Stryker (NYSE:SYK) reported operating results for the second
quarter of 2023:
Second Quarter
Results
- Reported net sales
increased 11.2%
to $5.0 billion
- Organic net sales
increased 11.9%
- Reported operating income
margin of 19.3%
- Adjusted operating income
margin(1) increased
60 bps to
24.3%
- Reported EPS
increased 12.2%
to $1.93
- Adjusted
EPS(1) increased
12.9% to
$2.54
|
Second Quarter Net Sales Growth Overview |
|
Reported |
|
Foreign Currency Exchange |
|
Constant Currency |
|
Acquisitions / Divestitures |
|
Organic |
MedSurg and
Neurotechnology |
12.2 |
% |
|
(0.7) % |
|
12.9 |
% |
|
— |
% |
|
12.9 |
% |
Orthopaedics and Spine |
9.9 |
|
|
(0.7)
|
|
|
10.6 |
|
|
— |
|
|
10.6 |
|
Total |
11.2 |
% |
|
(0.7) % |
|
11.9 |
% |
|
— |
% |
|
11.9 |
% |
"We delivered strong organic sales growth in the
second quarter as demand for our products remains strong," said
Kevin A. Lobo, Chair and CEO. "We are back on our margin expansion
pathway, and our supercycle of innovation is going well."
Sales Analysis
Consolidated net sales of $5.0 billion increased
11.2% in the quarter and 11.9% in constant currency. Organic net
sales increased 11.9% in the quarter including 11.4% from increased
unit volume and 0.5% from higher prices.
MedSurg and Neurotechnology net sales of $2.9
billion increased 12.2% in the quarter and 12.9% in constant
currency. Organic net sales increased 12.9% in the quarter
including 11.5% from increased unit volume and 1.4% from higher
prices.
Orthopaedics and Spine net sales of $2.1 billion
increased 9.9% in the quarter and 10.6% in constant currency.
Organic net sales increased 10.6% in the quarter including 11.3%
from increased unit volume partially offset by 0.7% from lower
prices.
Earnings Analysis
Reported net earnings of $738 million increased
12.5% in the quarter. Reported net earnings per diluted share of
$1.93 increased 12.2% in the quarter. Reported gross profit margin
and reported operating income margin were 63.7% and 19.3% in the
quarter. Reported net earnings include certain items, such as
charges for acquisition and integration-related activities, the
amortization of purchased intangible assets, structural
optimization and other special charges (including asset write-offs
and impairments), costs to comply with certain medical device
regulations, recall-related matters, regulatory and legal matters
and tax matters. Excluding the aforementioned items, adjusted gross
profit margin(1) was 63.9% in the quarter, and adjusted operating
income margin(1) was 24.3% in the quarter. Adjusted net earnings(1)
of $976 million increased 13.5% in the quarter. Adjusted net
earnings per diluted share(1) of $2.54 increased 12.9% in the
quarter.
2023 Outlook
Considering our year-to-date results, our strong
order book for capital equipment and continued positive procedural
trends, we now expect full year 2023 organic net sales growth(2) to
be in the range of 9.5% to 10.5% including slightly positive
pricing for the year. If foreign exchange rates hold near their
current levels, we anticipate net sales will be unfavorably
impacted by 0.3% and adjusted net earnings per diluted
share(2) will be unfavorably impacted by $0.05 to $0.10 for
the full year, both of which are included in our guidance. Based on
our performance in the first half of the year, together with our
strong sales momentum, we now expect adjusted net earnings per
diluted share(2) to be in the range of $10.25 to $10.45.
(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 fair value
adjustments to inventory 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 Thursday,
August 3, 2023
As previously announced, we will host a
conference call on Thursday, August 3, 2023
at 4:30 p.m., Eastern Time, to discuss our operating results for
the quarter ended June 30, 2023 and provide an operational
update.
