ITEM 1A.
RISK FACTORS.
Our operations and financial results are subject to various risks
and uncertainties discussed below that could materially and
adversely affect our business, cash flows, financial condition and
results of operations. Additional risks and uncertainties not
currently known to us or that we currently deem not to be material
or that could apply to any company may also materially and
adversely affect our business, cash flows, financial condition or
results of operations. If any of the risks discussed below or other
risks actually occur or continue to occur, our business, financial
condition, operating results or cash flows could be materially
adversely affected. Accordingly, you should carefully consider the
following risk factors, as well as other information contained in or
incorporated by reference in this report.
BUSINESS AND OPERATIONAL RISKS
We use a variety of raw materials, components, devices and
third-party services in our global supply chains, production
and distribution processes; significant shortages, price
increases or unavailability of third-party services have in the
past increased, and could in the future increase, our
operating costs and could require significant capital
expenditures or adversely impact the competitive position of
our products: Our reliance on certain suppliers to secure raw
materials, components and finished devices, and on certain third-
party service providers, such as sterilization service providers,
exposes us to the risk of product shortages and unanticipated
increases in prices, whether due to inflationary pressure,
regulatory changes, litigation exposure, tariffs, geopolitical
tensions or otherwise. For example, in the past we have
experienced limited product availability due to an electronic
component shortage in certain product lines. If a similar shortage
occurs in the future with respect to any raw materials or
components, we may not be able to obtain them from our
suppliers on a timely basis, or at all, or identify alternative
suppliers. In addition, several raw materials, components,
finished devices and services are procured from a sole source
due to, among other things, the quality considerations, unique
intellectual property considerations or constraints associated with
regulatory requirements. If sole-source suppliers or service
providers are unable or unwilling to deliver these materials or
services as a result of financial difficulties, business disruptions,
acquisition by a third party, natural disasters, embargoes, tariffs
or otherwise, we may not be able to manufacture or have
available one or more products during such period of
unavailability and our business could suffer, possibly materially.
In certain cases, we may not be able to establish additional or
replacement suppliers for such materials or service providers for
such services in a timely or cost-effective manner, often as a
result of FDA and other regulations that require, among other
things, validation of materials, components and services prior to
their use in or with our products. In certain instances we have
been unable to meet demand due to supply chain challenges,
which has led to loss of sales. Although the impacts have not
been material to date, an inability to meet demand due to supply
chain challenges in the future could materially adversely impact
our reputation, the competitive position of our products and our
business. In addition, recently enacted tariffs by the United States
government and retaliatory measures by other governments
could adversely impact our supply chain or the availability of
certain components. Any of the foregoing risks could have a
material adverse impact on our profitability and results of
operations.
In addition, in recent years, the market has experienced
inflationary pressures in part due to global supply chain
disruptions, labor shortages and other impacts following the
COVID-19 pandemic. Inflation in the United States and in many
of the countries where we conduct business has resulted in, and
may in the future result in, high interest rates and increased
capital, energy, shipping and labor costs, weakening or
strengthening exchange rates against the United States Dollar
and other similar effects. We have continued to experience, and
may in the future experience, inflationary increases in
manufacturing costs and operating expenses, as well as negative
impacts from weakening or strengthening exchange rates against
the United States Dollar. Although we have been able to pass
certain cost increases on to our customers, we have not been
able to pass along all cost increases and we cannot guarantee
that we will be able to do so in the future, including in connection
with proposed or enacted tariffs. Inflation, high interest rates,
interest rate volatility or proposed or enacted tariffs may also
cause our customers to reduce or delay orders for our products
and services. Any of the foregoing could have a material adverse
impact on our sales, profitability and results of operations.
We are subject to pricing pressures as a result of cost
containment measures in the United States and other
countries and other factors, including changes in
reimbursement practices and coverage policies and third-
party payor cost containment measures: Initiatives to limit the
growth of general healthcare expenses and hospital costs are
ongoing and gaining increased attention in the markets in which
we do business. These initiatives are sponsored by government
agencies, legislative bodies and the private sector and include
price regulation and competitive pricing. For example, China has
implemented a volume-based procurement process designed to
decrease prices for medical devices and other products. Pricing
pressure has also increased due to pressures on healthcare
budgets, continued consolidation among healthcare providers,
trends toward managed care, the shift toward governments
becoming the primary payers of healthcare expenses, reduction
in coverage or reimbursement levels and medical procedure
volumes and government laws and regulations relating to sales
and promotion, reimbursement and pricing generally. Coverage
policies and reimbursement levels can vary across the payer
community globally, regionally, and locally, and may affect which
products customers purchase, the market acceptance rate for
new technologies and the prices customers are willing to pay for
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STRYKER CORPORATION
2025 FORM 10-K
those products in a particular jurisdiction. Furthermore, any
changes to the coverage or reimbursement landscape, or
adverse decisions relating to our products by administrators of
these systems could significantly reduce reimbursement for
procedures using our products or result in denial of
reimbursement for those products, which could adversely affect
customer demand, or the price customers are willing to pay for
such products. Public and private payers have challenged, and
are expected to continue to challenge, prices charged for medical
products and services. Such downward pricing pressures from
any or all of these payers may result in an adverse effect on our
business, results of operations, financial condition and cash
flows. We have also reduced prices for certain products due to
increased competition and if we further reduce prices, we could
become less profitable. In addition, due to healthcare industry
consolidation in recent years, competition to provide goods and
services to industry participants has become, and may continue
to become, more intense, and this consolidation has produced,
and may continue to produce, larger enterprises with more
bargaining power. Pricing pressures related to any of the
foregoing or other factors have impacted and could in the future
impact our results of operations and profitability.
