Stryker reports 2022 operating results and 2023 outlook

Kalamazoo, Michigan , Jan. 31, 2023 (GLOBE NEWSWIRE) -- Stryker (NYSE:SYK) reported operating results for the fourth quarter and full year of 2022:

Fourth Quarter Results

  • Reported net sales increased 10.7% to $5.2 billion
  • Organic net sales increased 13.2%
  • Reported operating income margin of 15.6%
  • Adjusted operating income margin(1) contracted 70 bps to 26.6%
  • Reported EPS decreased 15.0% to $1.47
  • Adjusted EPS(1) increased 10.7% to $3.00
 Fourth Quarter Net Sales Growth Overview
             Reported Foreign Currency Exchange Constant Currency Acquisitions / Divestitures Organic
MedSurg and Neurotechnology        15.6    %         (3.7)    %         19.3    %         2.4    %         16.9    %
Orthopaedics and Spine        4.3              (4.0)             8.3              (0.1)             8.4     
Total        10.7    %         (3.8)    %         14.5    %         1.3    %         13.2    %

Full Year Results

  • Reported net sales increased 7.8% to $18.4 billion
  • Organic net sales increased 9.7%
  • Reported operating income margin of 15.4%
  • Adjusted operating income margin(1) contracted 180 bps to 23.8%
  • Reported EPS increased 18.4% to $6.17
  • Adjusted EPS(1) increased 2.8% to $9.34
 Full Year Net Sales Growth Overview
                Reported Foreign Currency Exchange Constant Currency Acquisitions / Divestitures Organic
MedSurg and Neurotechnology        11.2   %         (2.9)     %         14.1   %         2.3   %         11.8   %
Orthopaedics and Spine        3.5              (3.5)               7.0             —             7.0    
Total        7.8    %         (3.2)     %         11.0   %         1.3   %         9.7   %

"We delivered outstanding organic sales growth in the fourth quarter, driven by strong commercial execution and improved supply," said Kevin Lobo, Chair & CEO. "We expect continued positive sales momentum in 2023 and for adjusted earnings to gradually improve over the course of the year."

Sales Analysis

Consolidated net sales of $5.2 billion and $18.4 billion increased 10.7% in the quarter, 14.5% in constant currency, and increased 7.8% in the full year, 11.0% in constant currency. Organic net sales increased 13.2% and 9.7% in the quarter and full year including 13.8% and 10.6% from increased unit volume partially offset by 0.6% and 0.9% from lower prices.

MedSurg and Neurotechnology net sales of $3.1 billion and $10.6 billion increased 15.6% in the quarter, 19.3% in constant currency, and increased 11.2% in the full year, 14.1% in constant currency. Organic net sales increased 16.9% and 11.8% in the quarter and full year including 15.7% and 11.2% from increased unit volume and 1.2% and 0.6% from higher prices.

Orthopaedics and Spine net sales of $2.2 billion and $7.8 billion increased 4.3% in the quarter, 8.3% in constant currency, and increased 3.5% in the full year, 7.0% in constant currency. Organic net sales increased 8.4% and 7.0% in the quarter and full year including 11.4% and 9.9% from increased unit volume partially offset by 3.0% and 2.9% from lower prices.

Earnings Analysis

Reported net earnings of $563 million and $2.4 billion decreased 15.0% and increased 18.3% in the quarter and full year. Reported net earnings per diluted share of $1.47 and $6.17 decreased 15.0% in the quarter and increased 18.4% in the full year. Reported gross profit margin and reported operating income margin were 62.2% and 15.6% in the quarter and 62.8% and 15.4% in the full year. In the quarter, we recorded a goodwill impairment charge of $216 million related to our Spine business. Reported net earnings include certain items, such as charges for acquisition and integration-related activities, the amortization of purchased intangible assets, asset write-offs and impairments and restructuring-related and other charges, 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 62.7% and 63.1% in the quarter and full year, and adjusted operating income margin(1) was 26.6% and 23.8% in the quarter and full year. Adjusted net earnings(1) of $1.1 billion and $3.6 billion increased 11.1% and 2.8% in the quarter and full year. Adjusted net earnings per diluted share(1) of $3.00 and $9.34 increased 10.7% and 2.8% in the quarter and full year.

