $ | 2,022 | 21.0 | % | |||||||||
| Net earnings per share of common stock: | |||||||||||||||||||||
| Basic | $ | 2.18 | $ | 1.82 | 19.8 | % | $ | 6.42 | $ | 5.33 | 20.5 | % | |||||||||
| Diluted | $ | 2.16 | $ | 1.80 | 20.0 | % | $ | 6.35 | $ | 5.27 | 20.5 | % | |||||||||
| Weighted-average shares outstanding (in millions): | |||||||||||||||||||||
| Basic | 381.1 | 379.8 | 380.9 | 379.5 | |||||||||||||||||
| Diluted | 385.6 | 384.0 | 385.4 | 383.7 | |||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| September 30 | December 31 | ||||
| 2024 | 2023 | ||||
| Assets | |||||
| Cash and cash equivalents | $ | 3,850 | $ | 2,971 | |
| Short-term investments | 750 | — | |||
| Marketable securities | 84 | 82 | |||
| Accounts receivable, net | 3,736 | 3,765 | |||
| Inventories | 5,292 | 4,843 | |||
| Prepaid expenses and other current assets | 961 | 857 | |||
| Total current assets | $ | 14,673 | $ | 12,518 | |
| Property, plant and equipment, net | 3,429 | 3,215 | |||
| Goodwill and other intangibles, net | 21,336 | 19,836 | |||
| Noncurrent deferred income tax assets | 1,562 | 1,670 | |||
| Other noncurrent assets | 2,833 | 2,673 | |||
| Total assets | $ | 43,833 | $ | 39,912 | |
| Liabilities and shareholders' equity | |||||
| Current liabilities | $ | 7,669 | $ | 7,921 | |
| Long-term debt, excluding current maturities | 13,325 | 10,901 | |||
| Income taxes | 368 | 567 | |||
| Other noncurrent liabilities | 2,322 | 1,930 | |||
| Shareholders' equity | 20,149 | 18,593 | |||
| Total liabilities and shareholders' equity | $ | 43,833 | $ | 39,912 | |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| Nine Months | |||||||
| 2024 | 2023 | ||||||
| Operating activities | |||||||
| Net earnings | $ | 2,447 | $ | 2,022 | |||
| Depreciation | 319 | 292 | |||||
| Amortization of intangible assets | 467 | 486 | |||||
| Changes in operating assets, liabilities, income taxes payable and other, net | (922) | (617) | |||||
| Net cash provided by operating activities | $ | 2,311 | $ | 2,183 | |||
| Investing activities | |||||||
| Acquisitions, net of cash acquired | $ | (1,598) | $ | (390) | |||
| Purchases of property, plant and equipment | (489) | (430) | |||||
| Other investing, net | (610) | 10 | |||||
| Net cash used in investing activities | $ | (2,697) | $ | (810) | |||
| Financing activities | |||||||
| Borrowings (payments) of debt, net | $ | 2,378 | $ | (312) | |||
| Payments of dividends | (914) | (854) | |||||
| Other financing, net | (195) | (142) | |||||
| Net cash provided by (used in) financing activities | $ | 1,269 | $ | (1,308) | |||
| Effect of exchange rate changes on cash and cash equivalents | (4) | (49) | |||||
| Change in cash and cash equivalents | $ | 879 | $ | 16 | |||
| STRYKER CORPORATION |
| For the Three and Nine Months September 30 |
| (Unaudited - Millions of Dollars) |
| SALES GROWTH ANALYSIS | |||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||
| Percentage Change | Percentage Change | ||||||||||||||||||||
| 2024 | 2023 | As Reported | Constant Currency | 2024 | 2023 | As Reported | Constant Currency | ||||||||||||||
| Geographic: | |||||||||||||||||||||
| United States | $ | 4,109 | $ | 3,678 | 11.7 | % | 11.7 | % | $ | 12,070 | $ | 10,901 | 10.7 | % | 10.7 | % | |||||
| International | 1,385 | 1,231 | 12.5 | 13.0 | 4,089 | 3,782 | 8.1 | 10.1 | |||||||||||||