We operate in a highly competitive industry in which
competition and the regulatory burden in the development
and improvement of new and existing products is
significant: The markets in which we compete are highly
competitive, and a significant element of our strategy is to
increase revenue growth by focusing on innovation, new product
development and improvement of existing products, including
connectivity solutions. New business models, products and
surgical procedures, as well as improvements to existing
products, are introduced on an ongoing basis and our present or
future products could be rendered obsolete or uneconomical by
internal or external technological advances, including by our
existing competitors and new market entrants, which could
adversely impact demand for certain of our existing products. The
success of our products and services depends on, among other
things, our ability to properly identify customer needs and predict
future needs, including connectivity solutions; innovate and
develop new technologies, services and applications at an
accelerated pace; and appropriately allocate our research and
development spending to products and services with higher
growth. Our existing competitors and new market entrants may
respond more quickly to or integrate new or emerging
technologies such as robotics, artificial intelligence (AI) and
machine learning in their product offerings, undertake more
extensive marketing campaigns, have greater access to clinical
information to support ongoing product position in the market,
have greater financial, marketing and other resources or be more
successful in attracting potential customers, employees and
strategic partners. There can be no assurance that any products
now in development, or that we may seek to develop in the
future, will achieve technological feasibility, obtain regulatory
approval or gain market acceptance. If we are unable to develop
and launch new products, our ability to maintain or expand our
market position in the markets in which we participate may be
negatively impacted.
We may be unable to maintain adequate working
relationships with healthcare professionals: We work with
healthcare professionals in a transparent and responsible
manner and seek to maintain these relationships with respected
physicians and medical personnel in healthcare organizations,
such as hospitals and universities, who assist in product research
and development. We rely on these professionals to assist us in
the development and improvement of proprietary products. If we
are unable to maintain these relationships due to regulatory
restrictions, hospital access restrictions for non-patients or for
other reasons, our ability to develop, market and sell new and
improved products could be adversely affected.
We rely on indirect distribution channels and major
distributors that are independent of Stryker: In many markets
we rely on indirect distribution channels to market, distribute and
sell our products. These indirect channels often are the main
point of contact for the healthcare professionals and healthcare
organization customers who buy and use our products. Our
ability to continue to market, distribute and sell our products may
be at risk if the indirect channels become insolvent, choose to sell
competitive products, choose to stop selling medical technology,
fail to adhere to Stryker requirements or are subject to new or
additional government regulation.
We are subject to risks associated with our extensive global
operations: We develop, manufacture and distribute our products
globally. Our global operations are subject to risks and costs
related to, among other things, changes in coverage or
reimbursement levels from third-party payors in the United States
and other countries; changes in regulatory requirements (such as
the staggered phase-in period for manufacturers to comply with
the European Union Medical Device Regulation (MDR) through
December 2028); differing local product preferences and product
requirements; diminished protection of intellectual property in
some countries; tariffs and other trade protection measures, as
well as increasing localization and protectionism policies in
certain jurisdictions; international trade disputes and import or
export requirements; difficulty in staffing and managing foreign
operations; introduction of new internal business structures and
programs; political and economic instability and uncertainty;
current or potential geopolitical conflicts, such as the tensions
between China and Taiwan and the wars in Ukraine and the
Middle East, and related sanctions and other developments;
disruptions of transportation, including port closures, increased
border controls or border closures or reduced transportation
availability, due to military conflicts, a global pandemic of
contagious diseases; increased energy or transportation costs;
fluctuations in currency exchange rates and financial markets;
and increased security threats to our supply chain. For example,
the United States has recently enacted and proposed to enact
new tariffs. These developments, the perception they could
occur, or changes to the existing exemption framework may have
a material adverse effect on global economic conditions and may
significantly reduce global trade. Many of these risks are rapidly
evolving and subject to an accelerating pace of change. Our
business could be adversely impacted if we are unable to
successfully manage these and other risks of global operations in
an increasingly volatile environment. In addition, in many
countries, the laws and regulations applicable to us or our
industry are evolving, and we have in certain cases become
subject to divergent and conflicting laws and regulations across
our operations, which has increased the risks we are subject to.