Please register for this conference call at:
https://www.veracast.com/webcasts/stryker/events/SYK2Q23.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; 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 United States Food and Drug
Administration approval of new products; inflationary pressures;
increased interest rates; supply chain disruptions; changes in
reimbursement levels from third-party payors; a significant
increase in product liability claims; the ultimate total cost with
respect to recall-related matters; the impact of investigative and
legal proceedings and compliance risks; resolution of tax audits;
changes in tax laws and regulations; the impact of federal
legislation to reform the United States healthcare system; 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 environmental, social and
governance (ESG) and sustainability related matters; the impact on
our operations and financial results of the COVID-19 pandemic or
any other public health emergency and any related policies and
actions by governments or other third parties; and breaches or
failures of our or our vendors' 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 one of the world's leading medical
technology companies and, together with our customers, we are
driven to make healthcare better. We offer innovative products and
services in Medical and Surgical, Neurotechnology, Orthopaedics and
Spine that help improve patient and healthcare outcomes. Alongside
our customers around the world, Stryker impacts more than 130
million patients annually. More information is available at
www.stryker.com.
For investor inquiries please
contact:
Jason Beach, Vice President, 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 Six Months June 30 |
(Unaudited - Millions of Dollars, Except Per Share
Amounts) |
CONSOLIDATED STATEMENTS OF EARNINGS |
|
|
|
|
|
|
|
|
|
Three Months |
|
Six Months |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
Net
sales |
$ |
4,996 |
|
|
$ |
4,493 |
|
|
11.2 |
% |
|
$ |
9,774 |
|
|
$ |
8,768 |
|
|
11.5 |
% |
Cost of sales |
|
1,815 |
|
|
|
1,667 |
|
|
8.9 |
|
|
|
3,577 |
|
|
|
3,208 |
|
|
11.5 |
|
Gross
profit |
$ |
3,181 |
|
|
$ |
2,826 |
|
|
12.6 |
% |
|
$ |
6,197 |
|
|
$ |
5,560 |
|
|
11.5 |
% |
% of sales |
|
63.7 |
% |
|
|
62.9 |
% |
|
|
|
|
63.4 |
% |
|
|
63.4 |
% |
|
|
Research, development and engineering expenses |
|
346 |
|
|
|
351 |
|
|
(1.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
.4 |
% |
|
|
13.9 |
% |
|
|
Other income (expense), net |
|
(66)
|
|
|
|
(52)
|
|
|
26.9 |
|
|
|
(122)
|
|
|
|
(113)
|
|
|
8.0 |
|
Earnings before income
taxes |
$ |
899 |
|
|
$ |
720 |
|
|
24.9 |
% |
|
$ |
1,578 |
|
|
$ |
1,106 |
|
|
42.7 |
% |
Income taxes |
|
161 |
|
|
|
64 |
|
|
151.6 |
|
|
|
248 |
|
|
|
127 |
|
|
95.3 |
|
Net
earnings |
$ |
738 |
|
|
$ |
656 |
|
|
12.5 |
% |
|
$ |
1,330 |
|
|
$ |
979 |
|
|
35.9 |
% |
Net earnings per share
of common stock: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.95 |
|
|
$ |
1.73 |
|
|
12.7 |
% |
|
$ |
3.51 |
|
|
$ |
2.59 |
