Smith & Nephew plc (LON:SN, NYSE:SNN), the global medical technology business, has reported results for the fourth quarter and full year ended 31 December 2025:
| 31 December | 31 December | Reported | Underlying | |||||
| 2025 | 2024 | growth | growth | |||||
| $m | $m | % | % | |||||
| Fourth Quarter Results1,2 | ||||||||
| Revenue | 1,702 | 1,571 | 8.3 | 6.2 | ||||
| Full Year Results1,2 | ||||||||
| Revenue | 6,164 | 5,810 | 6.1 | 5.3 | ||||
| Operating profit | 794 | 657 | 20.7 | |||||
| Operating profit margin (%) | 12.9 | 11.3 | ||||||
| EPS (cents) | 72.1 | 47.2 | 52.8 | |||||
| Cash generated from operations | 1,549 | 1,245 | 24.4 | |||||
| Trading profit | 1,211 | 1,049 | 15.5 | |||||
| Trading profit margin (%) | 19.7 | 18.1 | ||||||
| EPSA (cents) | 102.0 | 84.3 | 21.0 | |||||
| Free cash flow | 840 | 551 | 52.5 |
Deepak Nath, Smith & Nephew Chief Executive Officer, said:
“I am pleased that a strong fourth quarter helped us meet or exceed our 2025 targets for revenue growth, profitability and cash generation. During the year, newer products drove strong broad-based performance, with underlying revenue growth above 5% for all three business units, and we look forward to a strong cadence of further new product introductions in 2026.
“This also marks the completion of our 12-Point Plan, through which we have successfully transformed Smith+Nephew into a fundamentally stronger business. Our new RISE strategy, launched in December, is the start of an ambitious and achievable next phase of growth. It is our roadmap to Reach more patients, unlock new categories of Innovation, Scale through strategic investment, and Execute efficiently. Together, it will allow us to step-up performance towards new 2028 financial targets.
“2026 is the first step in that journey and we are confident in delivering an acceleration in growth and returns. With our strengthened foundations and new strategy, we are well set to expand our leadership in healthcare innovation and realise sustainable value for shareholders, while continuing to deliver for customers, employees and communities into the future.”
Strategic Highlights1,2
· 12-Point Plan transformation completed, strengthening operational foundations, restoring performance in Orthopaedics, accelerating Sports Medicine and Advanced Wound Management, improving productivity, and embedding a culture of accountability, discipline and continuous improvement
· 12-Point Plan financial outcomes since 2022 include 5.7% reported revenue Compound Annual Growth Rate (CAGR), plus 240bps of trading margin expansion despite significant headwinds, fifteen-fold increase in free cash flow, and 170bps increase in adjusted Return on Invested Capital (ROIC) despite a -160bps headwind from the portfolio rationalisation announced in December 2025
· RISE, Smith+Nephew’s new strategy, launched, targeting new levels of financial and operational performance to drive shareholder value
· 2028 financial targets announced, including significant acceleration in revenue growth, trading profit, free cash flow, and adjusted ROIC
· Acquisition of Integrity Orthopaedics completed, supporting RISE and our ambition to become the global leader in Sports Medicine
Full Year 2025 Highlights1,2
· 2025 revenue was $6,164 million (2024: $5,810 million), with underlying revenue growth of 5.3%. Reported growth of 6.1% was after 80bps FX tailwind
· Underlying revenue growth excluding China was 7.0% (reported growth 7.8%)
· Trading profit up 15.5% to $1,211 million (2024: $1,049 million) with 19.7% trading profit margin, up 160bps (2024: 18.1%). Reported operating profit improved 20.7% to $794 million (2024: $657 million)
· Significant improvements in cash generated from operations at $1,549 million (2024: $1,245 million), trading cash flow at $1,236 million (2024: $999 million) and trading cash conversion, at 102.0% (2024: 95.2%). Free cash flow increased by 52.5% to $840 million, including one-off $26 million benefit from a property transaction (2024: $551 million)
· Adjusted ROIC improved 90bps to 8.3% (2024: 7.4%) despite a -160bps headwind from portfolio rationalisation
· EPSA up 21.0% to 102.0¢ (2024: 84.3¢) and EPS up 52.8% to 72.1¢ (2024: 47.2¢)
· Reflecting the strong cash generation and balance sheet, $500 million share buyback completed in second half of 2025; adjusted net debt/EBITDA leverage ratio for 2025 was 1.7x
· Full year dividend increased 4.3% to 39.1¢ per share (2024: 37.5¢ per share)
Q4 2025 Trading Highlights1,2