2023 Outlook

As we assess the current operating environment, we believe that there will continue to be macro-economic volatility caused by alleviating supply chain disruptions, inflationary risks and currency fluctuations. Despite the volatile macro-economic environment, we have good momentum in many parts of our business heading into 2023. We expect 2023 organic net sales growth(2) to be in the range of 7.0% to 8.5% and expect adjusted net earnings per diluted share(2) to be in the range of $9.85 to $10.15. Based on the steady progress of our pricing actions, we expect the impact of price to be between 0% and -0.5%. If foreign exchange rates hold near their current levels, we anticipate sales and EPS will be modestly unfavorably impacted as compared to 2022.

(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 restructuring-related and other 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 Tuesday, January 31, 2023

As previously announced, we will host a conference call on Tuesday, January 31, 2023 at 4:30 p.m., Eastern Time, to discuss our operating results for the quarter and year ended December 31, 2022 and provide an operational update.

Please register for this conference call at: Stryker’s Q4 and Full Year 2022 Earnings Call. 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 at (866) 813-9403 (Toll Free) or (929) 458-6194 (International). The replay passcode is 332859. An archive of the webcast will also be available on our website two hours after the live call ends.

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: the impact on our operations and financial results of the COVID-19 pandemic and any related policies and actions by governments or other third parties; weakening of economic conditions 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; 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; the impact of the federal legislation to reform the United States healthcare system; costs to comply with medical device regulations; changes in financial markets; 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, including the acquisition of Vocera; our ability to realize anticipated cost savings; and potential negative impacts resulting from environmental, social and governance (ESG) and sustainability related matters. 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 its customers, is driven to make healthcare better. The company offers innovative products and services in Medical and Surgical, Neurotechnology, Orthopaedics and Spine that help improve patient and healthcare outcomes. Alongside its 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 Months and Full Year December 31
(Unaudited - Millions of Dollars, Except Per Share Amounts)
CONSOLIDATED STATEMENTS OF EARNINGS
        
 Three Months                                    Full Year
  2022   2021                % Change  2022   2021  % Change
Net sales$        5,202   $        4,701          10.7  % $        18,449  $        17,108          7.8  %
Cost of sales         1,966            1,656          18.7            6,871            6,140          11.9  
Gross profit$        3,236   $        3,045          6.3  % $        11,578   $        10,968          5.6  %
% of sales         62.2  %          64.8 %            62.8  %          64.1  %  
Research, development and engineering expenses         326            331          (1.5)           1,454            1,235           17.7  
Selling, general and administrative expenses         1,751            1,745          0.3            6,455            6,427           0.4  
Recall charges, net         (29)            5  nm          (15)            103   nm
Amortization of intangible assets         158            145          9.0            627            619           1.3   
Goodwill impairment         216            —  nm          216            —    nm
Total operating expenses$        2,422   $        2,226          8.8  % $        8,737   $        8,384           4.2   %
Operating income$        814   $        819          (0.6) %          $        2,841   $        2,584           9.9   %
% of sales         15.6  %          17.4 %            15.4  %          15.1  %  
Other income (expense), net         (53)            (62)           (14.5)           (158)            (303)           (47.9) 
Earnings before income taxes$        761   $        757           0.5  % $        2,683   $        2,281           17.6  %
Income taxes         198            95           108.4            325            287           13.2  
Net earnings$        563   $        662          (15.0) %          $        2,358   $        1,994           18.3   %
Net earnings per share of common stock:           
Basic$        1.48  $        1.75         (15.4) %          $        6.23   $        5.29           17.8  %
Diluted$        1.47  $        1.73          (15.0) %          $        6.17   $        5.21           18.4  %
Weighted-average shares outstanding (in millions):           
Basic 378.5   377.3     378.2   377.0   
Diluted 382.3   382.7     382.2   382.3   


CONDENSED CONSOLIDATED BALANCE SHEETS
                                December 31
  2022         2021        
Assets   
Cash and cash equivalents$        1,844         $        2,944        
Marketable securities         84                  75        
Accounts receivable, net         3,565                  3,022        
Inventories         3,995                  3,314        
Prepaid expenses and other current assets         787                  662        
Total current assets$        10,275         $        10,017        
Property, plant and equipment, net         2,970                  2,833        
Goodwill and other intangibles, net         19,765                  17,758        
Noncurrent deferred income tax assets         1,410                  1,760        
Other noncurrent assets         2,464                  2,263        
Total assets$        36,884         $        34,631        
Liabilities and shareholders' equity   
Current liabilities$        6,303         $        4,549        
Long-term debt, excluding current maturities         11,857                  12,472        
Income taxes         641                  913        
Other noncurrent liabilities         1,467                  1,820        
Shareholders' equity         16,616                  14,877        
Total liabilities and shareholders' equity$        36,884         $        34,631        