We may be unable to capitalize on previous or future
acquisitions: In addition to internally developed products, we
invest in new products and technologies through acquisitions,
including our acquisition of Inari in 2025. Such investments are
inherently risky, and we cannot guarantee that any acquisition will
be successful or will not have a material unfavorable impact on
us. The risks include the activities required and resources
allocated to integrate new businesses, a slower pace of
integration than initially projected, diversion of management time
that could adversely affect management’s ability to focus on other
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STRYKER CORPORATION
2025 FORM 10-K
projects, the inability to realize the expected benefits, savings or
synergies from the acquisition, the loss of key personnel,
litigation resulting from the acquisition and exposure to
unexpected liabilities of acquired companies. Certain acquisitions
are subject to antitrust and competition laws, and antitrust
scrutiny by regulatory agencies and changes to the regulatory
approval process in the United States and foreign jurisdictions
may cause approvals to take longer than anticipated to obtain,
not be obtained at all, or contain burdensome conditions, which
may jeopardize, delay or reduce the anticipated benefits of
acquisitions to us and could impede the execution of our
business strategy. In addition, we cannot be certain that the
businesses we acquire will become or remain profitable.
We, our business partners or our third-party vendors could
experience a material failure or breach of a key information
technology system, network, process or site: We rely
extensively on information technology (IT) systems to conduct
business. In addition, we rely on networks and services, including
internet sites, cloud and software-as-a-service solutions, data
hosting and processing facilities and tools and other hardware,
software (including open-source software) and technical
applications and platforms, some of which are managed, hosted,
provided and/or used by third parties or their vendors, to assist in
conducting our business. Furthermore, numerous and evolving
cybersecurity threats have posed, and will continue to pose, risks
to the security of our IT systems, networks and product offerings,
as well as the confidentiality, availability and integrity of our data.
Emerging technologies such as generative AI may be used by
malicious actors to create more targeted phishing narratives,
spread disinformation about us or our products or otherwise
strengthen social engineering capabilities. An increasing risk of
civil unrest, political tensions, wars or other military conflicts may
also impact the cybersecurity threat risk landscape. Some of our
products, services, and information technology systems contain
or use open-source software which poses particular risks,
including potential security vulnerabilities, licensing compliance
issues and quality issues. We, our customers and third-party
hosting services have experienced, and expect to continue to
experience, security breaches of, unauthorized access to, and
disruptions of, products or systems. While such breaches,
unauthorized access and disruptions have not had a material
effect on us to date, we cannot guarantee that any future breach
or unauthorized access will not be material and any breach or
unauthorized access could impact the use of such products and
systems and the security of information stored therein. Although
we have made investments and expect to continue to make
investments seeking to address these threats, including
monitoring of networks and systems, use of AI, hiring of experts,
employee training, security policies for employees and third-party
providers and designing, developing and maintaining processes
and procedures to come into compliance with regulatory and
legal enactments such as Section 524B of the Federal Food,
Drug, and Cosmetic Act in the United States, the techniques used
in these attacks change frequently and may be difficult to detect
for periods of time and we may face difficulties in anticipating and
implementing adequate preventative measures.
When cybersecurity or other technology related incidents occur,
we follow our incident response protocols and address them in
accordance with applicable governmental regulations and other
legal requirements. Our response to these incidents and our
investments to protect our product offerings and information
technology infrastructure and data may not shield us from
significant losses and potential liability or prevent any future
interruption or breach of our systems. Moreover, given the
increasing complexity and sophistication of the techniques used
by threat actors to obtain unauthorized access or disable or
degrade systems, a cyberattack could occur and persist for an
extended period of time before being detected, and we may not
anticipate these acts or mitigate them adequately or timely, which
may compound damages before the incident is discovered or
remediated. The extent of a particular cyber incident and the
steps that we may need to take to investigate the incident may
not be immediately clear, and it may take a significant amount of
time before such investigation can be completed and full and
reliable information about the incident is known. New regulations
may require us to disclose information about a material
cybersecurity incident before it has been resolved or fully
investigated. Additionally, as threats continue to evolve and
increase, and as the regulatory environment and customer
requirements related to information security, data collection and
use, and privacy become increasingly rigorous, we may be
required to devote significant additional resources to modify and
enhance our security controls and to identify and remediate any
security vulnerabilities, which could adversely impact our net
income. In addition, a significant number of our employees
working remotely has exposed us, and may continue to expose
us, to greater risks related to cybersecurity and cyber-liability.
Hardware and software failures or delays in our key information
technology systems, networks, processes or sites could disrupt
our operations, cause the loss of confidential information or
otherwise adversely impact our business. Our systems, networks,
processes and sites may be vulnerable to damage, disruptions
and shutdown from a variety of sources, including malfunctions in
maintenance updates or security patches, design defects, the
age of the technology, network failures, modernization or other
initiatives, human acts and natural disasters. For example, some
of our information technology systems contain legacy third-party
software components for which we depend on a layered security
approach to protect against exploitation, which may not be
effective. Any such damage or disruptions could also compromise
the security of our information systems and networks. These
issues can also arise as a result of failures by, or in the software
or hardware of, third parties, including networks or service
providers, with whom we do business and over whom we have
limited or no control. Any disruption or failure of our systems,
networks, processes or sites could have a material impact on our
business and operations.