|
|
35.5 |
% |
Diluted |
$ |
1.93 |
|
|
$ |
1.72 |
|
|
12.2 |
% |
|
$ |
3.47 |
|
|
$ |
2.56 |
|
|
35.5 |
% |
Weighted-average
shares outstanding (in millions): |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
379.7 |
|
|
|
378.3 |
|
|
|
|
|
379.4 |
|
|
|
378.0 |
|
|
|
Diluted |
|
383.9 |
|
|
|
382.2 |
|
|
|
|
|
383.6 |
|
|
|
382.5 |
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
June 30 |
|
December 31 |
|
|
2023 |
|
|
2022 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
1,401 |
|
$ |
1,844 |
Marketable securities |
|
77 |
|
|
84 |
Accounts receivable, net |
|
3,261 |
|
|
3,565 |
Inventories |
|
4,593 |
|
|
3,995 |
Prepaid expenses and other current assets |
|
819 |
|
|
787 |
Total current assets |
$ |
10,151 |
|
$ |
10,275 |
Property, plant and equipment, net |
|
3,082 |
|
|
2,970 |
Goodwill and other intangibles, net |
|
20,089 |
|
|
19,765 |
Noncurrent deferred income tax assets |
|
1,439 |
|
|
1,410 |
Other noncurrent assets |
|
2,648 |
|
|
2,464 |
Total
assets |
$ |
37,409 |
|
$ |
36,884 |
Liabilities and
shareholders' equity |
|
|
|
Current liabilities |
$ |
6,584 |
|
$ |
6,303 |
Long-term debt, excluding current maturities |
|
11,149 |
|
|
11,857 |
Income taxes |
|
469 |
|
|
641 |
Other noncurrent liabilities |
|
1,846 |
|
|
1,467 |
Shareholders' equity |
|
17,361 |
|
|
16,616 |
Total liabilities and
shareholders' equity |
$ |
37,409 |
|
$ |
36,884 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
Six Months |
|
|
2023 |
|
|
|
2022 |
|
Operating
activities |
|
|
|
Net earnings |
$ |
1,330 |
|
|
$ |
979 |
|
Depreciation |
|
194 |
|
|
|
185 |
|
Amortization of intangible assets |
|
322 |
|
|
|
310 |
|
Changes in operating assets, liabilities, income taxes payable and
other, net |
|
(713)
|
|
|
|
(742)
|
|
Net cash provided by
operating activities |
$ |
1,133 |
|
|
$ |
732 |
|
Investing
activities |
|
|
|
Acquisitions, net of cash acquired |
$ |
(390)
|
|
|
$ |
(2,563)
|
|
Purchases of property, plant and equipment |
|
(282)
|
|
|
|
(262)
|
|
Other investing, net |
|
7 |
|
|
|
(9)
|
|
Net cash used in
investing activities |
$ |
(665)
|
|
|
$ |
(2,834)
|
|
Financing
activities |
|
|
|
Borrowings (payments) of debt, net |
$ |
(205)
|
|
|
$ |
872
|
|
Payments of dividends |
|
(569)
|
|
|
|
(525)
|
|
Other financing, net |
|
(112)
|
|
|
|
(107)
|
|
Net cash provided by
(used in) financing activities |
$ |
(886)
|
|
|
$ |
240
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(25)
|
|
|
|
(38)
|
|
Change in cash and
cash equivalents |
$ |
(443)
|
|
|
$ |
(1,900)
|
|
STRYKER CORPORATION |
For the Three and Six Months June 30 |
(Unaudited - Millions of Dollars) |
SALES GROWTH ANALYSIS |
|
Three Months |
|
Six Months |
|
|
|
|
Percentage Change |
|
|
|
|
Percentage Change |
|
|
2023 |
|
2022 |
|
As Reported |
ConstantCurrency |
|
|
2023 |
|
2022 |
|
As Reported |
ConstantCurrency |
Geographic: |
|
|
|
|
|
|
|
|
|
|
|
United States |
$ |
3,711 |
$ |
3,311 |
|
12.1 |
% |
12.1 |
% |
|
$ |
7,223 |
$ |
6,416 |
|
12.6 |
% |
12.6 |
% |
International |
|
1,285 |
|
