Stryker : 2020 Comprehensive Report

2020 Comprehensive Report

Financial, environmental, social and governance

Table of contents

Performance and governance

Patient impact	3
CEO stakeholder letter	5
Who we are	7
Corporate Responsibility strategy	9
Governance	11
Leadership	12
Financial highlights	15
Innovation, mergers and acquisitions	17
Global recognition	20
Product quality	21
Operating with integrity	22
Business ethics and ethical marketing	23
Supply chain management	25
Social impact
Community engagement	27

Medical education	29
Access and affordability	31
Employee safety	32
Employee training and development	33
Diversity, equity and inclusion	34
COVID-19: Our response efforts	38
Globalization	42
Environmental sustainability
Carbon neutrality: Our journey to 2030	43
Environment	45
Product design and lifecycle management	50
Data summary
About this report	52
Forward-looking statements	52
GRI index	53
SASB index	59

GRI and SASB references included throughout the report, see data summary for details

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Performance and governance

Patient impact

A young dancer with scoliosis faces a bright future after instrumentation with Stryker technology thanks to two surgical pioneers

Dr. Laurel Blakemore

Pediatric Specialists of Virginia

Life can get complicated when a bright, active teenager, who's an accomplished and passionate dancer, must face the prospects of complex spinal surgery to address a worsening case of scoliosis, or curvature of the spine. It's a procedure that will have an impact on the rest of her life.

Seventeen-year-old Destiney Jackson, from Gainesville, Florida, has been dancing since she was three. "It's always been a big part of my life," she says with a winning smile. "It's the way I express myself; I love it."

A good student and a member of her high school's competitive dance team, Destiney endured long practices and began to feel unusually sore and uncomfortable. "It started affecting my confidence, and I was afraid that my appearance was crooked," she says. She realized her condition was getting worse.

The path forward

That's where Dr. Laurel Blakemore comes in, a renowned orthopaedic surgeon with expertise in pediatric scoliosis and other spinal deformities -  a pioneering role model and advocate for women in

the field. While she discussed each treatment's pros and cons with Destiney and her parents, it became clear to all that surgery was the best option.

"Left untreated, scoliosis can seriously impact the quality of your life and your longevity," says Dr. Blakemore, who was Chief of Pediatric Orthopaedics at the University of Florida College of Medicine at the time and is now CEO of Pediatric Specialists of Virginia. "As the curvature worsens, people can end up in pain, with shortness of breath and a decrease of lung capacity," she adds.

"Making the decision for surgery was nerve-wracking," says Destiney's father, Kevin, "but we realized we had to go ahead." Her mother, Patrice, says the family focused on staying positive. Destiney agreed, saying, "We knew we were in good hands."

"Our objective was to stop Destiney's curve from getting bigger and correct the existing curve as much as possible," Dr. Blakemore explains. During surgery, Dr. Blakemore used Stryker's Mesa 2 Deformity Spinal System, which, she says, is "the first multiple reduction tool in one system1 and, I believe, very effective and versatile. It's also small and lightweight."

"The first time I danced [again] felt amazing"

- Destiney Jackson

1 See references on page 61

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Performance and governance

The journey to recovery

"Coming out of surgery, I was loopy but happy it was over," Destiney explains. When she first stood up, she had grown one-and-a-half inches. Because the surgery went so well and she was otherwise healthy, Destiney was discharged after only two days, ready to begin recovery.

"The first time I danced [again] felt amazing," Destiney says, beaming. "It was great to get back to normal, and I soon realized I could do things like cartwheels and rolls without pain. I even started wearing high heels after a month."

Now Destiney can look to her future with optimism. "I'm still deciding on college, and I'm interested in graphic design or computer science - I'm not sure yet," she says. "But dancing will always be a part of my life."

Nana Prof Oheneba Boachie-Adjei Woahene II

Foundation of Orthopedics and Complex Spine (FOCOS)

Building the tools to treat scoliosis

Half a world away from Florida, in Ghana, lives renowned orthopaedic surgeon Nana Prof Oheneba Boachie-Adjei Woahene II, who helped create the Mesa 2 Deformity Spinal System used in complex surgeries like Destiney's. Dr. Boachie-Adjei is the founder of the Foundation of Orthopedics and Complex Spine (FOCOS) and FOCOS Orthopedic Hospital in Accra. He is a member of our Spine division's scientific board.

