AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Existing patent protection provides a concrete exclusion mechanism, supported by a substantial portfolio and demonstrated product demand. The economic importance of protected features and superiority over alternatives remain unquantified.
durability · 2/4 · Continuing research spending and multiyear sales growth support ongoing commercial relevance. Required reinvestment and realized competitive deterioration in Spine limit confidence in durable portfolio-wide protection.
customer dependency · 2/4 · Multiyear sales growth and higher unit volumes provide indirect evidence of continuing customer demand. They do not demonstrate customer-specific dependency, costly switching or repeat-purchase rates.
erosion resilience · 2/4 · Broad operating growth and positive volumes coexist with competition-driven Spine impairment, product price reductions and realized supply disruption. The evidence supports mixed resilience rather than pervasive competitive weakness.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · First-half 2026 pricing added 10 basis points to consolidated gross margin and to MedSurg and Neurotechnology operating margin, with zero operating-margin contribution in Orthopaedics. Disclosed competition-driven price reductions show uneven power; these basis-point contributions are not selling-price growth rates.
retention · 2/4 · Higher unit volumes in both segments and multiyear sales growth support continuing demand indirectly. Customer retention rates and purchasing continuity are unavailable, while Spine demonstrates that demand can weaken under competition.
margin resilience · 2/4 · First-half segment margins were flat or improved despite manufacturing cost pressure. However, most consolidated gross-margin improvement came from tariff reversals and acquisition-accounting effects, with pricing contributing little. Cost control and volume support resilience without establishing strong price pass-through.
contractual freedom · 1/4 · Disclosed price regulation, competitive pricing and actual competition-driven reductions indicate constrained practical freedom over terms. Specific contractual repricing rights, durations and restrictions are missing, so the assessment concerns observed constraints rather than inferred contract provisions.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 1.35
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.06
Financial strength67
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 61.39
- netDebtEbitGrade
- 51.53
- interestCoverageGrade
- 64.13
- currentRatioGrade
- 91.45
- Debt / FCF (x)
- 3.70
- Net debt / operating income (x)
- 2.42
- Interest coverage (x)
- 8.05
- Current ratio (x)
- 1.89
Capital allocation87
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 13.77
- 3-year average dilution (%)
- 0.35
- 3-year average SBC / revenue (%)
- 0.99
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Reported 2025 operating cash generation of $5.044 billion and first-half 2026 cash generation of $1.842 billion support substantial reinvestment capacity. First-half debt repayments and lower acquisition outlays show financing restraint, but prior acquisition spending and Spine impairment prevent a strong conclusion about investment returns.
incentive alignment · 3/4 · Actual compensation has substantial variable and equity exposure, multiyear performance awards produced disclosed payouts, and the missed margin gate eliminated overachievement bonuses without a tariff-related override. Alignment is demonstrated, although adjusted measures and limited alignment with reported net income temper the conclusion; executive ownership levels are missing.
execution · 2/4 · Multiyear sales growth, higher second-quarter unit volumes and improved cash generation demonstrate delivery through operating results. This is indirect evidence of management effectiveness, balanced against competitive losses in Spine, supply-related lost sales and cybersecurity-related idle production.
governance · 3/4 · Annual elections, majority voting with a resignation policy, independent directors other than the Chair–CEO, independent committees and an adopted clawback policy provide strong disclosed accountability mechanisms. The combined Chair–CEO role and limited evidence of effectiveness in contested situations preclude an exceptional grade.
Evidence
Patent protection of such products restricts competitors from duplicating these unique designs and features.
Business / Patents and Trademarks · Filed 11/02/2026
On December 31, 2025 we owned approximately 5,600 United States patents and approximately 9,000 patents in other countries.
Business / patent ownership at December 31, 2025 · Filed 11/02/2026
FINANCIAL STATEMENTS Stryker Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) Three Months Six Months 2026 2025 2026 2025 Net sales $6,589 $6,022 $12,609 $11,888 Cost of sales 2,091 2,181 4,301 4,303 Gross profit $4,498 $3,841 $8,308 $7,585 Research, development and engineering expenses 434 407 847 812 Selling, general and administrative expenses 2,229 2,079 4,510 4,379 Amortization of intangible assets 175 187 355 354 Goodwill and other impairments 1 55 1 90 Total operating expenses $2,839 $2,728 $5,713 $5,635 Operating income $1,659 $1,113 $2,595 $1,950 Interest expense (141) (159) (289) (296) Other income 46 62 108 126 Earnings before income taxes $1,564 $1,016 $2,414 $1,780 Income taxes 288 132 393 242 Net earnings $1,276 $884 $2,021 $1,538 Net earnings per share of common stock: Basic $3.32 $2.32 $5.27 $4.03 Diluted $3.30 $2.29 $5.23 $3.98 Weighted-average shares outstanding (in millions): Basic 383.5 382.2 383.2 382.0 Effect of dilutive employee stock compensation 2.5 4.2 3.0 4.4 Diluted 386.0 386.4 386.2 386.4 Cash dividends declared per share of common stock $0.88 $0.84 $1.76 $1.68 Anti-dilutive shares excluded from the calculation of dilutive employee stock options were de minimis in all periods.