1,182 |
|
8.7 |
|
11.5 |
|
|
|
2,551 |
|
2,352 |
|
8.5 |
|
13.9 |
|
Total |
$ |
4,996 |
$ |
4,493 |
|
11.2 |
% |
11.9 |
% |
|
$ |
9,774 |
$ |
8,768 |
|
11.5 |
% |
12.9 |
% |
Segment: |
|
|
|
|
|
|
|
|
|
|
|
MedSurg and Neurotechnology |
$ |
2,860 |
$ |
2,549 |
|
12.2 |
% |
12.9 |
% |
|
$ |
5,550 |
$ |
4,972 |
|
11.6 |
% |
13.0 |
% |
Orthopaedics and Spine |
|
2,136 |
|
1,944 |
|
9.9 |
|
10.6 |
|
|
|
4,224 |
|
3,796 |
|
11.3 |
|
12.8 |
|
Total |
$ |
4,996 |
$ |
4,493 |
|
11.2 |
% |
11.9 |
% |
|
$ |
9,774 |
$ |
8,768 |
|
11.5 |
% |
12.9 |
% |
SUPPLEMENTAL SALES GROWTH ANALYSIS |
|
Three Months |
|
|
|
|
|
|
United States |
|
International |
|
|
|
Percentage Change |
|
|
2023 |
|
2022 |
|
As Reported |
Constant Currency |
|
As Reported |
|
As Reported |
Constant Currency |
MedSurg
and Neurotechnology: |
|
|
|
|
|
|
|
|
|
|
Instruments |
$ |
630 |
$ |
563 |
|
11.9 |
% |
12.4 |
% |
|
13.2 |
% |
|
6.7 |
% |
9.1 |
% |
Endoscopy |
|
705 |
|
677 |
|
4.1 |
|
4.6 |
|
|
3.5 |
|
|
6.9 |
|
9.7 |
|
Medical |
|
841 |
|
666 |
|
26.3 |
|
26.9 |
|
|
27.2 |
|
|
22.5 |
|
25.7 |
|
Neurovascular |
|
311 |
|
306 |
|
1.5 |
|
3.6 |
|
|
9.0 |
|
|
(2.9)
|
|
0.3 |
|
Neuro Cranial |
|
373 |
|
337 |
|
10.8 |
|
11.3 |
|
|
9.6 |
|
|
16.5 |
|
20.0 |
|
|
$ |
2,860 |
$ |
2,549 |
|
12.2 |
% |
12.9 |
% |
|
13.5 |
% |
|
8.0 |
% |
11.0 |
% |
Orthopaedics
and Spine: |
|
|
|
|
|
|
|
|
|
|
Knees |
$ |
562 |
$ |
500 |
|
12.5 |
% |
13.2 |
% |
|
10.4 |
% |
|
18.1 |
% |
21.2 |
% |
Hips |
|
393 |
|
364 |
|
8.1 |
|
9.3 |
|
|
8.8 |
|
|
6.8 |
|
10.3 |
|
Trauma and Extremities |
|
766 |
|
676 |
|
13.3 |
|
13.6 |
|
|
14.3 |
|
|
10.7 |
|
11.7 |
|
Spine |
|
296 |
|
290 |
|
1.8 |
|
2.1 |
|
|
5.2 |
|
|
(7.0)
|
|
(6.1)
|
|
Other |
|
119 |
|
114 |
|
4.3 |
|
6.2 |
|
|
(1.6)
|
|
|
22.3 |
|
30.9 |
|
|
$ |
2,136 |
$ |
1,944 |
|
9.9 |
% |
10.6 |
% |
|
10.0 |
% |
|
9.5 |
% |
12.0 |
% |
Total |
$ |
4,996 |
$ |
4,493 |
|
11.2 |
% |
11.9 |
% |
|
12.1 |
% |
|
8.7 |
% |
11.5 |
% |
|
|
Six Months |
|
|
|
|
|
|
|
United States |
|
International |
|
|
|
|
Percentage Change |
|
|
2023 |
|
2022 |
|
As Reported |
Constant Currency |
|
As Reported |
|
As Reported |
Constant Currency |
MedSurg
and Neurotechnology: |
|
|
|
|
|
|
|
|
|
|
Instruments |
$ |
1,205 |
$ |
1,091 |
|
10.4 |
% |
11.6 |
% |
|
11.1 |
% |
|
7.8 |
% |
13.3 |
% |
Endoscopy |
|
1,403 |
|
1,284 |
|
9.3 |
|
10.3 |
|
|
9.5 |
|
|
8.5 |
|
13.8 |
|
Medical |
|
1,619 |
|
1,330 |
|
21.7 |
|
22.9 |
|
|
21.9 |
|
|
21.0 |
|
26.9 |
|
Neurovascular |
|
595 |
|
607 |
|
(2.0)
|
|
1.3 |
|
|
8.1 |
|
|
(7.9)
|
|
(2.9)
|
|
Neuro Cranial |
|
728 |
|
660 |
|
10.3 |
|
11.3 |
|
|
9.4 |
|
|
15.1 |
|
21.3 |
|
|
$ |
5,550 |
$ |
4,972 |
|
11.6 |
% |
13.0 |
% |
|
13.3 |
% |
|
6.6 |
% |
12.1 |
% |
Orthopaedics
and Spine: |
|
|
|
|
|
|
|
|
|
|
Knees |
$ |
1,128 |
$ |
964 |
|
17.0 |
% |
18.4 |
% |
|
15.3 |
% |
|
22.0 |
% |
27.8 |
% |
Hips |
|
768 |
|
691 |
|
11.1 |
|
13.5 |
|
|
12.3 |
|
|
9.0 |
|
15.6 |
|
Trauma and Extremities |
|
1,535 |
|
1,361 |
|
12.8 |
|
14.0 |
|
|
14.0 |
|
|
9.8 |
|
14.1 |
|
Spine |
|
580 |
|
569 |