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            December 31
  2022           2021         
Operating activities   
Net earnings$        2,358          $        1,994         
Depreciation         371                   371         
Amortization of intangible assets         627                   619         
Changes in operating assets, liabilities, income taxes payable and other, net       (732)                   279         
Net cash provided by operating activities$        2,624          $        3,263         
Investing activities   
Acquisitions, net of cash acquired$        (2,563)         $        (339)        
Purchases of property, plant and equipment         (588)                  (525)        
Other investing, net         227                   5         
Net cash used in investing activities$        (2,924)         $        (859)        
Financing activities   
Borrowings (payments) of debt, net$        472          $        (1,153)        
Payments of dividends         (1,051)                  (950)        
Other financing, net         (170)                  (262)        
Net cash provided by (used in) financing activities         (749)         $        (2,365)        
Effect of exchange rate changes on cash and cash equivalents         (51)                  (38)        
Change in cash and cash equivalents$        (1,100)         $        1         

 

nm - not meaningful


 

STRYKER CORPORATION
For the Three Months and Full Year December 31
(Unaudited - Millions of Dollars)

 

SALES GROWTH ANALYSIS
 Three Months Full Year
    Percentage Change    Percentage Change
  2022 2021 As ReportedConstant

Currency
  2022 2021                    As ReportedConstant

Currency
Geographic:           
United States$        3,862 $        3,418         13.0 %        13.0 % $        13,638$        12,321         10.7 %        10.7 %
International         1,340          1,283         4.4          18.3            4,811         4,787         0.5          11.7  
Total$        5,202 $        4,701         10.7 %        14.5 % $        18,449$        17,108         7.8 %        11.0 %
Segment:           
MedSurg and Neurotechnology$        3,051 $        2,639         15.6 %        19.3 % $        10,611$        9,538          11.2 %        14.1 %
Orthopaedics and Spine         2,151          2,062         4.3          8.3            7,838         7,570          3.5          7.0  
Total$        5,202 $        4,701          10.7 %        14.5 % $        18,449$        17,108          7.8 %        11.0 %


SUPPLEMENTAL SALES GROWTH ANALYSIS
 Three Months
      United States International
   Percentage Change
  2022 2021          As ReportedConstant Currency As Reported As ReportedConstant Currency
MedSurg and Neurotechnology:          
Instruments$        653$        600         9.0 %        11.6  %         11.7 %         (0.6 ) %               11.4 %
Endoscopy         695         629         10.4          14.3            10.5           10.4           27.6  
Medical         936         709         32.0          35.2            33.7           26.0           40.1  
Neurovascular         299         303         (0.9)         7.5            1.5           (2.3)          10.9  
Neuro Cranial         384         324         18.1          20.8            19.7           11.5           25.8  
Other         84         74         13.1          13.2            13.5           (7.7)          —   
 $        3,051$        2,639         15.6 %        19.3  %         18.1 %         8.4  %        22.5 %
Orthopaedics and Spine:          
Knees$        552$        523         5.4 %        9.0 %         7.5 %        (0.5) %               13.0 %
Hips         375         352         6.7          12.5           11.3           (0.6)          14.4  
Trauma and Extremities         774         711         8.9          12.7           11.9           1.4           14.5  
Spine         297         300         (1.0)         2.4           0.5           (5.0)          7.3  
Other         153         176         (13.1)         (9.6)           (18.7)          6.2           20.3  
 $        2,151$        2,062         4.3 %        8.3  %         6.1 %         —   %        13.6 %
Total$        5,202$        4,701         10.7 %        14.5  %         13.0 %         4.4  %        18.3 %

 

 
 Full Year
      United States International
   Percentage Change
  2022 2021 As ReportedConstant Currency As Reported As ReportedConstant Currency
MedSurg and Neurotechnology:          
Instruments$        2,279$        2,111         8.0 %        10.4 %         10.6 %         (0.9)%              10.0 %
Endoscopy         2,423         2,141         13.2          15.9           14.6           8.2          20.8  
Medical         3,031         2,607         16.2          18.6           20.6           1.5          11.7  
Neurovascular         1,200         1,188         1.1          7.2           (0.9)          2.3          12.2  
Neuro Cranial         1,376         1,214         13.3          15.4           14.9           6.1          17.5  
Other         302         277         9.2          9.3           8.9           25.3          29.9  
 $        10,611 $        9,538         11.2 %        14.1 %         14.2 %         3.0 %        13.8 %
Orthopaedics and Spine:          
Knees$        1,997$        1,848         8.0 %        11.2 %         10.6 %         1.0 %        12.9 %
Hips         1,413         1,342         5.3          10.1           9.1           (0.6)         11.5  
Trauma and Extremities         2,807         2,664         5.4          8.7           9.0           (3.2)         8.0  
Spine         1,146         1,167         (1.8)          1.1           0.6           (7.7)         2.4  
Other         475         549         (13.3)         (10.3)          (16.9)          (0.9)         12.8  
 $        7,838$        7,570         3.5 %        7.0 %         6.0 %         (2.2)%              9.3 %
Total$        18,449$        17,108         7.8 %        11.0 %         10.7 %         0.5%        11.7 %