| Total | $ | 5,494 | $ | 4,909 | 11.9 | % | 12.0 | % | $ | 16,159 | $ | 14,683 | 10.1 | % | 10.6 | % | |||||
| Segment: | |||||||||||||||||||||
| MedSurg and Neurotechnology | $ | 3,224 | $ | 2,859 | 12.8 | % | 12.9 | % | $ | 9,340 | $ | 8,409 | 11.1 | % | 11.5 | % | |||||
| Orthopaedics and Spine | 2,270 | 2,050 | 10.7 | 10.8 | 6,819 | 6,274 | 8.7 | 9.2 | |||||||||||||
| Total | $ | 5,494 | $ | 4,909 | 11.9 | % | 12.0 | % | $ | 16,159 | $ | 14,683 | 10.1 | % | 10.6 | % | |||||
| SUPPLEMENTAL SALES GROWTH ANALYSIS | ||||||||||||||||||
| Three Months | ||||||||||||||||||
| United States | International | |||||||||||||||||
| Percentage Change | ||||||||||||||||||
| 2024 | 2023 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | ||||||||||||
| MedSurg and Neurotechnology: | ||||||||||||||||||
| Instruments | $ | 679 | $ | 620 | 9.6 | % | 9.5 | % | 9.9 | % | 8.3 | % | 7.8 | % | ||||
| Endoscopy | 837 | 746 | 12.2 | 12.5 | 11.3 | 16.6 | 18.1 | |||||||||||
| Medical | 938 | 798 | 17.6 | 17.7 | 18.6 | 12.7 | 13.2 | |||||||||||
| Neurovascular | 329 | 311 | 5.5 | 5.9 | 1.5 | 8.1 | 8.6 | |||||||||||
| Neuro Cranial | 441 | 384 | 15.0 | 15.0 | 16.2 | 9.4 | 9.6 | |||||||||||
| $ | 3,224 | $ | 2,859 | 12.8 | % | 12.9 | % | 13.3 | % | 10.9 | % | 11.4 | % | |||||
| Orthopaedics and Spine: | ||||||||||||||||||
| Knees | $ | 570 | $ | 515 | 10.6 | % | 10.7 | % | 8.4 | % | 17.1 | % | 17.4 | % | ||||
| Hips | 420 | 362 | 15.9 | 16.2 | 10.9 | 24.8 | 25.3 | |||||||||||
| Trauma and Extremities | 849 | 752 | 12.8 | 12.6 | 12.9 | 12.6 | 12.0 | |||||||||||
| Spine | 304 | 291 | 4.6 | 4.4 | 3.5 | 7.5 | 6.8 | |||||||||||
| Other | 127 | 130 | (2.4) | 0.1 | (0.6) | (6.1) | 1.3 | |||||||||||
| $ | 2,270 | $ | 2,050 | 10.7 | % | 10.8 | % | 9.2 | % | 14.4 | % | 14.8 | % | |||||
| Total | $ | 5,494 | $ | 4,909 | 11.9 | % | 12.0 | % | 11.7 | % | 12.5 | % | 13.0 | % | ||||
| Nine Months | ||||||||||||||||||
| United States | International | |||||||||||||||||
| Percentage Change | ||||||||||||||||||
| 2024 | 2023 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | ||||||||||||
| MedSurg and Neurotechnology: | ||||||||||||||||||
| Instruments | $ | 2,044 | $ | 1,808 | 13.1 | % | 13.3 | % | 13.9 | % | 9.7 | % | 10.9 | % | ||||
| Endoscopy | 2,383 | 2,166 | 10.0 | 10.5 | 10.2 | 9.1 | 11.6 | |||||||||||
| Medical | 2,710 | 2,417 | 12.1 | 12.3 | 15.7 | (2.9) | (1.8) | |||||||||||
| Neurovascular | 966 | 906 | 6.6 | 8.3 | 2.2 | 9.4 | 12.4 | |||||||||||
| Neuro Cranial | 1,237 | 1,112 | 11.3 | 11.7 | 11.4 | 10.7 | 12.9 | |||||||||||
| $ | 9,340 | $ | 8,409 | 11.1 | % | 11.5 | % | 12.4 | % | 6.7 | % | 8.7 | % | |||||
| Orthopaedics and Spine: | ||||||||||||||||||
| Knees | $ | 1,760 | $ | 1,643 | 7.1 | % | 7.7 | % | 6.0 | % | 10.2 | % | 12.2 | % | ||||
| Hips | 1,241 | 1,130 | 9.9 | 10.9 | 7.3 | 14.4 | 17.3 | |||||||||||
| Trauma and Extremities | 2,511 | 2,287 | 9.8 | 10.0 | 10.8 | 7.1 | 7.8 | |||||||||||
| Spine | 911 | 871 | 4.6 | 4.8 | 3.9 | 6.5 | 7.3 | |||||||||||
| Other | 396 | 343 | 15.4 | 17.8 | 17.4 | 11.2 | 18.6 | |||||||||||
| $ | 6,819 | $ | 6,274 | 8.7 | % | 9.2 | % | 8.3 | % | 9.7 | % | 11.6 | % | |||||
| Total | $ | 16,159 | $ | 14,683 | 10.1 | % | 10.6 | % | 10.7 | % | 8.1 | % | 10.1 | % | ||||
