Stryker(SYK) - 2025 Q4 - Annual Report

Financial Performance - Stryker achieved reported net sales growth of 11.2% in 2025, with net sales totaling $25,116 million[141] - Adjusted net earnings per diluted share increased by 11.8% to $13.63, with net earnings reaching $3,246 million[141] - Net earnings for 2025 increased to $3,246 million or $8.40 per diluted share from $2,993 million or $7.76 per diluted share in 2024[173] - Operating income increased to $4,889 million in 2025, with an operating income margin of 19.5%[163] - Gross profit for 2025 was $16,065 million, up from $14,440 million in 2024, reflecting a gross margin improvement[247] - Net earnings for 2025 were $3,246 million, compared to $2,993 million in 2024, representing an 8.5% growth[247] Sales Growth - MedSurg and Neurotechnology net sales grew by 15.7% as reported, totaling $15,647 million, with a 10.0% increase in constant currency excluding acquisitions[150] - Orthopaedics segment net sales increased by 4.3% to $9,469 million, with a 3.8% increase in constant currency[147] - The United States market contributed $19,006 million in sales, reflecting a 12.2% increase, while international sales reached $6,110 million, an 8.1% increase[147] - MedSurg and Neurotechnology net sales in 2024 increased by 11.1% as reported and 11.6% in constant currency, with a 0.5% negative impact from foreign currency exchange rates[151] - Orthopaedics net sales in 2025 increased by 4.3% as reported and 3.8% in constant currency, with a 0.5% positive impact from foreign currency exchange rates[152] Expenses and Costs - Research, development, and engineering expenses rose to $1,623 million, representing 6.5% of net sales[147] - Selling, general and administrative expenses as a percentage of net sales increased to 34.4% in 2025 from 34.0% in 2024, driven by higher acquisition-related costs[158] - Interest expense increased by 48.4% to $607 million, impacting overall profitability[147] - Cash paid for income taxes in 2025 was $1,002 million, compared to $989 million in 2024, showing a slight increase of 1.3%[260] Capital Allocation and Investments - The company invested $4,960 million in acquisitions and paid $1,284 million in dividends to shareholders in 2025[142] - Stryker's capital allocation strategy continues to prioritize acquisitions, dividends, and share repurchases to drive long-term growth[141] - Cash used in investing activities was $4,866 million in 2025, primarily for the acquisition of Inari and purchases of property, plant, and equipment[191] - Total dividends paid to common shareholders increased to $1,284 million in 2025 from $1,219 million in 2024, with dividends per share rising to $3.36[194] Tax and Impairments - The effective tax rate was 28.1% in 2025, an increase from 14.3% in 2024, influenced by tax effects from intellectual property transfers[171] - Goodwill and other impairments recorded were $170 million in 2025, with significant impairments related to the Spine business in 2024[161] - Adjustments to income taxes for 2025 included a charge of $660 million related to the transfer of intellectual properties between tax jurisdictions[202] - An impairment charge of $273 million was recognized for the Spine reporting unit due to decreased future product demand and increased weighted average cost of capital[221] Liquidity and Financial Position - The company maintained a strong liquidity position with cash, cash equivalents, and marketable securities totaling $4,100 million as of December 31, 2025[195] - Total assets increased to $47,844 million in 2025 from $42,971 million in 2024, representing a growth of 6.5%[251] - Cash and cash equivalents rose to $4,011 million in 2025, compared to $3,652 million in 2024, marking an increase of 9.8%[258] - Long-term debt, excluding current maturities, increased to $14,859 million in 2025 from $12,188 million in 2024, an increase of 21.9%[251] Accounting and Reporting - The company is evaluating the impact of new accounting standards issued by the FASB, including ASU 2025-10 and ASU 2025-07, on its consolidated financial statements[308][309] - The company adopted ASU 2023-09 for income tax disclosures effective January 1, 2025, which may impact future financial reporting[314] - The company performed a quantitative impairment test for goodwill, indicating that the implied fair values of other reporting units exceed their carrying amounts by at least 100%[227] Currency and Derivatives - A hypothetical 10% change in foreign currencies relative to the U.S. Dollar would change the fair value of derivative instruments by approximately $449 million[239] - The company recognized $25 million in cash flow hedges related to cost of sales for 2025, down from $31 million in 2024[335] - The total fair value of cash flow hedges was $148 million, with $15 million in other current assets and ($70) million in other current liabilities[334]