Consolidated Statements of Earnings / sales, research expenses and earnings · Filed 31/07/2026
The key components of the change were: Operating Income Percent Net Sales MedSurg and Neurotechnology Orthopaedics Three Months 2025 25.6% 33.1% Volume 60 bps 50 bps Manufacturing and supply chain costs 60 bps (20) bps Research, development and engineering expenses (10) bps 40 bps Selling, general and administrative expenses 140 bps 20 bps Three Months 2026 28.1% 34.0% The increase in MedSurg and Neurotechnology operating income as a percentage of net sales for the three months was primarily driven by lower selling, general and administrative expenses, lower manufacturing and supply chain costs and higher unit volumes, partially offset by higher research, development and engineering expenses.
MD&A / second-quarter segment operating income bridge and unit volumes · Filed 31/07/2026
The increase in Orthopaedics operating income as a percentage of net sales for the three months was primarily driven by higher unit volumes, lower research, development and engineering expenses and lower selling, general and administrative expenses, partially offset by higher manufacturing and supply chain costs.
MD&A / second-quarter Orthopaedics unit volumes and expenses · Filed 31/07/2026
The competitive environment requires substantial investments in continuing research and maintaining sales forces.
Business / Competition / required continuing investment · Filed 11/02/2026
The impairment charge for the Spine reporting unit was driven by a decrease in future product demand due to the competitive environment and an increase in the Spine reporting unit’s weighted average cost of capital.
Goodwill impairment / competitive environment and Spine demand · Filed 11/02/2026
flows. We have also reduced prices for certain products due to
Risk factors / realized product price reductions, continued in q227 · Filed 11/02/2026
increased competition and if we further reduce prices, we could
Risk factors / competition-driven price reductions, continuation of q226 · Filed 11/02/2026
The key components of the change were: Gross Profit Percent Net Sales Six Months 2025 63.8% Sales pricing 10 bps Volume and mix 40 bps Manufacturing and supply chain costs (100) bps Structural optimization and other special charges 50 bps Inventory stepped up to fair value 80 bps Reversal of 2025 tariffs 130 bps Six Months 2026 65.9% Gross profit as a percentage of net sales in the six months 2026 increased to 65.9% from 63.8% in 2025 driven by a reduction of certain import tariffs and lower amortization of inventory stepped up to fair value partially offset by higher manufacturing and supply chain costs primarily due to idle production time related to the cybersecurity incident in the first quarter 2026.
MD&A / first-half gross-profit bridge and cybersecurity-related idle production · Filed 31/07/2026
Segment Results 2025 2024 2023 MedSurg and Neurotechnology $15,647 $13,518 $12,163 Orthopaedics $9,469 9,077 8,335 Net sales $25,116 $22,595 $20,498 MedSurg and Neurotechnology $5,859 $5,320 $4,876 Orthopaedics $2,570 2,400 2,254 Cost of sales $8,429 $7,720 $7,130 MedSurg and Neurotechnology $948 $784 $702 Orthopaedics $524 540 508 Segment research, development and engineering expenses $1,472 $1,324 $1,210 MedSurg and Neurotechnology $3,931 $3,203 $2,934 Orthopaedics $3,132 3,111 2,922 Segment selling, general and administrative expenses $7,063 $6,314 $5,856 MedSurg and Neurotechnology $237 $208 $181 Orthopaedics 423 433 386 Segment depreciation and amortization $660 $641 $567 Corporate and Other 178 162 139 Amortization of intangible assets 732 623 635 Total depreciation and amortization $1,570 $1,426 $1,341 MedSurg and Neurotechnology $4,672 $4,004 $3,470 Orthopaedics 2,820 2,591 2,265 Segment operating income $7,492 $6,595 $5,735 Items not allocated to segments: Corporate and Other $(889) $(880) $(780) Inventory stepped up to fair value (173) (46) — Acquisition and integration-related charges (335) (108) (20) Amortization of intangible assets (732) (623) (635) Structural optimization and other special charges (191) (138) (170) Goodwill and other impairments (170) (977) (36) Medical device regulation (38) (58) (96) Recall-related matters (58) (40) (18) Regulatory and legal matters (17) (36) (92) Consolidated operating income $4,889 $3,689 $3,888 Segment Assets and Capital Spending Assets: 2025 2024 MedSurg and Neurotechnology $27,647 $23,115 Orthopaedics 18,641 18,507 Total segment assets $46,288 $41,622 Corporate and Other 1,556 1,349 Total assets $47,844 $42,971 Purchases of property, plant and equipment: 2025 2024 2023 Orthopaedics $296 $230 $179 MedSurg and Neurotechnology 220 276 183 Total segment purchases of property, plant and equipment $516 $506 $362 Corporate and Other 245 249 213 Total purchases of property, plant and equipment $761 $755 $575 We measure the financial results of our reportable segments using an internal performance measure that excludes acquisition and integration-related charges, structural optimization and other special charges, goodwill and other impairments, reserves for certain product recall matters and reserves for certain legal and regulatory matters.