· Q4 revenue of $1,702 million (2024: $1,571 million), with underlying revenue growth of 6.2%, which includes the benefit of one extra trading day offset by
-100bps headwind from China. Reported growth 8.3% after 210bps FX tailwind, primarily reflecting strength of the Euro
· Orthopaedics delivered underlying revenue growth of 7.9% (reported growth 9.8%), its strongest quarter of revenue growth for more than two years
· Sports Medicine & ENT delivered underlying revenue growth of 7.3% (reported growth 9.5%) despite continuing China headwinds
· Advanced Wound Management underlying revenue growth was 2.8% (reported growth 5.3%) reflecting a strong comparative period and weakness in skin substitutes ahead of reimbursement changes in 2026
2026 Outlook1,2
· Building on our momentum, for 2026 we are targeting further progress in revenue growth, trading profit and ROIC, and sustained strong cash generation
· In line with our provisional guidance issued in December 2025, underlying revenue growth is expected to accelerate further to around 6% for the full year
· Trading profit growth on an organic basis is expected to be around 8%, with revenue leverage and operational savings offsetting headwinds from inventory revaluation, tariffs, skin substitute reimbursement changes, and ENT VBP in China
· Since providing our provisional guidance, we have also completed the acquisition of Integrity Orthopaedics. This acquisition is expected to be marginally dilutive to trading profit in 2026, broadly neutral in 2027 and accretive in 2028. Including this dilution, we expect trading profit to be around $1.3 billion
· Free cash flow is expected to be around $800 million
· Adjusted ROIC is expected to be greater than 10% excluding the impact of Integrity Orthopaedics
Analyst conference call
An analyst conference call to discuss Smith+Nephew’s fourth quarter and full year results will be held 8.30am GMT / 3.30am EST on 2 March 2026, details of which can be found on the Smith+Nephew website at https://www.smith-nephew.com/en/about-us/investors.
Notes
1. Unless otherwise specified as ‘reported’ all revenue growth throughout this document is ‘underlying’ after adjusting for the effects of currency translation and including the comparative impact of acquisitions and excluding disposals. All percentages compare to the equivalent 2024 period.
‘Underlying revenue growth’ reconciles to reported revenue growth, the most directly comparable financial measure calculated in accordance with IFRS, by making two adjustments, the ‘constant currency exchange effect’ and the ‘acquisitions and disposals effect’, described below. See Other Information on pages 35 to 41 for a reconciliation of underlying revenue growth to reported revenue growth.
The ‘constant currency exchange effect’ is a measure of the increase/decrease in revenue resulting from currency movements on non-US Dollar sales and is measured as the difference between: 1) the increase/decrease in the current year revenue translated into US Dollars at the current year average exchange rate and the prior revenue translated at the prior year rate; and 2) the increase/decrease being measured by translating current and prior year revenues into US Dollars using the same exchange rate.
The ‘acquisitions and disposals effect’ is the measure of the impact on revenue from newly acquired material business combinations and recent material business disposals. This is calculated by comparing the current year, constant currency actual revenue (which includes acquisitions and excludes disposals from the relevant date of completion) with prior year, constant currency actual revenue, adjusted to include the results of acquisitions and exclude disposals for the commensurate period in the prior year. These sales are separately tracked in the Group’s internal reporting systems and are readily identifiable.
2. Certain items included in ‘trading results’, such as trading profit, trading profit margin, tax rate on trading results, trading cash flow, trading profit to trading cash conversion ratio, free cash flow, adjusted ROIC, EPSA, leverage ratio and underlying growth are non-IFRS financial measures. The non-IFRS financial measures reported in this announcement are explained in Other Information on pages 35 to 41 and are reconciled to the most directly comparable financial measure prepared in accordance with IFRS. Reported results represent IFRS financial measures as shown in the Condensed Consolidated Financial Statements.