Notes: The three months 2024 had one more selling day than 2023. The nine months 2024 had the same number of selling days as 2023. Beginning in the first quarter 2024, a product line previously included in Instruments has been reclassified to Endoscopy to align with a change in our internal reporting structure. We have reflected this change in all historical periods presented.
SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including: percentage sales growth in constant currency; percentage organic sales growth; adjusted gross profit; adjusted selling, general and administrative expenses; adjusted research, development and engineering expenses; adjusted operating income; adjusted other income (expense), net; adjusted income taxes; adjusted effective income tax rate; adjusted net earnings; and adjusted net earnings per diluted share (Diluted EPS). We believe these non-GAAP financial measures provide meaningful information to assist investors and shareholders in understanding our financial results and assessing our prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of our operations because they exclude items that may not be indicative of or are unrelated to our core operating results and provide a baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures for reviewing the operating results of reportable business segments and analyzing potential future business trends in connection with our budget process and bases certain management incentive compensation on these non-GAAP financial measures.
To measure percentage sales growth in constant currency, we remove the impact of changes in foreign currency exchange rates that affect the comparability and trend of sales. Percentage sales growth in constant currency is calculated by translating current and prior year results at the same foreign currency exchange rate. To measure percentage organic sales growth, we remove the impact of changes in foreign currency exchange rates, acquisitions and divestitures, which affect the comparability and trend of sales. Percentage organic sales growth is calculated by translating current year and prior year results at the same foreign currency exchange rates excluding the impact of acquisitions and divestitures. To measure earnings performance on a consistent and comparable basis, we exclude certain items that affect the comparability of operating results and the trend of earnings. The income tax effect of each adjustment was determined based on the tax effect of the jurisdiction in which the related pre-tax adjustment was recorded. These adjustments are irregular in timing and may not be indicative of our past and future performance.
Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, selling, general and administrative expenses, research, development and engineering expenses, operating income, other income (expense), net, income taxes, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliations to corresponding GAAP financial measures below, provide a more complete understanding of our business. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
The following reconciles the non-GAAP financial measures discussed above with the most directly comparable GAAP financial measures. The weighted-average diluted shares outstanding used in the calculation of adjusted net earnings per diluted share are the same as those used in the calculation of reported net earnings per diluted share for the respective period.