Segment results / 2023–2025 sales, research spending, operating results and capital spending · Filed 11/02/2026
The key components of the change were: Operating Income Percent Net Sales MedSurg and Neurotechnology Orthopaedics Six Months 2025 25.2% 31.7% Sales pricing 10 bps 0 bps Volume 40 bps 20 bps Manufacturing and supply chain costs (70) bps (100) bps Research, development and engineering expenses (20) bps 40 bps Selling, general and administrative expenses 40 bps 80 bps Six Months 2026 25.2% 32.1% MedSurg and Neurotechnology operating income as a percentage of net sales for the six months remained flat and was primarily driven by lower selling, general and administrative expenses and higher unit volumes and prices, offset by higher manufacturing and supply chain costs and research, development and engineering expenses.
MD&A / first-half segment pricing, volume and cost contributions · Filed 31/07/2026
The increase in Orthopaedics operating income as a percentage of net sales for the six months was primarily driven by lower selling, general and administrative expenses, lower research, development and engineering expenses and higher unit volumes, partially offset by higher manufacturing and supply chain costs.
MD&A / first-half Orthopaedics operating income drivers · Filed 31/07/2026
These initiatives are sponsored by government agencies, legislative bodies and the private sector and include price regulation and competitive pricing.
Business / healthcare cost containment, price regulation and competitive pricing · Filed 12/02/2025
4 STRYKER CORPORATION 2026 Second Quarter Form 10-Q CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months 2026 2025 Operating activities Net earnings $2,021 $1,538 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 241 214 Amortization of intangible assets 355 354 Asset impairments 1 90 Share-based compensation 141 133 Sale of inventory stepped-up to fair value at acquisition — 99 Deferred income tax (benefit) expense 74 176 Changes in operating assets and liabilities: Accounts receivable 267 257 Inventories (240) (226) Accounts payable (127) (269) Accrued expenses and other liabilities (356) (116) Income taxes (258) (610) Other, net (277) (279) Net cash provided by operating activities $1,842 $1,361 Investing activities Acquisitions, net of cash acquired (459) (4,814) Purchases of marketable securities (19) (27) Proceeds/(Purchases) of short-term investments — 750 Proceeds from sales of marketable securities 23 32 Purchases of property, plant and equipment (368) (306) Proceeds from the sale of the Spinal Implants business — 165 Other investing, net (1) (40) Net cash used in investing activities $(824) $(4,240) Financing activities Proceeds (payments) on short-term borrowings, net 250 2 Proceeds from issuance of long-term debt — 2,979 Payments on long-term debt (1,000) (650) Payments of dividends (674) (641) Cash paid for taxes from withheld shares (146) (115) Other financing, net (35) (30) Net cash provided by (used in) financing activities $(1,605) $1,545 Effect of exchange rate changes on cash and cash equivalents (33) 57 Change in cash and cash equivalents $(620) $(1,277) Cash and cash equivalents at beginning of period 4,011 3,652 Cash and cash equivalents at end of period $3,391 $2,375 See accompanying notes to Consolidated Financial Statements.
