Smith & Nephew SNATS (NYSE:SNN) executives struck an optimistic tone in the company’s fourth-quarter and full-year 2025 results presentation, pointing to a “strong finish” that landed at the high end of management’s guidance for revenue growth, margin expansion, and free cash flow. Chief Executive Officer Deepak Nath said underlying revenue rose 5.3% for the full year, with all three business units posting growth above 5%.
Nath highlighted continued strength in Sports Medicine and ENT—particularly joint repair—and “meaningful progress” in U.S. Orthopedics, including hips and trauma, while acknowledging that U.S. knees still require further improvement. He also noted a “record year of core replacements globally” and continued adoption of the company’s robot-assisted platform. In Advanced Wound Management, he described 2025 performance as solid, with growth driven by Advanced Wound Devices and “C.”
Q4 performance and regional trends
Growth was described as broad-based across regions. Rogers said U.S. revenue grew 5.6%, other established markets rose 7.2%, and emerging markets increased 6.4%. Excluding China, underlying growth was 7.2%.
Business unit highlights: Orthopedics, Sports/ENT, and Wound
Orthopedics delivered 7.9% underlying growth in the quarter, which Rogers said was the strongest quarterly growth for the unit in more than two years. In the U.S., management cited a third consecutive quarter of above-market growth in hips, acceleration in knees, and continued strength in trauma and extremities. Hip growth was attributed to uptake of the Catalyst Stem, with the company planning additional set deployments in 2026. Knee growth improved following the launch of LEGION MS, which management said aligns with a market shift toward medial stabilized inserts.
Management also emphasized the importance of CORI deployment. “Other recon” grew 40.8%, and Rogers said 45% of CORI units deployed in the quarter went to ambulatory surgery centers (ASCs). He added that knee growth is 850 basis points higher in accounts where CORI is established, which the company views as evidence of potential upside as utilization expands.
Sports Medicine and ENT grew 7.3% in Q4, driven by double-digit growth in joint repair as the company annualized the impact of China’s volume-based procurement (VBP) in that category. Rogers said the joint repair business surpassed $1 billion in annual revenue for the first time. He cited REGENETEN and Q-FIX Noctlus as contributors, along with strength in small joint outside China. ENT grew despite softness in the U.S. tonsil and adenoid market, with management noting double-digit growth in “nose” and strong international performance ex-China.
Advanced Wound Management grew 2.8% in the quarter. Advanced Wound Care rose 4.4%, while Bioactives declined 0.5% against a strong prior-year comparison and amid a slowdown in certain channels ahead of CMS reimbursement changes. Advanced Wound Devices grew 5.4%, with LEAF and PICO cited as performing well. Rogers said U.S. RENASYS remained impacted by softness in acute care, while performance outside the U.S. was strong.
Full-year 2025: margins, EPS, cash flow, and capital returns
For 2025, the company reported revenue of $6.2 billion, up 5.3% underlying and 6.1% reported. Excluding China, underlying growth would have been 7%, management said. Segment growth was reported as 5.1% in Orthopedics, 5.2% in Sports Medicine and ENT, and 5.6% in Advanced Wound Management.
Profitability improved. Underlying gross margin rose 60 basis points to 70.9% as price and productivity measures offset raw material inflation. Trading profit increased to $1.2 billion, with trading margin expanding 160 basis points to 19.7%. Nath attributed margin gains to an enterprise-wide cost savings program and Orthopedics improvements including manufacturing network optimization, productivity initiatives, and portfolio rationalization.
Adjusted EPS rose 21% to $1.02, which Rogers said was helped by the $500 million buyback completed in the second half of 2025. The proposed full-year dividend was $0.391 per share, up 4.3% year-over-year. Free cash flow increased 52.5% to $840 million, aided by improved working capital performance and lower restructuring and other costs; Rogers noted the figure included a $26 million one-off property transaction and a $58 million reduction in restructuring, acquisition, legal and other costs.
Management also emphasized inventory reductions and ROIC improvement. Group day sales inventory fell by 21 days excluding portfolio rationalization (and 51 days including it). Group ROIC increased to 8.3%, or 9.9% excluding portfolio rationalization, which Rogers said exceeded the cost of capital for the first time in several years.
2026 outlook and key variables: growth, headwinds, and Integrity Orthopaedics
Management guided to around 6% organic revenue growth in 2026 and approximately 8% organic reported trading profit growth, with profit growth expected to outpace revenue growth. Rogers also provided a trading profit outlook of around $1.3 billion including the impact of the acquisition of Integrity Orthopaedics, which the company expects to be marginally dilutive in 2026, broadly neutral in 2027, and accretive in 2028.
Rogers reiterated several “extraordinary headwinds” previously discussed at the company’s capital markets day, including inventory revaluation, tariffs, reimbursement changes in U.S. wound, and ENT VBP in China. The company expects a $60 million impact from tariffs in 2026 (up from $17 million in 2025) and a $20 million to $40 million incremental impact from changes to wound reimbursement.
On phasing, Rogers said the year is expected to be weighted to the second half. Management expects first-half revenue growth of roughly 4.5% to 5% and second-half growth of 7.5% to 8%, with a softer first quarter attributed to one fewer trading day and a planned softer start in U.S. knees. A stronger second half is expected to be supported by the launch of the cementless version of the LANDMARK knee system in the second half, along with the ramp of ALLEVYN Complete Care.
In China, executives said 2026 sales in greater China are expected to be similar to 2025, with an anticipated bounce in Sports Medicine tied to channel inventory actions offset by negative impacts from AET and ENT VBPs. Rogers said the company expects a $15 million to $20 million year-over-year reduction in China profit in 2026 related to AET and ENT VBPs, but stressed that China is not expected to be a top-line drag at the group level as it has been in prior periods.
On the Integrity Orthopaedics deal, management said total consideration is up to $450 million including performance-based payments, and centered its rationale on expanding Smith+Nephew’s shoulder portfolio. Nath said Integrity’s TENDINSEAM, approved by the FDA in 2023, targets the rotator cuff repair market, and executives described early clinical data as “promising.” Nath also discussed the AAOS guideline support for bioinductive implants in rotator cuff repair as reinforcing clinical confidence in REGENETEN, though he noted REGENETEN remains reimbursed as part of the DRG rather than via a specific reimbursement line item.
Management also addressed CMS reimbursement changes in skin substitutes, saying the largest impacts are expected in physician office and mobile channels, while surgical settings continue to show growth. Rogers said the company’s skin substitutes business is around $200 million and modeled a 20% to 25% price reduction for its portfolio, with volumes expected to be broadly neutral to slightly positive, supporting the company’s $20 million to $40 million bottom-line impact assumption.
Looking beyond 2026, executives reiterated medium-term targets under the company’s RISE strategy, including organic revenue CAGR of 6% to 7% and trading profit CAGR of 9% to 10%, while also pointing to plans to increase product launch cadence, with 16 new product launches expected in 2026.
About Smith & Nephew SNATS (NYSE:SNN)
Smith & Nephew plc is a global medical technology company specializing in the design, development and manufacture of advanced surgical devices, orthopaedic reconstruction implants, trauma and extremities products, sports medicine solutions and wound care therapies. Founded in 1856 in Hull, United Kingdom, the company has grown through both organic innovation and strategic acquisitions to offer a broad portfolio that addresses patient needs across joint replacement, minimally invasive surgery and wound healing.
In its orthopaedics business, Smith & Nephew provides hip and knee replacement systems, modular joint revision implants and biologic solutions for bone repair.