| STRYKER CORPORATION | |||||||||||||||||||||||||
| For the Three and Nine Months September 30 | |||||||||||||||||||||||||
| (Unaudited - Millions of Dollars, Except Per Share Amounts) | |||||||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | |||||||||||||||||||||||||
| Three Months 2024 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||
| Reported | $ | 3,517 | $ | 1,896 | $ | 377 | $ | 1,085 | $ | (42) | $ | 209 | $ | 834 | 20.0 | % | $ | 2.16 | |||||||
| Reported percent net sales | 64.0 | % | 34.5 | % | 6.9 | % | 19.7 | % | (0.8) % | nm | 15.2 | % | |||||||||||||
| Acquisition and integration-related costs: | |||||||||||||||||||||||||
| Inventory stepped-up to fair value | 29 | — | — | 29 | — | 7 | 22 | 0.2 | 0.06 | ||||||||||||||||
| Other acquisition and integration-related (a) | — | (48) | — | 48 | — | 11 | 37 | 0.3 | 0.10 | ||||||||||||||||
| Amortization of purchased intangible assets | — | — | — | 159 | — | 32 | 127 | 0.7 | 0.32 | ||||||||||||||||
| Structural optimization and other special charges (b) | (2) | (26) | — | 24 | — | 4 | 20 | — | 0.05 | ||||||||||||||||
| Medical device regulations (c) | — | — | (13) | 13 | — | 2 | 11 | 0.1 | 0.03 | ||||||||||||||||
| Recall-related matters (d) | — | — | — | — | — | — | — | — | — | ||||||||||||||||
| Regulatory and legal matters (e) | — | 1 | — | (1) | — | — | (1) | — | — | ||||||||||||||||
| Tax matters (f) | — | — | — | — | — | (57) | 57 | (5.5) | 0.15 | ||||||||||||||||
| Adjusted | $ | 3,544 | $ | 1,823 | $ | 364 | $ | 1,357 | $ | (42) | $ | 208 | $ | 1,107 | 15.8 | % | $ | 2.87 | |||||||
| Adjusted percent net sales | 64.5 | % | 33.2 | % | 6.6 | % | 24.7 | % | (0.8) % | nm | 20.1 | % | |||||||||||||
| Three Months 2023 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||
| Reported | $ | 3,158 | $ | 1,710 | $ | 353 | $ | 931 | $ | (62) | $ | 177 | $ | 692 | 20.4 | % | $ | 1.80 | |||||||
| Reported percent net sales | 64.3 | % | 34.8 | % | 7.2 | % | 19.0 | % | (1.3) % | nm | 14.1 | % | |||||||||||||
| Acquisition and integration-related costs: | |||||||||||||||||||||||||
| Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||
| Other acquisition and integration-related (a) | — | 1 | — | (1) | — | (28) | 27 | (3.1) | 0.07 | ||||||||||||||||
| Amortization of purchased intangible assets | — | — | — | 164 | — | 36 | 128 | 1.6 | 0.34 | ||||||||||||||||
| Structural optimization and other special charges (b) | 19 | (9) | — | 28 | — | 7 | 21 | 0.3 | 0.06 | ||||||||||||||||
| Medical device regulations (c) | 1 | — | (18) | 19 | — | 4 | 15 | 0.2 | 0.04 | ||||||||||||||||
| Recall-related matters (d) | — | (9) | — | 9 | — | 2 | 7 | 0.1 | 0.01 | ||||||||||||||||
| Regulatory and legal matters (e) | — | 1 | — | (1) | — | 1 | (2) | 0.1 | — | ||||||||||||||||
| Tax matters (f) | — | — | — | — | 1 | (55) | 56 | (6.4) | 0.14 | ||||||||||||||||
| Adjusted | $ | 3,178 | $ | 1,694 | $ | 335 | $ | 1,149 | $ | (61) | $ | 144 | $ | 944 | 13.2 | % | $ | 2.46 | |||||||
| Adjusted percent net sales | 64.7 | % | 34.5 | % | 6.8 | % | 23.4 | % | (1.2) % | nm | 19.2 | % | |||||||||||||
nm - not meaningful
(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:
| Three Months | ||||||
| 2024 | 2023 | |||||
| Termination of sales relationships | $ | — | $ | 2 | ||
| Employee retention and workforce reductions | 13 | 3 | ||||
| Changes in the fair value of contingent consideration | 2 | (4) | ||||
| Manufacturing integration costs | 1 | — | ||||
| Stock compensation payments upon a change in control | 22 | — | ||||
| Other integration-related activities (e.g., deal costs and legal entity rationalization) | 10 | (2) | ||||
| Adjustments to Operating Income | $ | 48 | $ | (1) | ||
| Charges for acquisition-related tax provisions | — | (28) | ||||
| Other income taxes related to acquisition and integration-related costs | 11 | — | ||||
| Adjustments to Income Taxes | $ | 11 | $ | (28) | ||
| Adjustments to Net Earnings | $ | 37 | $ | 27 | ||
(b) Structural optimization and other special charges represent the costs associated with:
| Three Months | |||||||
| 2024 | 2023 | ||||||
| Employee retention and workforce reductions | $ | 12 | $ | (5) | |||
| Closure/transfer of manufacturing and other facilities (e.g., site closure, contract termination and redundant employee costs) | 2 | 12 | |||||
| Product line exits (e.g., inventory, long-lived asset and specifically-identified intangible asset write-offs) | 4 | 7 | |||||
| Certain long-lived and intangible asset write-offs and impairments | 12 | 9 | |||||
| Termination of sales relationships in certain countries | 6 | — | |||||
| Other charges | (12) | 5 | |||||
| Adjustments to Operating Income | $ | 24 | $ | 28 | |||
| Adjustments to Income Taxes | $ | 4 | $ | 7 | |||
| Adjustments to Net Earnings | $ | 20 | $ | 21 | |||
(c) Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union.
