Smith & Nephew has lowered its 2026 sales outlook after weakness in U.S. orthopedics and wound care outweighed stronger growth in sports medicine.
The medtech now expects underlying revenue to grow around 4% this year, down from its previous forecast of around 6%. The revision marks a pullback from May, when Smith & Nephew maintained the higher target following its first-quarter results.
Second-quarter revenue reached $1.6 billion, up 2.8% from a year earlier. Excluding currency effects and changes to the company’s portfolio, sales grew 1.6%. The company acknowledged that the underlying performance fell short of its expectations.
Much of the pressure came from the U.S., where underlying revenue declined 1.3%. Smith & Nephew pointed to continued weakness in orthopedics as well as a downturn in its advanced wound bioactives business.
The sharpest decline came in U.S. knee implants, where revenue fell 7.2%. Smith & Nephew blamed the decline partly on decisions to limit certain product and equipment placements, along with growing demand for cementless knee implants.
Smith & Nephew expects new products and wider adoption of its Legion MS system to help revive the knee business. The company plans to launch a cementless version of its Landmark Knee System in the third quarter.
“Orthopedics is not where we want it to be, but we expect growth to accelerate as we fill portfolio gaps, starting later this year and continuing into 2027,” CEO Deepak Nath said in the earnings release.
The challenges extended to hips. U.S. hip implant revenue declined 1.5% after four consecutive quarters of above-market growth, with delays in deploying sets for the Catalystem Primary Hip System weighing on sales.
Taken together, those setbacks pushed underlying orthopedics revenue down 1% for the quarter.
Smith & Nephew also faced pressure in advanced wound management, where underlying revenue fell 2.1%. Advanced wound bioactives sales dropped 12.7% as reimbursement changes affected skin substitutes and sales of the Santyl enzymatic debridement treatment weakened following a strong first quarter.
The company expects Santyl to return to growth in the third quarter and said reimbursement changes affecting skin substitutes could reduce full-year revenue by close to $40 million, near the high end of its earlier estimate.
Sports medicine provided a brighter spot. Revenue from the company’s sports medicine and ear, nose and throat unit climbed 8.6%, including 10.6% growth in sports medicine joint repair.
Despite the lower sales outlook, Smith & Nephew continues to forecast around 8% trading profit growth, approximately $800 million in free cash flow and an adjusted return on invested capital above 10%.
To help preserve those targets, the company is planning an additional $50 million in savings in areas including manufacturing, procurement, sales and marketing. Smith & Nephew expects its cost-cutting efforts to deliver about $200 million in total savings this year.