STRYKER CORP Annual Report - Your Investment Snapshot

Discover Stryker's impressive performance from the past year (2025) in this comprehensive overview.

Stryker stands as a global leader in medical technology, committed to advancing healthcare. The company primarily operates through two key segments:

• MedSurg and Neurotechnology: This segment includes surgical instruments, endoscopy equipment, general medical devices, and specialized tools for brain and nerve-related procedures.
• Orthopaedics and Spine: This covers joint replacements (such as knees and hips), trauma care, and spinal surgeries.

In 2025, Stryker delivered strong results, excelling not only in sales but also across key profitability measures. This performance highlights the company's effective operations and the high market demand for its innovative products.

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Financial Performance Highlights

Stryker's financial performance and growth trajectory remained strong in 2025:

• Total Sales: Stryker achieved $18.8 billion in total sales for 2025, a healthy 9.2% increase from $17.2 billion in 2024. This growth continues a consistent trend, following a 9.1% rise from $15.8 billion in 2023 to 2024.
• Profitability: Beyond sales, Stryker significantly boosted its bottom line. Net Income reached $3.2 billion in 2025, resulting in Diluted Earnings Per Share (EPS) of $8.42. This marks a substantial improvement from the prior year, reflecting effective cost management and strong demand. Stryker also maintained solid gross and operating profit margins of 65.5% and 27.0%, respectively, underscoring efficient operations.
• Segment Performance:
  • MedSurg and Neurotechnology generated $11.3 billion in 2025 sales, growing an impressive 10.0% from $10.2 billion in 2024.
  • The Orthopaedics and Spine segment contributed $7.5 billion, increasing 8.0% from $7.0 billion in 2024, reflecting sustained demand for its joint and spine solutions.
• Geographic Sales:
  • U.S. sales reached $13.9 billion, up 9.6% from $12.7 billion in 2024.
  • International sales grew to $4.9 billion, an 8.0% increase from $4.6 billion in 2024, demonstrating continued global expansion.

Financial Health: Cash, Debt, and Liquidity

Stryker maintains a sound financial position to support its growth and operations:

• Cash Position: Stryker ended 2025 with a healthy $2.5 billion in cash and cash equivalents, providing ample liquidity.
• Cash Flow: Strong operating cash flow of $4.0 billion demonstrates Stryker's ability to generate significant cash from its core business. Free cash flow, after capital expenditures, reached $3.0 billion, providing substantial cash for debt reduction, dividends, and strategic investments.
• Debt Management: Stryker strategically uses debt, including $12.0 billion in Senior Unsecured Notes, with varying interest rates (e.g., 2.125% to 3.625%) and maturities ranging from 2027 to 2036. Stryker manages this diversified debt portfolio to optimize its capital structure. A Debt-to-Equity ratio of 0.8x indicates a manageable leverage level.
• Risk Management: Stryker actively employs financial instruments, such as foreign exchange contracts and interest rate swaps, to hedge against currency fluctuations and interest rate volatility. This protects its global earnings and borrowing costs.

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Key Achievements & Strategic Focus

Stryker's strong performance was driven by several key factors:

• Innovation & Product Launches: Stryker invested $1.3 billion in Research & Development (R&D) in 2025, fueling the successful launch of several new products across its segments. These innovations, particularly in robotic-assisted surgery and advanced neurovascular devices, enhanced its competitive edge.
• Operational Excellence: Stryker achieved greater efficiencies in its supply chain and manufacturing processes, contributing to improved margins.
• Strategic Acquisitions: The company completed two tuck-in acquisitions in the MedSurg segment, expanding its product portfolio and market reach in key growth areas.
• Digital Health Integration: Stryker made significant progress integrating digital health solutions and artificial intelligence into its product offerings, enhancing patient outcomes and surgical precision.

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Challenges & Key Risks

While performance was strong, Stryker navigates a complex operating environment:

• Regulatory Scrutiny: The medical device industry faces continuous, stringent regulatory oversight from bodies like the FDA and global health authorities. This can impact product development, approval timelines, and market access.
• Intense Competition: Stryker operates in highly competitive markets, requiring continuous innovation and effective strategies to maintain leadership.
• Supply Chain Disruptions: Global supply chain volatility, including raw material shortages and logistics challenges, continues to risk production and delivery schedules.
• Customer Lease Agreements: A notable portion of Stryker's revenue comes from customer lease agreements for its equipment. While these provide recurring revenue, changes in customer financial health or accounting standards could impact revenue recognition and cash flow.
• Cybersecurity Risks: As a technology-driven company, Stryker faces ongoing cyberattack threats, which could compromise data security and operational continuity.
• Economic Headwinds: Global economic uncertainties, such as inflation and interest rate hikes, could impact healthcare spending and customer purchasing power.

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Competitive Landscape

Stryker operates in highly competitive global markets. Its strong growth and market position stem from its broad and innovative product portfolio, strong brand reputation, extensive sales network, and commitment to R&D. Stryker differentiates itself through superior product quality, advanced technology (especially in robotics), and a focus on integrated solutions that improve clinical outcomes and operational efficiency for healthcare providers.

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Future Outlook & Strategic Priorities

Looking ahead to 2026, Stryker's management is optimistic, providing the following guidance:

• Revenue Growth: Stryker anticipates organic net sales growth in the range of 7.0% to 8.5%.
• Earnings Per Share: Projected diluted EPS is between $9.00 and $9.30, reflecting continued profitability improvements.

Stryker's strategic priorities for the coming year include:

• Accelerate Innovation: Invest in R&D to bring next-generation products to market, particularly in robotic surgery, advanced visualization, and neurotechnology.
• Expand Global Markets: Strengthen its presence in emerging markets and expand international distribution channels.
• Enhance Operational Efficiency: Drive further cost efficiencies and supply chain resilience to boost profitability.
• Pursue Strategic M&A: Target acquisitions that complement its existing portfolio and open new growth avenues.
• Advance Digital Transformation: Further integrate digital tools and data analytics to enhance product performance and customer experience.

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Industry Trends & Regulatory Environment

Stryker is well-positioned to capitalize on several key industry trends:

• Aging Global Population: An increasing elderly population drives demand for orthopaedic and neurotechnology products.
• Shift to Outpatient Care: A growing trend towards less invasive procedures and outpatient settings creates opportunities for specialized devices and digital solutions.
• Technological Advancements: Rapid advancements in robotics, artificial intelligence, and personalized medicine are transforming healthcare delivery—areas where Stryker leads.
• Value-Based Healthcare: The industry's shift towards value-based care models emphasizes products that demonstrate improved patient outcomes and cost-effectiveness, aligning with Stryker's innovative focus.

The regulatory environment remains dynamic, with ongoing changes in global healthcare policy and reimbursement models. Stryker actively monitors and adapts to these changes to ensure compliance and market access.