(d) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain recall-related matters.
(e) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
(f) Benefits / (charges) represent the accounting impact of certain significant and discrete tax items, including:
| Three Months | |||||||
| 2024 | 2023 | ||||||
| Adjustments related to the transfer of certain intellectual properties between tax jurisdictions | $ | (47) | $ | (44) | |||
| Other tax matters | (10) | (11) | |||||
| Adjustments to Income Taxes | $ | (57) | $ | (55) | |||
| Charges / (benefits) for certain tax audit settlements | — | 1 | |||||
| Adjustments to Other Income (Expense), Net | $ | — | $ | 1 | |||
| Adjustments to Net Earnings | $ | 57 | $ | 56 | |||
| Nine Months 2024 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||
| Reported | $ | 10,266 | $ | 5,583 | $ | 1,108 | $ | 3,108 | $ | (144 | ) | $ | 517 | $ | 2,447 | 17.4 | % | $ | 6.35 | ||||||
| Reported percent net sales | 63.5 | % | 34.6 | % | 6.9 | % | 19.2 | % | (0.9) % | nm | 15.1 | % | |||||||||||||
| Acquisition and integration-related costs: | |||||||||||||||||||||||||
| Inventory stepped-up to fair value | 38 | — | — | 38 | — | 9 | 29 | 0.3 | 0.08 | ||||||||||||||||
| Other acquisition and integration-related (a) | — | (49) | — | 49 | — | 14 | 35 | 0.2 | 0.09 | ||||||||||||||||
| Amortization of purchased intangible assets | — | — | — | 467 | — | 96 | 371 | 1.0 | 0.96 | ||||||||||||||||
| Structural optimization and other special charges (b) | 41 | (72) | — | 113 | — | 24 | 89 | 0.2 | 0.23 | ||||||||||||||||
| Medical device regulations (c) | 5 | — | (36) | 41 | — | 9 | 32 | 0.1 | 0.08 | ||||||||||||||||
| Recall-related matters (d) | 11 | (11) | — | 22 | — | 5 | 17 | 0.1 | 0.04 | ||||||||||||||||
| Regulatory and legal matters (e) | — | 1 | — | (1) | — | — | (1) | — | — | ||||||||||||||||
| Tax matters (f) | — | — | — | — | (1) | (136) | 135 | (4.7) | 0.35 | ||||||||||||||||
| Adjusted | $ | 10,361 | $ | 5,452 | $ | 1,072 | $ | 3,837 | $ | (145) | $ | 538 | $ | 3,154 | 14.6 | % | $ | 8.18 | |||||||
| Adjusted percent net sales | 64.1 | % | 33.7 | % | 6.6 | % | 23.7 | % | (0.9) % | nm | 19.5 | % | |||||||||||||
| Nine Months 2023 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||
| Reported | $ | 9,355 | $ | 5,200 | $ | 1,038 | $ | 2,631 | $ | (184) | $ | 425 | $ | 2,022 | 17.4 | % | $ | 5.27 | |||||||
| Reported percent net sales | 63.7 | % | 35.4 | % | 7.1 | % | 17.9 | % | (1.3) % | nm | 13.8 | % | |||||||||||||
| Acquisition and integration-related costs: | |||||||||||||||||||||||||
| Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||
| Other acquisition and integration-related (a) | — | (7) | — | 7 | — | (25) | 32 | (1.0) | 0.08 | ||||||||||||||||
| Amortization of purchased intangible assets | — | — | — | 486 | — | 104 | 382 | 1.5 | 1.00 | ||||||||||||||||
| Structural optimization and other special charges (b) | 30 | (112) | — | 142 | — | 32 | 110 | 0.5 | 0.29 | ||||||||||||||||
| Medical device regulations (c) | 1 | — | (73) | 74 | — | 17 | 57 | 0.3 | 0.15 | ||||||||||||||||
| Recall-related matters (d) | — | (12) | — | 12 | — | 3 | 9 | — | 0.02 | ||||||||||||||||