Note: Fourth quarter and full year 2022 had the same number of selling days as 2021.


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; 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 effective income tax rate; adjusted net earnings; adjusted net earnings per diluted share (Diluted EPS); free cash flow; and free cash flow conversion. 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. To measure free cash flow, we adjust cash provided by operating activities by the amount of purchases of property, plant and equipment and proceeds from long-lived asset disposals and remove the impact of certain legal settlements and recall payments. To measure free cash flow conversion we divide free cash flow by adjusted net earnings.

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, 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 Months and Full Year December 31
(Unaudited - Millions of Dollars, Except Per Share Amounts)
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Three Months 2022      Gross ProfitSelling, General & Administrative ExpensesResearch, Development & Engineering ExpensesOperating IncomeOther Income (Expense), NetNet EarningsEffective

Tax Rate
Diluted EPS
Reported$        3,236         $        1,751         $        326         $        814         $        (53)       $        563                 26.0%       $        1.47         
Reported percent net sales         62.2%                33.7%               6.3%               15.6%              (1.0)%                10.8%        
Acquisition and integration-related costs (a)        
Inventory stepped-up to fair value         —                  —                  —                  —                  —                  —                 —                  —         
Other acquisition and integration-related         —                  (42)                  —                  42                  —                  58                 (2.9)                 0.15         
Amortization of purchased intangible assets         —                  —                  —                  158                  —                  124                 1.5                  0.33         
Restructuring-related and other charges (b)         27                  (93)                  —                  120                  —                  93                 1.6                  0.24         
Goodwill impairment         —                  —                  —                  216                  —                  216                 (3.9)                 0.57         
Medical device regulations (c)         —                  —                  (42)                 42                  —                  33                 0.4                  0.09         
Recall-related matters (d)         —                  —                  —                  (29)                 —                  (22)                (0.4)           (0.06)            
Regulatory and legal matters (e)         —                  (23)                  —                  23                  —                  30                 (1.5)                 0.08         
Tax matters (f)         —                  —                  —                  —                  (1)                 54                 (7.0)                 0.13         
Adjusted$        3,263         $        1,593         $        284         $        1,386         $        (54)        $        1,149                 13.8%      $        3.00         
Adjusted percent net sales         62.7%               30.6%               5.5 %              26.6%              (1.0) %                22.1%        


Three Months 2021      Gross ProfitSelling, General & Administrative ExpensesResearch, Development & Engineering ExpensesOperating IncomeOther Income (Expense), Net       Net EarningsEffective
Tax Rate
Diluted EPS
Reported$        3,045         $        1,745         $        331         $        819         $        (62)       $        662                 12.5%      $        1.73        
Reported percent net sales         64.8%               37.1%               7.0%               17.4%              (1.3)%                14.1%        
Acquisition and integration-related costs (a)        
Inventory stepped-up to fair value         35                  —                  —                  35                  —                  27                 0.4                  0.07        
Other acquisition and integration-related         —                  (55)                 —                  55                  —                  40                 0.8                  0.11        
Amortization of purchased intangible assets         —                  —                  —                  145                  —                  111                 1.4                  0.29        
Restructuring-related and other charges (b)         8                  (169)                 —                  177                  —                  147                 0.5                  0.38        
Goodwill impairment         —                  —                  —                  —                  —                  —                 —                  —        
Medical device regulations (c)         3                  —                  (32)                 35                  —                  30                 —                  0.08        
Recall-related matters (d)         —                  —                  —                  5                  —                  4                 0.1                  0.01        
Regulatory and legal matters (e)         —                  (14)                 —                  14                  (4)                 7                 0.2                  0.03        
Tax matters (f)         —                  —                  —                  —                  —                  6                 (0.7)                 0.01        
Adjusted$        3,091         $        1,507         $        299         $        1,285         $        (66)       $        1,034                 15.2 %      $        2.71        
Adjusted percent net sales         65.8%               32.1%                6.4%               27.3 %             (1.4)%                22.0%        


