ABOUT STRYKER
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 Orthopaedics, Medical and Surgical, and Neurotechnology
and Spine that help improve patient and hospital outcomes.
We segregate our operations into three reportable business segments:
Orthopaedics, MedSurg, and Neurotechnology and Spine. Orthopaedics products
consist primarily of implants used in hip and knee joint replacements and trauma
and extremities surgeries. MedSurg products include surgical equipment and
surgical navigation systems (Instruments), endoscopic and communications systems
(Endoscopy), patient handling, emergency medical equipment and intensive care
disposable products (Medical), reprocessed and remanufactured medical devices
(Sustainability) and other medical device products used in a variety of medical
specialties. Neurotechnology and Spine products include neurosurgical,
neurovascular and spinal implant devices.
COVID-19 Pandemic
The COVID-19 global pandemic has led to severe disruptions in the market and the
global and United States economies that may continue for a prolonged duration
and trigger a recession or a period of economic slowdown. In response, various
governmental authorities and private enterprises have implemented numerous
measures to contain the pandemic, such as travel bans and restrictions,
quarantines, shelter-in-place orders and shutdowns. A significant number of our
global suppliers, vendors, distributors and manufacturing facilities are located
in regions that have been affected by the pandemic. Those operations have been
materially adversely affected by restrictive government and private enterprise
measures implemented in response to the pandemic.
Some of our products are particularly sensitive to reductions in deferrable
medical procedures. Deferrable medical procedures were suspended in the first
quarter of 2020 in many of the markets where our products are marketed and sold,
which negatively affected our business, cash flows, financial condition and
results of operations. While we have seen progressive improvement in the second
and third quarters, to the extent individuals are required to continue to
de-prioritize or delay deferrable procedures as a result of the COVID-19
pandemic or otherwise, our business, cash flows, financial condition and results
of operations could be negatively affected.
Overview of the Three and Nine Months
The response to the COVID-19 pandemic has included unprecedented measures to
slow the spread of the virus taken by
local governments and health care authorities globally, including the
postponement of deferrable medical procedures and social contact restrictions,
which have had, and we expect will continue to have, a significant negative
impact on Stryker's operations and financial results. While we are still
recovering from the impacts of the COVID-19 pandemic, most of our businesses
reported overall increased unit volume during the third quarter.
In the three months 2020 we achieved sales growth of 4.2%. Excluding the impact
of acquisitions sales grew 3.3% in constant currency. We reported operating
income margin of 23.0%, net earnings of $621 and net earnings per diluted share
of $1.63. Excluding the impact of certain items, we expanded adjusted operating
income margin(1) by 260 bps to 28.0%, with adjusted net earnings(1) of $812 and
growth of 12.0% in adjusted net earnings per diluted share(1).
In the nine months 2020 we experienced sales declines of 6.2%. Excluding the
impact of acquisitions sales decreased 6.3% in constant currency. We reported
operating income margin of 14.6%, net earnings of $1,031 and net earnings per
diluted share of $2.71, including $170 of charges related to certain in-process
asset impairments (primarily the portion of our investment in a new global ERP
system that was in-process of being developed for future deployment) and product
line and other exit costs resulting from our decision to suspend certain
investments due to pandemic-related constraints. Excluding the impact of certain
items, adjusted operating income margin(1) was 22.3%, with adjusted net
earnings(1) of $1,756 and a reduction of 19.9% in adjusted net earnings per
diluted share(1).
Recent Developments
In January 2020 we repaid $500 of our senior unsecured notes with a coupon of
4.375% that were due on January 15, 2020. In June 2020 we issued $650 of senior
unsecured notes with a fixed interest rate of 1.150% due on June 15, 2025,
$1,000 of senior unsecured notes with a fixed interest rate of 1.950% due on
June 15, 2030 and $650 of senior unsecured notes with a fixed interest rate of
2.900% due on June 15, 2050. Refer to Note 8 to our Consolidated Financial
Statements for further Information.
In the nine months 2020 we did not repurchase any shares of our common stock
under our authorized repurchase program. The total dollar value of shares of our
common stock that could be acquired under our authorized repurchase program was
$1,033 as of September 30, 2020. As previously announced we intend to maintain
the suspension of our share repurchase program through 2021.

(1) Refer to "Non-GAAP Financial Measures" for a discussion of non-GAAP financial measures used in this report and a reconciliation to the most directly comparable GAAP financial measure.

Dollar amounts are in millions except per share amounts or as otherwise specified.

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