If our IT systems, networks or processes are damaged or cease
to function properly for any reason, the networks, service
providers, hardware or software we rely upon fail to function
properly, or we or one of our third-party providers suffer a loss or
disclosure of our business or stakeholder information due to any
number of causes ranging from catastrophic events or power
outages to improper data handling or security breaches or
unauthorized access and our business continuity plans do not
effectively address these failures on a timely basis, we may be
exposed to reputational, competitive and business harm as well
as litigation and regulatory action and fines, penalties and
expenses related thereto.
An inability to successfully manage the implementation of
our new commercial global enterprise resource planning
(ERP) system could adversely affect our operations and
operating results: We are in the process of implementing a new
commercial ERP system. This system will replace many of our
existing operating and financial systems. The implementation is a
major undertaking, both financially and from a management and
personnel perspective. Any material disruptions, delays or
deficiencies in the design and implementation of our new ERP
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STRYKER CORPORATION
2025 FORM 10-K
system could adversely affect our ability to process orders, ship
products, provide services and customer support, send invoices
and track payments, fulfill contractual obligations or otherwise
operate our business.
We may be unable to attract, develop and retain executives
and key employees: Our sales, technical and other key
personnel play an integral role in the development, marketing and
selling of new and existing products. Our future performance also
depends in large part on the continued services of our senior
management. If we are unable to recruit, hire, develop and retain
a talented, competitive workforce in our highly competitive
industry, or if we are unable to plan effective succession for the
future, we may not be able to meet our strategic business
objectives. Inflationary pressures, labor demand and shortages
and other macroeconomic factors have increased and could
further increase the cost of labor and could harm our ability to
recruit, hire and retain talented employees. In addition, increased
unionization could negatively impact our labor costs and ability to
create an engaging, connected culture, which could adversely
affect our ability to recruit, hire, develop and retain a talented,
competitive workforce. Further, if we are unable to maintain
competitive and equitable compensation and benefit programs,
including incentive programs which reward financial and
operational performance, our ability to recruit, hire, engage,
motivate and retain talent could be negatively affected.
Additionally, if we are unable to maintain an inclusive culture that
aligns our workforce with our mission and values, it could
adversely impact our ability to recruit, hire, develop and retain
key talent. Further, our remote and hybrid work practices, and
ability to provide flexible and alternative work arrangements may
not meet the needs or expectations of our employees, including
senior management or other key employees, which could
negatively impact our ability to attract and retain highly skilled
employees, or may harm our culture and/or decrease employee
engagement, which could adversely impact our ability to recruit,
hire, develop and retain a talented, competitive workforce.
Effective succession planning is also important to our long-term
success. Failure to ensure effective transfer of knowledge and
smooth transitions involving executives and other key employees
could hinder our strategic planning and execution. Changes in
our management team may be disruptive to our business, and
any failure to successfully integrate key new hires or promoted
employees could adversely affect our business and results of
operations. The loss of the services of any of our senior
management or other key personnel, or our inability to attract
highly qualified senior management and other key personnel,
could harm our business. Our ability to execute our business
strategy could be impaired if we are unable to replace such
persons timely. In addition, recent legal and regulatory changes
affect our ability to enforce post-termination obligations from
certain employees with respect to non-competition, non-
solicitation and protection of confidential information. This may
negatively impact our ability to retain employees and protect our
information and relationships with customers and other third
parties.
Interruption of manufacturing operations could adversely
affect our business: We and our suppliers have manufacturing
and supply sites all over the world. However, the manufacturing
of certain of our product lines is concentrated in one or more
plants or geographic regions. We have principal manufacturing
and distribution facilities in the United States in Arizona,
California, Florida, Illinois, Indiana, Michigan, Minnesota, New
Jersey, Puerto Rico, Tennessee, Texas, Utah and Washington,
and outside the United States in China, France, Germany,
Ireland, Mexico, the Netherlands, Poland, Switzerland and
Turkey. Damage to our facilities, to our suppliers’ or service
providers’ facilities, or to our central distribution centers as a
result of natural disasters, fires, explosions or otherwise, as well
as issues in our manufacturing arising from a failure to follow
specific internal protocols and procedures, compliance concerns
relating to the quality systems regulation, equipment breakdown
or malfunction, IT system failures or cybersecurity incidents,
environmental hazard incidents or changes to environmental
regulations or other factors, could adversely affect the availability
of our products. In the event of an interruption in manufacturing,
we may be unable to move quickly to alternate means of
producing and distributing affected products to meet customer
demand. In the event of a significant interruption, we may
experience lengthy delays in resuming production or distribution
of affected products due to the need for regulatory approvals, and
we may experience loss of market share, additional expense and
harm to our reputation.
