Smith & Nephew plc

What they do

Smith & Nephew designs and manufactures medical devices and therapies across four segments: Orthopaedics (knees, hips, trauma), Sports Medicine & ENT, Advanced Wound Management, and Other Reconstruction. The company serves healthcare professionals in over 100 countries, with the US as its largest market. Products include joint replacement implants, arthroscopic instruments, and advanced wound care dressings.

Revenue drivers

• Orthopaedics — Largest segment, includes knees, hips, and trauma products. Revenue driven by surgical implants and instruments; global volume growth is a key factor.
• Sports Medicine & ENT — Offers arthroscopy, joint repair, and ear, nose, and throat surgical products. Growth driven by minimally invasive procedures and technology adoption.
• Advanced Wound Management — Provides advanced dressings and negative pressure wound therapy. Revenue influenced by chronic wound prevalence and consumables sales.
• Other Reconstruction — Includes robotic-assisted surgery and other reconstruction products. Emerging growth area with strategic investments.

Recent performance

In 2025, Smith & Nephew reported revenue of $5.85 billion, up 2.7% on an underlying basis. Orthopaedics grew in the low single digits, while Sports Medicine & ENT and Advanced Wound Management also contributed. Trading profit margin was 18.6%, up from 17.2% in 2024. Growth was led by knees and hips, with continuing momentum in robotics.

Strategy

The company focuses on innovation in high-growth areas, including robotics, digital surgery, and advanced wound care. Management is prioritizing operational efficiency to improve margins, with a target of achieving a 20% trading profit margin by 2026. Recent acquisitions, such as Cartiheal, add complementary technologies. Cost savings programs are expected to deliver incremental benefits.

Risks

• Regulatory and compliance risk — The medical device industry is heavily regulated; changes in approval processes or post-market surveillance could impact product launches.
• Competitive pressures — Competition from major players like Stryker and Zimmer Biomet in orthopedics could pressure pricing and market share.
• Supply chain disruptions — Reliance on third-party suppliers and global logistics exposes the company to cost increases and delays.
• Litigation and product liability — Ongoing claims, such as metal-on-metal hip litigation, could lead to financial settlements and reputational damage.

Outlook

Management expects continued revenue growth above market rates, driven by new product launches and geographic expansion. They guide to a trading profit margin of around 20% for 2026, with improvement from restructuring and procurement savings. Foreign exchange headwinds are expected to modestly impact reported revenue. Capital expenditure will focus on robotics and digital capabilities.