"The technology we developed for Mesa 2 is simple and versatile and designed to address difficult maneuvers for complex spinal pathologies - replacing what we used to do with wires," he says.

A former professor at the Weill Cornell Medical College and Chief of Scoliosis at the Hospital for Special Surgery, both in New York, Dr. Boachie- Adjei founded FOCOS as a medical mission. The goal: to make quality orthopaedic and spine care possible, especially for the poor, vulnerable and underserved populations across Ghana and the West African sub-region. Opened in 2012, the 70- bed state-of-the-art orthopaedic hospital treats some 300-400 people a year, about half getting care for free.

In 2020, in addition to the countless professional awards he has received, Professor Boachie-Adjei was named the "essential chief" of the Asantehene, King of the Ashanti kingdom, for his dedication, commitment and service.

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Performance and governance

Dear stakeholders,

2020 was a year like no other! Stryker is weathering the COVID-19 storm and continues to be well-positioned for the future. The pandemic's impact was dramatic in the second quarter and continued thereafter, resulting in our first annual decline in revenue since going public in 1979. However, we did well in keeping our employees safe, serving our customers, and displaying strong financial discipline, including delivering a record year of cash flow. The halting of elective procedures in various geographies around the world was the primary cause for sales declines across multiple divisions and was most strongly felt in our hip, knee, instruments and endoscopy businesses. Our performance continued to outpace our competition but was below our normal expectations given the macroeconomic conditions.

Culture and leadership

The importance of our mission was reinforced by the pandemic, and, in 2020, together with our customers, we were driven to make healthcare better. Many of our employees went to work on-site every day during the pandemic, to manufacture critical products or support our customers on the front lines of healthcare delivery. Our focus on safety remained a top priority, and in addition to effective COVID prevention measures,

we had an excellent reduction in injury rates in our manufacturing facilities. We embraced flexible work practices and employee well-being, and will evolve our ways of working based on our learnings through this challenging time. We continue to be regarded as a great place to work and moved up three spots to #5 in Fortune's World's Best Workplaces list. We

also received Great Place to Work awards around the world, including in Europe and Asia-Pacific countries. We are making strong progress on Diversity, Equity and Inclusion (DE&I) by empowering our Employee Resource Groups and focusing on inclusive management practices, including a novel, internally developed training program called Think Twice.

We had several changes to our Board of Directors this year. We welcomed new board members Lisa M. Skeete Tatum, Founder and CEO of Landit, Inc., and Dr. Giovanni Caforio, Chairman and CEO of Bristol Myers Squibb, and we look forward to their contributions. In addition, Roch Doliveux announced that after 10 years of dedicated service, he will not stand for re-election in May 2021 (see p. 12). On our leadership team, Katherine Owen announced her retirement from the Vice President of Strategy and Investor Relations role in March, after 13 years of valued service (see p. 14).

Financial performance

Largely due to the pandemic, our reported sales declined 3.6 percent, our reported net earnings decreased 23.2 percent, and our adjusted net earnings decreased 9.9 percent, while we delivered $3.3 billion of cash from operations which was a

50 percent increase from 2019. As a commitment to our shareholders and our long-term goals we continued to increase our dividend rate, including by 9.6 percent for the January 2021 payment.

Kevin A. Lobo

Chair and CEO

Innovation, mergers and acquisitions

A hallmark of our historic growth record is steady innovation and acquisitions. In November, we closed the largest acquisition in our company's history, Wright Medical, a fast-growing leader in extremities that will bolster our existing Trauma & Extremities business. We also launched many exciting products, including a wireless Acute Care bed and new product offerings in Neurovascular, Spine and Foot and Ankle. We released updated hip software for our Mako SmartRobotics System, secured regulatory approval for Mako applications in China, Brazil and Russia, and in spite of the pandemic, installed a record number of Mako Systems.

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