Our insurance program may not be adequate to cover future
losses: We maintain third-party insurance to cover our exposure
to certain property and casualty losses and are self-insured for
claims and expenses related to other property and casualty
losses, including product liability, intellectual property
infringement and enforcement, environmental, and cybersecurity
and data privacy losses. We manage a portion of our exposure to
self-insured losses through a wholly-owned captive insurance
company. Insurance coverage limits provided by third-party
insurers and/or our captive insurance company may not be
sufficient to fully cover certain losses we may experience.
We have experienced, and may continue to experience, a
significant and unpredictable need to adjust our operations
as market demand for certain of our products has shifted
and continues to shift or as may be mandated by
governmental authorities: Some of our products are particularly
sensitive to reductions in elective medical procedures. It is not
possible to predict whether elective medical procedures will be
suspended or reduced in the future and, to the extent individuals
and customers are required to delay or cancel elective
procedures, our business, cash flows, financial condition and
results of operations could be negatively affected. Further, our
customers have experienced, and may continue to experience,
staffing shortages that may result in decreased demand for our
products, which could negatively affect our business and financial
results.
Unpredictable increases in demand for certain of our products
have exceeded in the past, and could exceed in the future, our
capacity to meet such demand timely, which could adversely
affect our customer relationships and result in negative publicity.
In this regard, the accelerated development and production of
products and services to address medical and other requirements
could increase the risk of regulatory enforcement actions, product
defects or related claims or reputational harm, among other
things.
Our use of AI and other emerging technologies could
adversely impact our business and financial results: We
have begun to deploy AI and other emerging technologies in
various facets of our operations and products and we continue to
explore further use cases. The rapid advancement of these
technologies presents opportunities for us in research,
manufacturing, commercialization, and other business
endeavors, but also entails risks, including that AI-generated
content, analyses, or recommendations we utilize could be
deficient, that our competitors may more quickly or effectively
adopt AI capabilities, or that our use of AI or other emerging
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STRYKER CORPORATION
2025 FORM 10-K
technologies increases regulatory, cybersecurity and other
significant risks. In addition, any disruption or failure in the AI
functionality we incorporate into our business activities, products
or services could adversely impact our business or result in
delays or errors in our product offerings. The legal and regulatory
landscape surrounding AI technologies is rapidly evolving and
uncertain, including in the areas of intellectual property,
cybersecurity and privacy and data protection. Compliance with
new or changing laws, regulations or industry standards relating
to AI may impose significant costs on us and limit our ability to
effectively develop, deploy or use AI technologies. Furthermore, if
we are unable to effectively manage the use of AI technologies
by our employees and service providers, our confidential
information, intellectual property and reputation could be put at
risk. Failure to appropriately respond to this evolving landscape
may result in reputational, competitive and business harm as well
as litigation and regulatory action and fines, penalties and
expenses related thereto.
Pandemics and public health emergencies, and the fear
thereof, have in the past materially adversely affected and
could in the future materially adversely affect, our
operations, supply chain, manufacturing, product
distribution, customers and other business activities:
Pandemics and public health emergencies, and the fear thereof,
have in the past materially adversely affected and could in the
future materially adversely affect, our operations, supply chain,
manufacturing, product distribution, customers and other
business activities:
In connection with prior pandemics, governmental authorities and
private enterprises implemented, and may in the future
implement in connection with another pandemic or public health
emergency (or in response to the fear thereof), measures, such
as travel bans and restrictions, quarantines, shelter-in-place
orders and shutdowns. Our customers, global suppliers,
distributors and manufacturing facilities have in the past been,
and could in the future be, materially affected by restrictive
measures implemented in response to a pandemic or public
health emergency, which has in the past caused and could in the
future cause them to be unable to hire and retain employees,
distribute or use our products or provide required services. We
have as a result experienced, and could in the future experience,
delays in, or the suspension of, our manufacturing operations,
sales activities, research and product development activities,
regulatory work streams, clinical development programs and
other important commercial functions, which may result in our
inability to satisfy consumer demand for our products in a timely
manner or at all and which could harm our reputation, future
sales and profitability. The extent of any future pandemic or
public health emergency’s effect on our business and industry will
depend on, among other things, the severity of the disease, the
successful development, distribution and acceptance of vaccines
for diseases, future resurgences and/or the spread of disease
variants, all of which are uncertain and difficult to predict. The
COVID-19 pandemic materially impacted us, and any future
pandemic or public health emergency could materially impact us
and would heighten many of the other risks described in this
report.
