Smith & Nephew cuts 2026 outlook; talks with Johnson & Johnson end
(Alliance News) - Smith & Nephew PLC on Wednesday cut its 2026 guidance as weaker-than-expected growth in its US Orthopaedics business weighed on its outlook.
Meanwhile, the Watford, England-based medical technology company confirmed that discussions with New Brunswick, New Jersey-based pharmaceutical firm Johnson & Johnson over a potential combination involving its Orthopaedics division have ended.
Smith & Nephew said third-quarter revenue rose 3.4% to USD1.55 billion from USD1.50 billion a year earlier, supported by strong Sports Medicine performance and improving Advanced Wound Management trading.
Sports Medicine & ENT revenue increased 8.0% to USD507 million, while Orthopaedics revenue climbed 2.3% to USD590 million and Advanced Wound Management revenue remained broadly flat at USD454 million.
Smith & Nephew now expects full-year underlying revenue growth of around 3.0%, down from 4.0%, and trading profit of approximately USD1.25 billion, representing growth of around 4.0%, compared with previous guidance of USD1.30 billion and 8.0% growth.
The firm reduced free cash flow guidance to USD750 million from USD800 million, while adjusted return on invested capital is now expected to be around 9.0%, down from more than 10%.
The company said it approached Johnson & Johnson earlier this year as part of a strategic review of its Orthopaedics business, but discussions have since ended.
It continues to explore strategic options for the division.
Chief Executive Officer Deepak Nath said: "We remain focused on improving performance, enhancing operational efficiency and allocating capital to the highest-value opportunities across our business, in line with the RISE strategy, while continuing to consider all opportunities that could accelerate value creation in the best interests of shareholders."
The firm's RISE strategy includes investing in higher-growth and higher-margin Sports Medicine and Advanced Wound Management businesses where the company sees a "clear route to market leadership". The strategy also aims to continue improving Orthopaedics performance.
Meanwhile, Smith & Nephew said its USD500 million share buyback remains on track, with USD250 million completed by the end of September.
Smith & Nephew shares were 0.2% lower at 1,115.00 pence each on Wednesday morning in London.
By Tom Budszus, Alliance News slot editor
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