|
1.9 |
|
3.0 |
|
|
5.7 |
|
|
(8.0)
|
|
(4.6)
|
|
Other |
|
213 |
|
211 |
|
0.7 |
|
2.9 |
|
|
(7.6)
|
|
|
25.3 |
|
35.8 |
|
|
$ |
4,224 |
$ |
3,796 |
|
11.3 |
% |
12.8 |
% |
|
11.6 |
% |
|
10.6 |
% |
15.9 |
% |
Total |
$ |
9,774 |
$ |
8,768 |
|
11.5 |
% |
12.9 |
% |
|
12.6 |
% |
|
8.5 |
% |
13.9 |
% |
Notes: The three months 2023
had the same number of selling days as 2022. The six months 2023
had one more selling day than 2022. Beginning in the first quarter
2023 we consolidated Other MedSurg and Neurotechnology into
Endoscopy as Other MedSurg and Neurotechnology (primarily
Sustainability Solutions) has been fully integrated into our
Endoscopy business. Endoscopy includes sales related to Other of
$87 and $77 for the three months 2023 and 2022 and $168 and $146
for the six months 2023 and 2022. We have reflected these changes
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 rate 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.
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 non-GAAP 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 Six Months June 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 2023 |
Gross Profit |
Selling, General & Administrative
Expenses |
Research, Development & Engineering
Expenses |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings |
EffectiveTax Rate |
Diluted EPS |
Reported |
$ |
3,181 |
|
$ |
1,706 |
|
$ |
346 |
|
$ |
965 |
|
$ |
(66)
|
|
$ |
161 |
|
$ |
738 |
|
17.9 |
% |
$ |
1.93 |
|
Reported percent net
sales |
|
63.7 |
% |
|
34.1 |
% |
|
6.9 |
% |
|
19.3 |
% |
(1.3) % |
nm |
|
14.8 |
% |
|
|
Acquisition and
integration-related costs: |
|
|
|
|
|
|
|
|
|
Inventory stepped-up to fair value |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
Other acquisition and integration-related (a) |
|
— |
|
|
(2)
|
|
|
— |
|
|
2 |
|
|
— |
|
|
2 |
|
|
— |
|
0.1 |
|
|
— |
|
Amortization of purchased
intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
161 |
|
|
— |
|
|
34 |
|
|
127 |
|
1.1 |
|
|
0.33 |
|
Structural optimization and
other special charges (b) |
|
9 |
|
|
(63)
|
|
|
— |
|
|
72 |
|
|
— |
|
|
17 |
|
|
55 |
|
0.7 |
|
|
0.14 |
|
Medical device regulations
(c) |
|
— |
|
|
— |
|
|
(27)
|
|
|
27 |
|
|
— |
|
|
8 |
|
|
19 |
|
0.4 |
|
|
0.05 |
|
Recall-related matters
(d) |
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
— |
|
|
1 |
|
|
2 |
|
— |
|
|
0.01 |
|
Regulatory and legal matters
(e) |
|
— |
|
|
14 |
|
|
— |
|
|
(14)
|
|
|
— |
|
|
(3)
|
|
|
(11)
|
|
(0.1)
|
|
|
(0.03)
|
|
Tax matters (f) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(46)
|
|
|
46 |
|
(4.9)
|
|
|
0.11 |
|
Adjusted |
$ |
3,190 |
|
$ |
1,655 |
|
$ |
319 |
|
$ |
1,216 |
|
$ |
(66)
|
|
$ |
174 |
|
$ |
976 |
|
15.2 |
% |
$ |
2.54 |
|
Adjusted percent net
sales |
|
63.9 |
% |
|
33.1 |
% |
|
6.4 |
% |
|
24.3 |
% |
(1.3) % |
nm |
|
19.5 |
% |
|
|
Three Months 2022 |
Gross Profit |
Selling, General & Administrative
Expenses |
Research, Development & Engineering
Expenses |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings |
EffectiveTax Rate |