LEGAL AND REGULATORY RISKS
Current economic and political conditions make tax rules in
jurisdictions subject to significant change: Our future results
of operations could be affected by changes in the effective tax
rate as a result of changes in tax laws, regulations and judicial
rulings. We are continuing to evaluate the impact of tax reform in
the countries in which we operate as new guidance is published
and new regulations are adopted. In addition, further changes in
the tax laws could arise, including as a result of the base erosion
and profit shifting project undertaken by the Organisation for
Economic Cooperation and Development (OECD). The OECD,
which represents a coalition of member countries, has put forth
two proposed frameworks that revise the existing profit allocation
and nexus rules (Pillar 1) and ensure a minimal level of taxation
(Pillar 2), respectively, and several countries enacted tax
legislation based on these frameworks. In January 2026 the
OECD released Administrative Guidance containing the Side-by-
Side system (SbS System) and introduced two new Pillar 2 safe
harbors for multinationals headquartered in jurisdictions including
the United States with eligible tax systems. The safe harbors
must now be legislated domestically by each country with
enacted Pillar 2 legislation impacted by the new OECD
Administrative Guidance. These tax law changes and any
additional contemplated tax law changes could impact tax
expense in future periods.
We could be negatively impacted by future changes in the
allocation of income to each of the income tax jurisdictions
in which we operate: We operate in multiple income tax
jurisdictions both in the United States and internationally.
Accordingly, our management must determine the appropriate
allocation of income to each jurisdiction based on current
interpretations of complex income tax regulations. Income tax
authorities regularly perform audits of our income tax filings.
Income tax audits associated with the allocation of income and
other complex issues, including inventory transfer pricing and
cost sharing, product royalty and foreign branch arrangements,
may require an extended period to resolve and may result in
significant income tax adjustments including the assessment of
additional income taxes, interest and penalties. For example, we
received a final audit report and assessments from the German
Federal Central Tax Office ("FCTO") related to audits of tax years
2010 through 2017. Although we intend to defend our filing
positions through the FCTO independent appeals process and, if
necessary, litigation, there can be no assurance that we will be
successful. If the resolution of this matter results in additional
German income taxes, we intend to seek associated foreign tax
credits, but such credits may not be available on a timely basis or
at all, or may not fully offset any additional liability. Any such
outcome could materially adversely affect our business, financial
condition and results of operations. See Note 11 to our
Consolidated Financial Statements for more information.
The impact of healthcare reform legislation on our business
remains uncertain: Several markets where we sell our products
are making efforts to expand access to healthcare or health
insurance coverage while decreasing costs. These efforts may
have a direct or unintended negative impact on access to medical
technology and could have a significant effect on our business.
Both in the United States and internationally, governmental
authorities may make legislative or administrative reforms to
existing reimbursement programs, make adverse decisions
relating to our products’ coverage or reimbursement, or make
changes to patient access to healthcare, all of which could
adversely impact the demand for and usage of our products or
the prices that our customers are willing to pay for them. We
cannot predict what healthcare programs and regulations could
ultimately be implemented at the federal or state level or the
effect that any future legislation or regulation in the United States
may have on our business. Similarly, we cannot predict the
impact that healthcare reform legislation in other countries where
we sell our products may have on our business.
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STRYKER CORPORATION
2025 FORM 10-K
We are subject to extensive governmental regulation relating
to the classification, manufacturing, sterilization, licensing,
labeling, marketing and sale of our products: The
classification, manufacturing, sterilization, licensing, labeling,
marketing and sale of our products are subject to extensive and
evolving regulations and rigorous regulatory enforcement by the
FDA, state governments, European Union and other
governmental authorities in the United States and internationally.
These governmental authorities may impose additional
requirements or limits on the methods, procedures or agents we
use to manufacture and sterilize our products, which could have
a negative impact on our business. For example, governmental
authorities in the United States and internationally have or are
considering adopting regulations on the use of per- and
polyfluoroalkyl substances. In addition, the process of obtaining
licenses, regulatory clearances and/or approvals to market and
sell our products can be costly and time consuming and the
clearances and/or approvals might not be granted timely. We
have ongoing responsibilities under the laws and regulations
applicable to the manufacturing of products within our facilities
and those contracted by third parties that are subject to periodic
inspections by the FDA, state Boards of Pharmacy and other
governmental authorities to determine compliance with the quality
system, medical device reporting regulations and other
requirements. We may also be subject to legal obligations in
some countries that require disclosure or sharing of proprietary
information. We incur significant costs to comply with regulations,
including the MDR. If we fail to comply with applicable regulatory
requirements, we may be subject to a range of sanctions,
including substantial fines, warning letters that require corrective
action, product seizures, recalls, import restrictions, the
suspension of product manufacturing or sales, revocation of
approvals, exclusion from future participation in government
healthcare programs, substantial fines and criminal prosecution.
