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 elective
medical procedures. Elective 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. In the three months 2021 the continued impact of the
COVID-19 pandemic and related surgical procedure cancellations negatively
impacted our sales primarily in the United States and Europe. Towards the end of
the quarter sales momentum showed improvement primarily in our United States and
Asia Pacific businesses. Demand increases for certain capital products continued
from the fourth quarter 2020.
Overview of the Three Months
The response to the COVID-19 pandemic has included measures to slow the spread
of the virus taken by governments and health
care authorities globally, including the postponement of elective medical
procedures and social contact restrictions. While there is starting to be some
recovery in certain geographies, there continues to be a negative impact on our
operations and financial results.
In the three months 2021 we achieved sales growth of 10.2% and 12.4% from 2020
and 2019. Excluding the impact of acquisitions sales grew 1.8% and 4.7% in
constant currency. We reported operating income margin of 11.6%, net earnings of
$302 and net earnings per diluted share of $0.79. Excluding the impact of
certain items, adjusted operating income margin(1) contracted by 50 bps to
23.5%, with adjusted net earnings(1) of $737 and adjusted net earnings per
diluted share(1) of $1.93 representing growth of 4.9%.
Recent Developments
In March 2021 we repaid $750 of our senior unsecured notes with a coupon of
2.625% that were due on March 15, 2021. Refer to Note 8 to our Consolidated
Financial Statements for further information.
We have not repurchased any shares of our common stock under our authorized
repurchase program in 2021. The total dollar value of shares of our common stock
that could be acquired under our authorized share repurchase program was $1,033
as of March 31, 2021. We previously announced our intention to suspend our
repurchase program through 2021.
In China the government launched a national program for volume-based procurement
of high value medical consumables to reduce healthcare costs. The government
will award a contract to the lowest bidders who are able to satisfy the quality
and quantity requirements. The successful bidders will be guaranteed a sales
volume for certain periods, while losing a volume-based procurement tender
process will result in a loss of market share. This process may also enable
manufacturers to lower their distribution and commercial costs. The
implementation of the tender process may negatively impact our existing
commercial operations of joint replacement, spine and trauma products in China.
Currently the government is collecting data related to these products. We are
responding to the request for information and are closely monitoring this
process for any indicators of potential impairment of goodwill or intangible
assets related to our business in China. Our business in China represented
approximately 2% of our revenues for the year ended December 31, 2020.
(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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