| Regulatory and legal matters (e) | — | (19) | — | 19 | — | 4 | 15 | — | 0.04 | ||||||||||||||||
| Tax matters (f) | — | — | — | — | (8) | (121) | 113 | (4.9) | 0.29 | ||||||||||||||||
| Adjusted | $ | 9,386 | $ | 5,050 | $ | 965 | $ | 3,371 | $ | (192) | $ | 439 | $ | 2,740 | 13.8 | % | $ | 7.14 | |||||||
| Adjusted percent net sales | 63.9 | % | 34.4 | % | 6.6 | % | 23.0 | % | (1.3) % | nm | 18.7 | % | |||||||||||||
(a) Charges represent certain acquisition and integration-related costs associated with acquisitions, including:
| Nine Months | |||||||
| 2024 | 2023 | ||||||
| Termination of sales relationships | $ | 3 | $ | 2 | |||
| Employee retention and workforce reductions | 17 | 3 | |||||
| Changes in the fair value of contingent consideration | (12) | (7) | |||||
| Manufacturing integration costs | 2 | 2 | |||||
| Stock compensation payments upon a change in control | 22 | — | |||||
| Other integration-related activities (e.g., deal costs and legal entity rationalization) | 17 | 7 | |||||
| Adjustments to Operating Income | $ | 49 | $ | 7 | |||
| Charges for acquisition-related tax provisions | — | (28) | |||||
| Other income taxes related to acquisition and integration-related costs | 14 | 3 | |||||
| Adjustments to Income Taxes | $ | 14 | $ | (25) | |||
| Adjustments to Net Earnings | $ | 35 | $ | 32 | |||
(b) Structural optimization and other special charges represent the costs associated with:
| Nine Months | |||||
| 2024 | 2023 | ||||
| Employee retention and workforce reductions | $ | 14 | $ | 63 | |
| Closure/transfer of manufacturing and other facilities (e.g., site closure, contract termination and redundant employee costs) | 18 | 36 | |||
| Product line exits (e.g., inventory, long-lived asset and specifically-identified intangible asset write-offs) | 19 | 16 | |||
| Certain long-lived and intangible asset write-offs and impairments | 22 | 12 | |||
| Termination of sales relationships in certain countries | 7 | — | |||
| Other charges | 33 | 15 | |||
| Adjustments to Operating Income | $ | 113 | $ | 142 | |
| Adjustments to Income Taxes | $ | 24 | $ | 32 | |
| Adjustments to Net Earnings | $ | 89 | $ | 110 | |
(c) Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union.
(d) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain recall-related matters.
(e) Charges represent changes in our best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within a range is not known, to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements.
(f) Benefits / (charges) represent the accounting impact of certain significant and discrete tax items, including:
| Nine Months | |||||||
| 2024 | 2023 | ||||||
| Adjustments related to the transfer of certain intellectual properties between tax jurisdictions | $ | (141) | $ | (138) | |||
| Certain tax audit settlements | (2) | 24 | |||||
| Other tax matters | 7 | (7) | |||||
| Adjustments to Income Taxes | $ | (136) | $ | (121) | |||
| Charges / (benefits) for certain tax audit settlements | (1) | (9) | |||||
| Other tax related adjustments | — | 1 | |||||
| Adjustments to Other Income (Expense), Net | $ | (1) | $ | (8) | |||
| Adjustments to Net Earnings | $ | 135 | $ | 113 | |||
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