We are subject to federal, state and foreign healthcare
regulations, including anti-bribery, anti-corruption, anti-
kickback and false claims laws, globally and could face
substantial penalties if we fail to comply with such
regulations and laws: The relationships that we, and third
parties that market and/or sell our products, have with healthcare
professionals, such as physicians, hospitals, healthcare
organizations and others, are subject to scrutiny under various
state and federal laws often referred to collectively as healthcare
fraud and abuse laws. In addition, the United States and foreign
government regulators have increased the enforcement of the
Foreign Corrupt Practices Act (FCPA) and other anti-bribery and
anti-kickback laws. We also must comply with a variety of other
laws that impose extensive tracking and reporting related to all
transfers of value provided to certain healthcare professionals
and others. These laws and regulations are broad in scope and
are subject to evolving interpretation and we have in the past
been, and in the future could be, required to incur substantial
costs to investigate, audit and monitor compliance or to alter our
practices. Violations or alleged violations of these laws have in
the past resulted and could in the future result in investigations,
litigation or government proceedings, and we have been and may
in the future be subject to criminal or civil penalties and
sanctions, including substantial fines, imprisonment of current or
former employees and exclusion from participation in
governmental healthcare programs. For example, in 2013 and
2018 we settled claims brought by the SEC related to the FCPA.
Pursuant to these settlements, we paid fines and penalties and
retained an independent compliance consultant. We continue to
implement recommendations that resulted from the independent
compliance consultant’s review of our commercial practices to
enhance our commercial business practices. In addition, as
disclosed in our prior filings, we were previously contacted by the
SEC, the United States Department of Justice, and other
regulatory authorities involving whether certain business activities
in certain foreign countries violated provisions of the FCPA and
analogous local laws. We have completed our investigation into
these matters. On April 1, 2025, and December 16, 2025, we
were informed by the DOJ and SEC, respectively, that each
agency had closed its inquiry. We are currently responding to
inquiries by certain foreign authorities arising in the normal
course of business, however, we do not expect these matters to
have a material effect, if any, on our financial statements.
We are subject to privacy, data protection and data security
regulations and laws globally, and could face substantial
penalties if we fail to comply with such regulations and laws:
We are subject to a variety of laws and regulations globally
regarding privacy, data protection and data security, including
those related to the collection, storage, handling, use, disclosure,
transfer and security of personally identifiable healthcare
information and the development and use of AI in sharing certain
data. For example, in the United States, privacy and security
regulations under the Health Insurance Portability and
Accountability Act of 1996, including the expanded requirements
under the Health Information Technology for Economic and
Clinical Health Act of 2009, establish comprehensive standards
with respect to the use and disclosure of protected health
information (PHI), by covered entities, in addition to setting
standards to protect the confidentiality, integrity and security of
PHI. Regulators are also imposing new data privacy and security
requirements, including new and greater monetary fines for
privacy violations. For example, the European Union’s General
Data Protection Regulation (GDPR) established rules regarding
the handling of personal data. Non-compliance with the GDPR
may result in monetary penalties of up to 4% of total company
revenue. Various government authorities within the United States
and around the world have imposed or are considering similar
types of laws and regulations, data breach reporting and
penalties for non-compliance or unauthorized disclosure and
increasing security requirements. These laws and regulations are
broad in scope and are subject to evolving interpretation and
enforcement and we have in the past been, and in the future
could be, required to incur substantial costs to monitor
compliance or to alter our practices. As new privacy-related laws
and AI-related regulations are implemented, the time and
resources needed for us to comply with such laws and
regulations, as well as our potential liability for non-compliance
and reporting obligations in the case of data breaches, have
increased and may further increase.
We may be adversely affected by product liability claims,
unfavorable court decisions or legal settlements: We are
exposed to potential product liability risks inherent in the design,
manufacture and marketing of medical devices, many of which
are implanted in the human body for long periods of time or
indefinitely. We are currently defendants in a number of product
liability matters, including those relating to our Rejuvenate and
ABGII Modular-Neck hip stems, LFIT Anatomic CoCr V40
Femoral Heads and the product liability lawsuits and claims
relating to Wright Medical Group N.V. (Wright) legacy hip
products discussed in Note 7 to our Consolidated Financial
Statements. These matters are subject to uncertainties and
outcomes are not predictable. Further, the European
Representative Actions Directive (the Collective Redress
Directive) mandates a class action regime in each EU member
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STRYKER CORPORATION
2025 FORM 10-K
state to facilitate domestic and cross-border class actions in a
wide range of areas, including product liability claims with
medical devices. The European Product Liability Directive was
revised in 2024 and will become fully adopted into each member
state’s national laws by December 9, 2026. The revised Product
Liability Directive and Collective Redress Directive exposes us to
additional litigation risks and could result in significant legal
expenses. In addition, we may incur significant legal expenses or
reputational damage for product liability claims regardless of
whether we are found to be liable.
Intellectual property litigation and infringement claims could
cause us to incur significant expenses or prevent us from
selling certain of our products: The medical device industry is
characterized by extensive intellectual property litigation and,
from time to time, we are the subject of claims of infringement or
misappropriation. Regardless of the outcome, such claims are
expensive to defend and divert management and operating
personnel from other business issues. A successful claim or
claims of patent or other intellectual property infringement against
us could result in payment of significant monetary damages and/
or royalty payments or negatively impact our ability to sell current
or future products in the affected category.
