Financial Performance Overview

Stryker Corporation, a global leader in medical technologies, reported strong financial results in 2024. The company achieved reported net sales growth of 10.2%, with sales growing 10.7% in constant currency. Stryker reported net earnings of $2,993 million and net earnings per diluted share of $7.76. Excluding the impact of certain items, the company achieved adjusted net earnings of $4,700 million and adjusted net earnings per diluted share of $12.19, representing growth of 15.0%.

Revenue and Profit Trends

Stryker’s revenue growth was driven by strong performance across its business segments. MedSurg and Neurotechnology net sales increased 11.6% in constant currency, while Orthopaedics net sales grew 9.4% in constant currency. The company attributed the revenue growth to increased unit volume and higher prices.

Gross profit as a percentage of net sales increased to 63.9% in 2024 from 63.7% in 2023, primarily due to higher sales pricing and favorable volume, partially offset by higher manufacturing and supply chain costs. Operating income as a percentage of sales decreased to 16.3% in 2024 from 19.0% in 2023, driven by higher goodwill and other impairment charges.

Segment Performance

Stryker’s MedSurg and Neurotechnology segment, which includes Instruments, Endoscopy, Medical, Neurovascular, and Neuro Cranial, reported an 11.6% increase in constant currency net sales. The Orthopaedics segment, which includes Knees, Hips, Trauma and Extremities, Spinal Implants, and Other, saw a 9.4% increase in constant currency net sales.

The MedSurg and Neurotechnology segment’s operating income as a percentage of net sales increased to 29.6% in 2024 from 28.5% in 2023, driven by higher sales pricing, favorable volume, and disciplined cost management. The Orthopaedics segment’s operating income as a percentage of net sales increased to 28.5% in 2024 from 27.2% in 2023, primarily due to higher sales volumes and lower selling, general, and administrative expenses as a percentage of sales.

Strengths and Weaknesses

Stryker’s key strengths include its diversified product portfolio, strong market positions, and consistent focus on innovation and acquisitions to drive growth. The company’s ability to maintain pricing power and manage costs effectively have also contributed to its profitability.

One potential weakness is the company’s exposure to macroeconomic factors, such as inflation and supply chain challenges, which have impacted its manufacturing and supply chain costs. Additionally, the company’s Spine business has faced challenges, leading to goodwill impairment charges in 2024 and 2022.

Outlook and Future Considerations

Stryker’s management remains focused on achieving sales growth at the high-end of the medical technology industry and maintaining its long-term capital allocation strategy, which prioritizes acquisitions, dividends, and share repurchases.

The company’s outlook is cautiously optimistic, as it continues to navigate the evolving macroeconomic environment. Stryker will need to closely monitor and manage its manufacturing and supply chain costs, as well as address the challenges in its Spine business, to maintain its profitability and competitiveness.

Additionally, the company will need to stay ahead of regulatory changes, such as the implementation of the OECD’s Pillar Two global minimum tax, which could impact its effective tax rate in future periods.

Conclusion

Stryker Corporation delivered strong financial results in 2024, driven by robust revenue growth and disciplined cost management. The company’s diversified product portfolio, focus on innovation, and strategic acquisitions have been key to its success. However, the company faces ongoing challenges, including macroeconomic pressures and issues within its Spine business, which it will need to address to maintain its competitive edge and drive long-term shareholder value.