Consolidated Statements of Cash Flows / spending, financing and cash generation · Filed 31/07/2026
Pierce and Mr. Stiles: Item Year Ended December 31, 2025 Operating income, as reported $4,889 Inventory stepped-up to fair value 173 Other acquisition and integration-related costs 335 Amortization of purchased intangible assets 732 Structural optimization and other special charges 191 Goodwill and other impairments 170 Medical device regulations 38 Recall-related matters 58 Regulatory and legal matters 17 Net currency adjustments 7 Operating income attributable to acquisitions and divestitures that occurred during 2025 4 Adjusted operating income for bonus calculation $6,614 Information with respect to adjustments made to GAAP cash provided from operating activities in 2025 that resulted in the free cash flow excluding recall payments used in the calculation of the NEOs' bonus awards is set forth in the following reconciliation (dollar values in millions): Item Year Ended December 31, 2025 Cash provided by operating activities $5,044 Purchases of property, plant and equipment (761) Recall payments 18 Free cash flow excluding recall payments for bonus calculation $4,301 •Refer to "Appendix A — Reconciliation of the Most Directly Comparable GAAP Measure to Non-GAAP Financial Measure" for information with respect to adjustments made to GAAP net earnings per diluted share in 2025 that resulted in the adjusted net earnings per diluted share used in the calculation of the NEOs' bonus awards.
Compensation Discussion and Analysis / reported cash generation and incentive-measure adjustments · Filed 23/03/2026
The carrying value of the Spine reporting unit exceeded its fair value and a charge of $273 was recognized in goodwill and other impairments in our Consolidated Statements of Earnings.
Goodwill impairment / Spine reporting-unit charge · Filed 11/02/2026
Among the considerations in this regard are: •An important part of our executive compensation philosophy is the alignment of the compensation of our NEOs with the interests of our shareholders and achievement of key business objectives; •In 2025, the value of the variable, performance and stock-based compensation elements for the NEOs that received a grant of stock awards in 2025 averaged approximately 87% of the total value of the primary compensation elements (salary, actual bonus and stock awards).
Compensation Discussion and Analysis / actual 2025 compensation mix · Filed 23/03/2026
However, the adjusted operating income margin goal required for payout of any of the overachievement bonus plan measures was not achieved which resulted in no payout related to the overachievement measures.
Compensation Discussion and Analysis / no overachievement bonus payout · Filed 23/03/2026
Even though our financial performance was adversely impacted by tariffs in 2025, the Compensation and Human Capital Committee did not make any adjustments to the calculated 2025 bonus payout for any NEO.
Compensation Discussion and Analysis / no tariff-related bonus adjustment · Filed 23/03/2026
The payout related to the 2023 grant of performance stock units, which is discussed under "2023 Performance Stock Units: Results for the 2023-2025 Performance Period" beginning on page 27, was 200% of target as a result of performance that reached the maximum goal for both average reported net sales growth relative to a comparison group of companies and average adjusted net earnings per diluted share growth; •We monitor a comparison group of medical technology and related companies to ensure that our compensation programs are generally within observed competitive practices, review trends and practices with assistance from the Compensation and Human Capital Committee's independent compensation consultant and make adjustments as deemed appropriate by the Compensation and Human Capital Committee; and •We evaluate key risk issues related to compensation and, in this regard, engaged a third-party independent consultant to conduct a risk assessment of executive compensation programs in 2025 as discussed under "Compensation Risks" on page 17 20 and believe that our executive compensation practices do not create risks that are reasonably likely to have a material adverse effect on Stryker.
Compensation Discussion and Analysis / 2023–2025 performance-stock-unit payout · Filed 23/03/2026
Relationship of Compensation Actually Paid and Our Net Income The compensation actually paid to our PEO and other NEOs had limited alignment to our reported net income during the five-year period of 2021 to 2025.
Pay versus Performance / limited alignment with reported net income · Filed 23/03/2026
Our policies and practices in this regard include the following: •All directors elected annually.
Corporate Governance Practices / annual director elections · Filed 23/03/2026
•Majority voting in uncontested elections, coupled with a resignation policy.
Corporate Governance Practices / majority voting and resignation policy · Filed 23/03/2026
•All directors are independent other than the Chair and Chief Executive Officer.
Corporate Governance Practices / board independence and combined Chair–CEO role · Filed 23/03/2026
•All members of Board Committees are independent.
Corporate Governance Practices / independent committee membership · Filed 23/03/2026
•In October 2023, our Board adopted a separate, mandatory clawback policy regarding accounting restatements in connection with the SEC's adoption of new rules to implement Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and corresponding New York Stock Exchange ("NYSE") listing standards.
Executive Compensation Practices / adopted mandatory clawback policy · Filed 23/03/2026
We believe our commitment to innovation, quality and service and our reputation differentiates us in the highly competitive product categories in which we operate and enables us to compete effectively.
Business / management belief concerning innovation, quality, service and reputation · Filed 11/02/2026
In certain instances we have been unable to meet demand due to supply chain challenges, which has led to loss of sales.
Risk factors / realized supply-chain-related lost sales · Filed 11/02/2026