Diluted EPS |
Reported |
$ |
2,826 |
|
$ |
1,539 |
|
$ |
351 |
|
$ |
772 |
|
$ |
(52)
|
|
$ |
64 |
$ |
656 |
|
8.9 |
% |
$ |
1.72 |
|
Reported percent net
sales |
|
62.9 |
% |
|
34.3 |
% |
|
7.8 |
% |
|
17.2 |
% |
(1.2) % |
nm |
|
14.6 |
% |
|
|
Acquisition and
integration-related costs: |
|
|
|
|
|
|
|
|
|
Inventory stepped-up to fair value |
|
7 |
|
|
— |
|
|
— |
|
|
7 |
|
|
— |
|
|
2 |
|
5 |
|
0.1 |
|
|
0.01 |
|
Other acquisition and integration-related (a) |
|
— |
|
|
(30)
|
|
|
— |
|
|
30 |
|
|
— |
|
|
7 |
|
23 |
|
0.4 |
|
|
0.06 |
|
Amortization of purchased
intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
160 |
|
|
— |
|
|
36 |
|
124 |
|
2.0 |
|
|
0.33 |
|
Structural optimization and
other special charges (b) |
|
8 |
|
|
(54)
|
|
|
— |
|
|
62 |
|
|
— |
|
|
6 |
|
56 |
|
(0.4 |
) |
|
0.15 |
|
Medical device regulations
(c) |
|
2 |
|
|
(2)
|
|
|
(28)
|
|
|
32 |
|
|
— |
|
|
6 |
|
26 |
|
0.2 |
|
|
0.07 |
|
Recall-related matters
(d) |
|
— |
|
|
— |
|
|
— |
|
|
4 |
|
|
— |
|
|
1 |
|
3 |
|
0.1 |
|
|
— |
|
Regulatory and legal matters
(e) |
|
— |
|
|
4 |
|
|
— |
|
|
(4)
|
|
|
— |
|
|
— |
|
(4)
|
|
— |
|
|
(0.02)
|
|
Tax matters (f) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(12)
|
|
|
17 |
|
(29 |
|
2.6 |
|
|
(0.07)
|
|
Adjusted |
$ |
2,843 |
|
$ |
1,457 |
|
$ |
323 |
|
$ |
1,063 |
|
$ |
(64)
|
|
$ |
139 |
$ |
860 |
|
13.9 |
% |
$ |
2.25 |
|
Adjusted percent net
sales |
|
63.3 |
% |
|
32.4 |
% |
|
7.2 |
% |
|
23.7 |
% |
(1.4) % |
nm |
|
19.1 |
% |
|
|
nm - not meaningful
(a) |
Charges represent certain acquisition and integration-related costs
associated with acquisitions, including charges for termination of
sales relationships ($0 in 2023, $6 in 2022), employee retention
and workforce reductions ($0 in 2023, $14 in 2022), changes in the
fair value of contingent consideration (($2) in 2023, ($9) in
2022), manufacturing integration costs ($0 in 2023, $8 in 2022) and
other integration-related activities such as deal costs and costs
associated with legal entity rationalization ($4 in 2023, $11 in
2022). |
(b) |
Charges represent the costs associated with employee retention and
workforce reductions ($47 in 2023, $20 in 2022), the
closure/transfer of manufacturing and other facilities, including
site closure costs, contract termination costs and redundant
employee costs during the work transfers ($12 in 2023, $29 in
2022), product line exits (primarily inventory, long-lived asset
and specifically-identified intangible asset write-offs) ($6 in
2023, ($8) in 2022), certain long-lived and intangible asset
write-offs and impairments ($2 in 2023, $12 in 2022) and other
charges ($5 in 2023, $9 in 2022). |
(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 minimum of
the range of probable loss to resolve certain recall-related
matters. |
(e) |
Charges represent changes in our best estimate of the minimum of
the range of probable loss to resolve certain regulatory or other
legal matters and the amount of favorable awards from
settlements. |
(f) |