Dependence on intellectual proprietary rights and failing to
protect such rights or to be successful in litigation related to
such rights may impact offerings in our product portfolios:
Our long-term success largely depends on our ability to market
technologically competitive products. If we fail to obtain or
maintain adequate intellectual property protection, it could allow
others to sell products that directly compete with proprietary
features in our product portfolio. Also, our issued patents may be
subject to claims challenging their validity and scope and raising
other issues. In addition, currently pending or future patent
applications may not result in issued patents and the expiration of
patents may lead to a loss of exclusive rights and/or increased
competition.
MARKET RISKS
We have exposure to exchange rate fluctuations on cross border
transactions and translation of local currency results into United
States Dollars: We report our financial results in United States
Dollars and approximately 24% of our net sales are denominated
in foreign currencies, including the Australian Dollar, British
Pound, Canadian Dollar, Euro and Japanese Yen. Cross border
transactions with external parties, financing transactions in
currencies other than the United States Dollar and intercompany
relationships result in increased exposure to foreign currency
exchange effects. While we use derivative instruments to
manage the impact of currency exchange, our hedging strategies
may not be successful, and our unhedged exposures continue to
be subject to currency fluctuations. In addition, the weakening or
strengthening of the United States Dollar results in favorable or
unfavorable translation effects when the results of our foreign
locations are translated into United States Dollars. Currency
exchange rates continue to be volatile, and these currency
fluctuations have affected, and may continue to affect, our results
of operations.
Additional capital that we may require in the future may not
be available to us or may only be available to us on
unfavorable terms, which could negatively affect our
liquidity: Our future capital requirements will depend on many
factors, including operating requirements, current and future
acquisitions and the need to refinance existing debt. Our ability to
issue additional debt or enter into other financing arrangements
on acceptable terms could be adversely affected by our debt
levels, unfavorable changes in economic conditions or
uncertainties that affect the capital markets. Changes in credit
ratings issued by nationally recognized credit rating agencies
could also adversely affect our access to and cost of financing.
Higher borrowing costs or the inability to access capital markets
could adversely affect our ability to support future growth and
operating requirements. In addition, we have experienced, and
could in the future experience, loss of sales and profits due to
delayed payments or insolvency of healthcare professionals,
hospitals and other customers and suppliers facing liquidity
issues due to the current macroeconomic environment, type and
number of conditions being treated or for other reasons. As a
result, we may be compelled to take additional measures to
preserve our cash flow, including through the reduction of
operating expenses or suspension of dividend payments.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE RISKS
We could be negatively impacted by evolving requirements
and expectations related to corporate responsibility and
sustainability-related matters, including those related to
climate: Governments, investors, customers, employees and
other stakeholders have been focused on corporate responsibility
practices and disclosures, and expectations in this area continue
to rapidly evolve, including in diverging directions. On occasion,
we announce new initiatives and make disclosures, including
goals, relating to various corporate responsibility matters.
Implementation of these initiatives involves risks and
uncertainties, requires investments and depends in part on third-
party performance or data that is outside our control. We cannot
guarantee that we will achieve our announced corporate
responsibility initiatives. If we fail or are perceived to have failed
to achieve previously announced initiatives or goals, comply with
corporate responsibility laws and regulations, meet evolving
expectations or accurately disclose our progress, we could face
legal and regulatory proceedings and our reputation, business,
financial condition and results of operations could be adversely
impacted. Furthermore, there is no guarantee that we will satisfy
the evolving and diverging expectations of our various
stakeholders on corporate responsibility matters, and a failure to
satisfy the expectations of any key stakeholder group could result
in, among other things, reduced demand for our products,
reduced profits, increased investigations and litigation and an
increased risk of reputational damage. If we are unable to satisfy
evolving and diverging expectations on these matters, certain
investors and other stakeholders may conclude that our policies
and/or actions with respect to corporate responsibility matters are
inadequate or undesirable.
Physical weather events, as well as legal, regulatory or
market measures related to environmental, climate and other
sustainability matters, could adversely affect our operations
and operating results: Weather-related events and evolving
environmental conditions may result in operational, supply chain
and infrastructure disruptions. Such events, including hurricanes,
tornadoes, wildfires, droughts, extreme temperatures, flooding,
and other natural disasters, could damage our facilities and
products, or those of our suppliers, disrupt manufacturing and
distribution, reduce workforce availability, increase raw material
and component costs, increase liabilities, or adversely affect the
operations of hospitals, medical care facilities and other
customers, any of which could negatively impact our results of
operations. In addition, sustainability-related matters continue to
be the subject of regulatory, legal and market attention.
Regulatory requirements and enforcement approaches may
evolve, differ by jurisdiction, or change over time, including
through the adoption, modification, interpretation, or enforcement
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STRYKER CORPORATION
2025 FORM 10-K
of environmental laws and regulations. Such developments may
increase compliance costs, create uncertainty, affect raw material
availability and sourcing, require operational changes, or
otherwise adversely affect our manufacturing, supply chain,
distribution activities or operating results.
