Smith+Nephew Reports Strong 2025 Results, Completes 12-Point Plan and Sets 2028 Growth Targets

Smith+Nephew 2025 results: revenue, margins and cash all step up

Smith+Nephew capped off 2025 with a strong fourth quarter and full-year performance, completing its 12-Point Plan and setting the stage for its new RISE strategy. Revenue grew, margins widened and cash generation jumped, with all three business units delivering more than 5% underlying growth.

Quick jargon check:

• Underlying revenue growth strips out currency moves and M&A so you see like-for-like performance.
• Trading profit is the company’s preferred operating metric, excluding items like restructuring and amortisation of acquired intangibles.
• ROIC (return on invested capital) measures how efficiently profits are generated from the asset base.
• VBP (Volume Based Procurement) is China’s bulk tendering process that pressures prices.

Headline numbers investors should know

Metric	2025	Change/Notes
Revenue	$6,164 million	+6.1% reported, +5.3% underlying
Q4 revenue	$1,702 million	+8.3% reported, +6.2% underlying
Trading profit	$1,211 million	+15.5%; margin 19.7% (+160bps)
Operating profit	$794 million	+20.7%; margin 12.9%
EPSA	102.0¢	+21.0%
EPS	72.1¢	+52.8%
Cash generated from operations	$1,549 million	+24.4%
Free cash flow	$840 million	+52.5% (includes one-off $26m property benefit)
Adjusted ROIC	8.3%	+90bps
Dividend	39.1¢ per share	+4.3%
Share buyback	$500 million	Completed H2 2025
Leverage (adj. net debt/EBITDA)	1.7x	Within comfort zone

What drove the beat in Q4 and the full year

Q4 revenue rose 6.2% underlying to $1,702 million, helped by one extra trading day, with Orthopaedics putting in its best quarter for more than two years at 7.9% underlying. Sports Medicine & ENT grew 7.3% despite China, while Advanced Wound Management added 2.8% on a tougher comparable and some skin substitute softness ahead of 2026 reimbursement changes.

For 2025, each business unit delivered more than 5% underlying growth. Orthopaedics rose 5.1% as supply issues receded and robotics momentum built. Sports Medicine & ENT grew 5.2% despite a -400bps China headwind from VBP. Advanced Wound Management delivered 5.6%, led by Devices at 9.8%.

Orthopaedics – robotics pulling its weight

• FY underlying growth 5.1%; Q4 7.9%.
• “Other Reconstruction” (robotics capital and bone cement) grew 33.8% underlying for the year. More than 1,100 CORI Surgical Systems are now installed worldwide, with the US finishing 2025 at 36% of knee implants completed on CORI and 63% utilisation.
• US Knee Implants still need work. The new LANDMARK Knee System launches in H2 2026, including a cementless version, aimed at closing the gap.

Sports Medicine & ENT – innovation offsets China

• FY underlying growth 5.2% with -400bps China drag. Q4 up 7.3% underlying as China headwinds eased year-on-year.
• Shoulder repair remains a star, led by the REGENETEN Bioinductive Implant. The CARTIHEAL AGILI-C cartilage implant gained a Category I CPT code effective 1 January 2027, a helpful future reimbursement milestone.
• China VBP for Arthroscopic Enabling Technologies and ENT is expected in 2026, but management expects smaller impacts than in Joint Repair.

Advanced Wound Management – devices out in front

• FY underlying growth 5.6%; Devices +9.8% with strong PICO single-use negative pressure therapy and the LEAF monitoring system.
• Bioactives grew 6.8% for the year but was softer in Q4 as the market digested 2026 reimbursement changes. SANTYL delivered mid-single digit growth.

Margins, cash and capital discipline impress

Trading margin expanded to 19.7%, up 160bps, driven by operating leverage and productivity from the 12-Point Plan. Notably, Smith+Nephew booked a $159 million non-cash inventory provision to accelerate portfolio rationalisation, yet still delivered higher trading gross margin at 70.9% and stronger operating profit.

Cash conversion was excellent at 102%, with free cash flow up 52.5% to $840 million. Inventory discipline improved markedly, with Days Sales of Inventory down 51 days year-on-year as the company pares back lower-priority product families.

RISE strategy and 2028 targets – what’s new

With the 12-Point Plan completed, the new RISE strategy targets faster top-line and profit growth through reaching more patients, scaling innovation, focused investment and tighter execution. Management set 2028 goals of:

• 6-7% organic revenue CAGR,
• 9-10% trading profit CAGR,
• More than $1 billion free cash flow, and
• Adjusted ROIC of 12-13%.

Acquisitions will support this. In January 2026 Smith+Nephew bought Integrity Orthopaedics for an initial $225 million (up to $225 million more earn-out). Integrity’s TENDON SEAM system complements REGENETEN in rotator cuff repair, strengthening the shoulder franchise.

2026 outlook – acceleration with known headwinds

• Underlying revenue growth expected to accelerate to around 6%.
• Trading profit growth around 8% organically, with revenue leverage and savings offsetting headwinds.
• Headwinds include inventory revaluation, tariffs of around $60 million (vs $17 million in 2025), US skin substitute reimbursement changes of $20–40 million, and ENT VBP in China.
• Including Integrity Orthopaedics dilution, trading profit is expected to be around $1.3 billion.
• Free cash flow around $800 million and adjusted ROIC greater than 10% excluding Integrity.
• Phasing: softer first half, stronger second half. One fewer trading day in Q1 and one more in Q4 vs 2025.

Regional picture – steady in the US, China still a drag

• US underlying revenue growth was 5.9% for 2025 to $3,306 million.
• Other Established Markets grew 5.9% underlying; Emerging Markets grew 2.5% underlying as China weighed.
• China revenue fell to $128 million as VBP and market adjustments played through.

Shareholder returns and balance sheet

With strong cash generation, Smith+Nephew completed a $500 million buyback in H2 2025 and lifted the full-year dividend 4.3% to 39.1¢ per share, consistent with a 38% payout ratio. Adjusted leverage sits at a comfortable 1.7x and the group has access to $4.1 billion of committed facilities.

The good, the not-so-good, and what to watch

What looks positive

• All business units above 5% underlying growth and Q4 momentum in Orthopaedics.
• Margin expansion and 102% cash conversion, even after a sizeable non-cash inventory provision.
• Clear 2028 targets with credible levers – robotics adoption, portfolio pruning and focused launches like LANDMARK and continued PICO growth.

What tempers the story

• China remains a headwind, with more VBP to navigate in 2026.
• US Knee Implants still lag – 2026 is the prove-it year with LANDMARK.
• Tariffs and reimbursement changes create a profit drag in 2026, and Integrity is marginally dilutive this year.

Catalysts to track

• H2 2026 launch of the LANDMARK Knee System – especially cementless – and any share gains in US knees.
• Further CORI placements and utilisation – knee growth is higher in CORI accounts.
• AGILI-C reimbursement tailwind from 1 January 2027 and progress integrating Integrity’s TENDON SEAM with REGENETEN.
• Execution on portfolio rationalisation and the targeted cost savings flowing into margins.

My take – why this matters for investors

Smith+Nephew has done the hard yards. Three years on, it is a higher-growth, higher-margin and far more cash-generative business. 2026 brings real-world headwinds, but guidance points to another step up in growth and profits, and the balance sheet has room to back strategy and returns.

If management executes on RISE – notably in US knees, robotics utilisation and wound devices – the 2028 targets of faster growth, more than $1 billion in free cash flow and 12-13% adjusted ROIC look achievable. For long-term investors, this reads as a disciplined recovery story with tangible milestones and plenty of self-help still to come.