Smith & Nephew SNATS Q2 Earnings Call Highlights

Smith & Nephew cut its 2026 underlying revenue-growth outlook to about 4% after second-quarter growth came in at 1.6%, pressured by U.S. Orthopaedics and Advanced Wound Bioactives. Sports Medicine and ENT delivered strong 8.6% growth, while emerging markets rose 10.6%. Profitability and cash-flow guidance was maintained, supported by efficiency savings and tariff refunds. First-half trading profit rose 9% excluding the Integrity Orthopaedics acquisition, free cash flow reached $231 million, and the 2026 savings forecast increased to about $200 million. Management expects second-half revenue growth to accelerate to 5%–5.5%, aided by easier comparisons, new product launches and stronger Orthopaedics performance. Full-year targets remain roughly 8% trading-profit growth, $800 million in free cash flow and return on invested capital above 10%. Smith & Nephew SNATS NYSE: SNN reported second-quarter underlying revenue growth of 1.6%, below management’s expectations, as continued strength in Sports Medicine and ENT was offset by weakness in U.S. Orthopaedics and Advanced Wound Bioactives. Chief Executive Officer Deepak Nath said quarterly revenue performance prompted the medical technology company to reduce its full-year underlying revenue growth outlook to about 4% for 2026. However, the company maintained its forecasts for trading profit, free cash flow and return on invested capital, citing stronger-than-expected efficiency savings and tariff refunds. Quarterly revenue totaled $1.6 billion, up 2.8% on a reported basis, including a 120-basis-point foreign-exchange benefit. U.S. revenue declined 1.3%, while other established markets grew 1.7% and emerging markets increased 10.6%, according to CFO John Rogers. Sports Medicine and ENT grew 8.6% in the quarter, supported by broad-based demand across regions and product categories. Joint Repair posted double-digit growth, aided by Q-FIX KNOTLESS and REGENETEN, while FASTSEAL and services were key contributors in the company’s AE/TE business. Nath said REGENETEN grew about 20% in the first half. Advanced Wound Management revenue declined 2.1%. Advanced Wound Care increased 3.7%, led by U.S. ALLEVYN sales and emerging-market growth. The company said its ALLEVYN COMPLETE CARE launch showed encouraging early momentum in the U.S. and was launched in Europe during the quarter. Bioactives revenue declined 12.7%, reflecting U.S. reimbursement changes for skin substitutes and a softer quarter for SANTYL. Rogers said SANTYL benefited from elevated distributor demand in the first quarter that did not recur in the second quarter. A payer’s introduction of prior authorization for certain SANTYL doses also created prescription-processing friction, though management said underlying demand remained healthy and expected the product to return to growth in the second half. Management expects the trading-profit impact from skin substitute reimbursement changes to be toward the upper end of its prior $20 million to $40 million range. The company said hospitals drove sequential improvement in the skin-substitutes business, though non-surgical settings continued to face volume and pricing pressure. Orthopaedics declined 1% on an underlying basis. U.S. knees remained weak, which management attributed primarily to a portfolio gap in cementless implants and the company’s deliberate capital discipline.