Benefits and charges represent the accounting impact of certain
significant and discrete tax items, including adjustments related
to the transfer of certain intellectual properties between tax
jurisdictions (charges of $47 in 2023 and $46 in 2022), certain tax
audit settlements (benefit of $4 included in Income Taxes for 2023,
$0 for 2022) and the reversal of deferred income tax on
undistributed earnings of foreign subsidiaries ($0 for 2023,
benefit of $71 for 2022). |
Six Months 2023 |
Gross Profit |
Selling, General & Administrative
Expenses |
Research, Development & Engineering
Expenses |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings |
EffectiveTax Rate |
Diluted EPS |
Reported |
$ |
6,197 |
|
$ |
3,487 |
|
$ |
685 |
|
$ |
1,700 |
|
$ |
(122)
|
|
$ |
248 |
|
$ |
1,330 |
|
15.7 |
% |
$ |
3.47 |
Reported percent net
sales |
|
63.4 |
% |
|
35.7 |
% |
|
7.0 |
% |
|
17.4 |
% |
(1.2) % |
nm |
|
13.6 |
% |
|
|
Acquisition and
integration-related costs: |
|
|
|
|
|
|
|
|
|
Inventory stepped-up to fair value |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
Other acquisition and integration-related (a) |
|
— |
|
|
(8)
|
|
|
— |
|
|
8 |
|
|
— |
|
|
3 |
|
|
5 |
|
0.1 |
|
|
0.01 |
Amortization of purchased
intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
322 |
|
|
— |
|
|
68 |
|
|
254 |
|
1.4 |
|
|
0.66 |
Structural optimization and
other special charges (b) |
|
11 |
|
|
(103)
|
|
|
— |
|
|
114 |
|
|
— |
|
|
25 |
|
|
89 |
|
0.6 |
|
|
0.23 |
Medical device regulations
(c) |
|
— |
|
|
— |
|
|
(55)
|
|
|
55 |
|
|
— |
|
|
13 |
|
|
42 |
|
0.3 |
|
|
0.11 |
Recall-related matters
(d) |
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
— |
|
|
1 |
|
|
2 |
|
— |
|
|
0.01 |
Regulatory and legal matters
(e) |
|
— |
|
|
(20)
|
|
|
— |
|
|
20 |
|
|
— |
|
|
3 |
|
|
17 |
|
— |
|
|
0.04 |
Tax matters (f) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(9)
|
|
|
(66)
|
|
|
57 |
|
(4.0)
|
|
|
0.15 |
Adjusted |
$ |
6,208 |
|
$ |
3,356 |
|
$ |
630 |
|
$ |
2,222 |
|
$ |
(131)
|
|
$ |
295
|
|
$ |
1,796 |
|
14.1 |
% |
$ |
4.68 |
Adjusted percent net
sales |
|
63.5 |
% |
|
34.3 |
% |
|
6.4 |
% |
|
22.7 |
% |
(1.3) % |
nm |
|
18.4 |
% |
|
|
Six Months 2022 |
Gross Profit |
Selling, General & Administrative
Expenses |
Research, Development & Engineering
Expenses |
Operating Income |
Other Income (Expense), Net |
Income Taxes |
Net Earnings |
EffectiveTax Rate |
Diluted EPS |
Reported |
$ |
5,560 |
|
$ |
3,249 |
|
$ |
764 |
|
$ |
1,219 |
|
$ |
(113)
|
|
$ |
127 |
|
$ |
979 |
|
11.5 |
% |
$ |
2.56 |
Reported percent net
sales |
|
63.4 |
% |
|
37.1 |
% |
|
8.7 |
% |
|
13.9 |
% |
(1.3) % |
nm |
|
11.2 |
% |
|
|
Acquisition and
integration-related costs: |
|
|
|
|
|
|
|
|
|
Inventory stepped-up to fair value |
|
12 |
|
|
— |
|
|
— |
|
|
12 |
|
|
— |
|
|
3 |
|
|
9 |
|
0.1 |
|
|
0.02 |
Other acquisition and integration-related (a) |
|
— |
|
|
(174)
|
|
|
— |
|
|
174 |
|
|
— |
|
|
46 |
|
|
128 |
|
2.0 |
|
|
0.33 |
Amortization of purchased
intangible assets |
|
— |
|
|
— |
|
|
— |
|
|
310 |
|
|
— |
|
|
71 |
