Smith & Nephew cuts annual guidance as US orthopaedics struggles

(Sharecast News) - Medical technology group Smith & Nephew cut its full-year revenue and profit forecasts on Wednesday as weakness in its US hip and knee implant businesses continued to weigh on performance, despite an acceleration in third-quarter sales growth. The FTSE 100 company now expects underlying revenue growth of around 3% for 2026, down from its previous forecast of 4%, while the trading profit growth forecast was slashed to 4% from 8%. The group also lowered its adjusted return on invested capital forecast to around 9% from more than 10%.

The downgrade came despite third-quarter underlying revenues rising 3.4% to $1.55bn from $1.50bn a year earlier, with growth accelerating from 1.6% in the second quarter.

Sports Medicine & ENT revenues increased 8% to $507m, driven by an 11.2% underlying rise in joint repair sales, while Advanced Wound Management revenues were broadly flat at $454m.

Orthopaedics revenues rose 2.3% to $590m, supported by international markets, but US knee implant sales declined 7.3% and US hip implant revenues fell 1%.

Chief executive Deepak Nath said: "We have revised our full-year guidance to reflect the slower growth in US Orthopaedics, which we expect to continue through the fourth quarter."

He added: "Despite this, we remain confident in delivering profit growth ahead of revenue growth, together with strong free cash flow and cash conversion."

Separately, Smith & Nephew confirmed that it had held discussions with Johnson & Johnson earlier this year about a potential combination involving the US group's DePuy Synthes business, but said those talks had ended.

The company said it would continue exploring strategic options for its Orthopaedics division as it prioritises investment in its higher-growth Sports Medicine and Advanced Wound Management businesses.

Smith & Nephew also confirmed that its $500m share buyback remained on track, with $250m completed by the end of September.

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