Full Year 2022Gross ProfitSelling, General & Administrative ExpensesResearch, Development & Engineering ExpensesOperating IncomeOther Income (Expense), NetNet EarningsEffective
Tax Rate
Diluted EPS
Reported$        11,578         $        6,455         $        1,454         $        2,841         $        (158)         $        2,358                 12.1%         $        6.17         
Reported percent net sales         62.8%               35.0%               7.9%               15.4%              (0.9)%                  12.8%        
Acquisition and integration-related costs (a)        
Inventory stepped-up to fair value         12                  —                  —                  12                  —                  9                 —                  0.02         
Other acquisition and integration-related         —                  (138)                  —                  138                  —                  104                 0.5                  0.27         
Amortization of purchased intangible assets         —                  —                  —                  627                  —                  495                 1.7                  1.30         
Restructuring-related and other charges (b)         56                  (206)                  (87)                 349                  —                  283                 0.7                  0.74         
Goodwill impairment         —                  —                  —                  216                  —                  216                 (1.1)                 0.57         
Medical device regulations (c)         3                  —                  (137)                 140                  —                  115                 0.2                  0.30         
Recall-related matters (d)         —                  —                  —                  (15)                 —                  (12)                —              (0.03)      . 
Regulatory and legal matters (e)         —                  (76)                  —                  76                  —                  69                 (0.2)                  0.18         
Tax matters (f)         —                  —                  —                  —                  (75)                 (66)                0.1          (0.18)          
Adjusted$        11,649         $        6,035         $        1,230         $        4,384         $        (233)        $        3,571                 14.0%      $        9.34         
Adjusted percent net sales         63.1%               32.7%               6.7%                23.8%              (1.3)%                 19.4%        

 

Full Year 2021Gross ProfitSelling, General & Administrative ExpensesResearch, Development & Engineering ExpensesOperating IncomeOther Income (Expense), NetNet EarningsEffective
Tax Rate
Diluted EPS
Reported$        10,968         $        6,427         $        1,235         $        2,584         $        (303)         $        1,994                 12.6%      $        5.21         
Reported percent net sales         64.1%               37.6%               7.2%               15.1%              (1.8)%                  11.7%        
Acquisition and integration-related costs (a)        
Inventory stepped-up to fair value         266                  —                  —                  266                  —                  203                 1.0                  0.53         
Other acquisition and integration-related         —             ��    (319)                 —                  319                  —                  244                 1.2                  0.64         
Amortization of purchased intangible assets         —                  —                  —                  619                  —                  489                 1.6                  1.28         
Restructuring-related and other charges (b)         28                  (358)                 —                  386                  11                  345                 (0.3)                 0.90         
Goodwill impairment         —                  —                  —                  —                  —                  —                 —                  —         
Medical device regulations (c)         5                  —                  (102)                 107                  —                  90                 —                  0.24         
Recall-related matters (d)         —                  —                  —                  103                  —                  89                 —                  0.23         
Regulatory and legal matters (e)         —                  2                  —                  (2)                  (7)                  (12)                0.2          (0.02)        
Tax matters (f)         —                  —                  —                  —                  —                  32                 (1.4)                 0.08         
Adjusted$        11,267         $        5,752         $        1,133         $        4,382         $        (299)         $        3,474                 14.9%      $        9.09         
Adjusted percent net sales         65.9%               33.6%               6.6%               25.6%              (1.7)%                 20.3%        


(a)Charges represent certain acquisition and integration-related costs associated with acquisitions including changes in the fair value of contingent consideration.
(b)Charges represent the costs associated with the termination of sales relationships in certain countries, workforce reductions, elimination of product lines, certain long-lived and intangible asset write-offs and impairments and associated costs and other restructuring-related activities.
(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 end of the range of probable loss to resolve certain recall-related matters.
(e)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 and certain significant tax audit settlements.


Year Ended 2022            2021         
Cash provided by operating activities$        2,624          $        3,263         
Net earnings         2,358                   1,994         
Conversion         111.3 %               163.6 %     
    
Cash provided by operating activities$        2,624          $        3,263         
Purchases of property, plant and equipment         (588)                  (525)        
Proceeds from long-lived asset disposals         15                   11         
Recall payments         157      ��            221         
Free cash flow$        2,208          $        2,970         
Adjusted net earnings         3,571                   3,474         
Free cash flow conversion         61.8 %               85.5 %     

 

 

 

 

 

 

 

 

 

 



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