|
|
239 |
|
2.6 |
|
|
0.63 |
Structural optimization and
other special charges (b) |
|
10 |
|
|
(82)
|
|
|
(79)
|
|
|
171 |
|
|
— |
|
|
31 |
|
|
140 |
|
0.6 |
|
|
0.37 |
Medical device regulations
(c) |
|
2 |
|
|
(2)
|
|
|
(56)
|
|
|
60 |
|
|
— |
|
|
10 |
|
|
50 |
|
0.2 |
|
|
0.13 |
Recall-related matters
(d) |
|
— |
|
|
— |
|
|
— |
|
|
18 |
|
|
— |
|
|
4 |
|
|
14 |
|
0.2 |
|
|
0.04 |
Regulatory and legal matters
(e) |
|
— |
|
|
(33)
|
|
|
— |
|
|
33 |
|
|
— |
|
|
9 |
|
|
24 |
|
0.4 |
|
|
0.06 |
Tax matters (f) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(12)
|
|
|
(41)
|
|
|
29 |
|
(3.7)
|
|
|
0.08 |
Adjusted |
$ |
5,584 |
|
$ |
2,958 |
|
$ |
629 |
|
$ |
1,997 |
|
$ |
(125) |
|
$ |
260 |
|
$ |
1,612 |
|
13.9 |
% |
$ |
4.22 |
Adjusted percent net
sales |
|
63.7 |
% |
|
33.7 |
% |
|
7.2 |
% |
|
22.8 |
% |
(1.4) % |
nm |
|
18.4 |
% |
|
|
(a) |
Charges represent certain acquisition and integration-related costs
associated with acquisitions, including charges for termination of
sales relationships ($0 in 2023, $14 in 2022), employee retention
and workforce reductions ($0 in 2023, $18 in 2022), changes in the
fair value of contingent consideration (($3) in 2023, ($25) in
2022), manufacturing integration costs ($2 in 2023, $17 in 2022),
stock compensation payments upon a change in control ($0 in 2023,
$132 in 2022) and other integration-related activities such as deal
costs and costs associated with legal entity rationalization ($9 in
2023, $18 in 2022). |
(b) |
Charges represent the costs associated with employee retention and
workforce reductions ($68 in 2023, $29 in 2022), the
closure/transfer of manufacturing and other facilities, including
site closure costs, contract termination costs and redundant
employee costs during the work transfers ($24 in 2023, $46 in
2022), product line exits (primarily inventory, long-lived asset
and specifically-identified intangible asset write-offs) ($9 in
2023, ($8) in 2022), certain long-lived and intangible asset
write-offs and impairments ($3 in 2023, $92 in 2022) and other
charges ($10 in 2023, $12 in 2022). |
(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 minimum of
the range of probable loss to resolve certain recall-related
matters. |
(e) |
Charges represent changes in our best estimate of the minimum of
the range of probable loss to resolve certain regulatory or other
legal matters and the amount of favorable awards from
settlements. |
(f) |
Benefits and charges represent the accounting impact of certain
significant and discrete tax items, including adjustments related
to the transfer of certain intellectual properties between tax
jurisdictions (charges of $94 in 2023 and $92 in 2022), certain tax
audit settlements (benefit of $9 included in Other Income
(Expense), Net for 2023 and benefit of $24 included in Income Taxes
for 2023, $0 for 2022) and the reversal of deferred income tax on
undistributed earnings of foreign subsidiaries ($0 for 2023,
benefit of $71 for 2022). |
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