REG - Smith & Nephew Plc - New Strategy and 2028 Financial Targets

Smith & NephewAnnouncement

Today 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20251208:nRSH6170Ka&default-theme=true

RNS Number : 6170K  Smith & Nephew Plc  08 December 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Smith+Nephew Announces New Strategy and 2028 Financial Targets

8 December 2025

 

Highlights:

·    RISE, Smith+Nephew's new strategy, builds on our successful 12-Point
Plan transformation and will deliver new levels of financial and operational
performance to drive shareholder value

·    2028 financial targets announced, including significant acceleration
in revenue growth, profit, free cash flow and Return on Invested Capital
(ROIC)

·    2025 full year guidance updated, with trading profit margin guidance
now expected to be at least 19.5% and expected free cash flow upgraded to
around $800 million

·    Further opportunities to rationalise product portfolio identified,
with an estimated $200 million non-cash inventory provision in 2025, reducing
complexity to drive growth, efficiency and returns, and delivering a
significant and on-going reduction in the capital requirements of the business

·    2026 full year provisional guidance issued, building on 2025 progress

Smith+Nephew (LSE: SN, NYSE: SNN), the global medical technology company, will
today present its new strategy, RISE, 2026 provisional guidance and 2028
financial targets at its Capital Markets Day in London.

The RISE strategy is designed to drive stronger returns for shareholders by
elevating Smith+Nephew's financial and operational performance to new levels
by raising the standard of care within our segments and reaching more patients
with our continued focus on innovation. This new strategy builds on the
success of the 12-Point Plan, announced in 2022, through which we have
transformed into a stronger, more agile, and higher growth company.

RISE has four elements:

·    To REACH more patients by driving adoption of our differentiated
portfolio and taking share across indications, settings and markets worldwide.

·    To INNOVATE to enhance the standard of care through accelerating new
product launches and rapidly scaling existing innovation platforms.

·    To SCALE through strategic investment, allocating capital to high
return and high growth opportunities aligned to our portfolio priorities.

·    To EXECUTE efficiently, driving enterprise productivity and asset
efficiency to expand our margins and returns.

Further details on the new strategy will be provided at the Capital Markets
Day event in London later today.

Deepak Nath, Chief Executive Officer, commented:

"Smith+Nephew's new RISE strategy represents an ambitious but achievable new
chapter. Our actions under the 12-Point Plan have created a fundamentally
stronger business than three years ago and a springboard for future growth.
RISE is our roadmap to reach more patients, deliver new categories of
innovation, and further accelerate our financial performance.

"Over the next three years, every business unit will contribute uniquely to
our value creation. Sports Medicine, Advanced Wound Management and ENT will
drive above-market growth through innovation and disciplined execution, while
Orthopaedics, operating in a more mature segment, will return to delivering
market-level growth, supporting margin expansion, and enhanced returns.

"Our growing free cash flow will enable ongoing investment in innovation and
open new strategic opportunities, and we will empower our highly engaged
workforce with world-class tools and processes.

"We are confident that RISE will solidify Smith+Nephew's leadership in
healthcare innovation and deliver significant value for our shareholders,
customers, employees and communities."

2028 Financial Targets

Through RISE we expect to deliver a further step-change in financial
performance between 2025 and 2028. Our targets are to deliver:

·    6-7% underlying revenue compound annual growth rate (CAGR),
significantly above Smith+Nephew's historical average.

·    9-10% trading profit CAGR, built on operating leverage and
efficiencies.

·    More than $1 billion in free cash flow in 2028.

·    12-13% post-tax ROIC in 2028, significantly above our Weighted
Average Cost of Capital (WACC), creating significant value for shareholders.

2025 Full Year Outlook

Smith+Nephew is on-track to meet its 2025 full year target with another year
of strong revenue growth and a significant expansion in trading profit margin.

As previously stated, we expect underlying revenue growth to be around 5%
(around 5.8% based on exchange rates prevailing on 4 December 2025).

Full year trading profit margin is now expected to be at least 19.5%, within
our guided range of 19.0% to 20.0% (2024: 18.1%).

In addition, we are further raising our guidance for free cash flow. We now
expect this to be around $800 million, driven by good working capital
discipline, particularly in Orthopaedics, and operational efficiency over the
life of the 12-Point Plan. This was originally guided to be more than $600
million for 2025.

We expect post-tax ROIC to be more than 9% for the full year, excluding the
impact of portfolio rationalisation (2024: 7.4%), above our WACC.

Portfolio rationalisation

As part of our 12-Point Plan we have taken actions to optimise our
manufacturing footprint and drive operational efficiencies across our network.
In addition, we have also reviewed our overall product portfolio and taken
actions to rationalise and simplify. These, in turn, have led to our new Ortho
360 operating model which will drive improved efficiency, profitability and
capital returns at the market and product level.

As part of this new operating model and building on the portfolio
rationalisation started through the 12-Point Plan, we have identified further
opportunities to simplify our product range. This will reduce the need for
inventory and capital employed in the business, provide a simpler and more
efficient offer to our customers, and will also allow us to focus on migrating
them to our latest technology products.

Work is ongoing to finalise the product families and individual Stock Keeping
Units (SKU's) which will be removed from the portfolio over time, but we
currently estimate that we will be able to reduce gross inventory by around
$500 million. To achieve this significant and on-going reduction in the
capital requirements of the business, we will take a non-cash provision in our
2025 accounts which we currently estimate to be around $200 million. Combined
with the expansion and redesign of our Life Cycle Management (LCM) process,
this will leave our portfolio simpler, easier for customers to understand, and
the company in a stronger position to drive growth and improve margins and
capital returns.

2026 Full Year Outlook

Smith+Nephew is also issuing provisional guidance for full year 2026, when we
expect to deliver further progress across all key financial metrics.

·    Underlying revenue growth is expected to accelerate to around 6% for
the full year (around 5.8% based on exchange rates prevailing on 4 December
2025).

·    Profit growth is expected to be ahead of revenue growth as we deliver
operating leverage.

·    Free cash flow is expected to be around $800 million.

·    Post-tax ROIC is expected to substantially increase to be more than
10% for 2026, well above our WACC.

The 2026 full year guidance will be confirmed when we issue our 2025 full year
results on 2 March 2026.

Capital Markets Days

In addition to today's Capital Markets Day for institutional investors and
financial analysts in London, Smith+Nephew is hosting an additional Capital
Markets Day in New York on Thursday 11 December 2025.

Both events will be led by Chief Executive Officer Deepak Nath, accompanied by
Chief Financial Officer John Rogers and members of the Executive Committee.
Each event will include product demonstrations for those attending in person.

Participants are encouraged to attend both events, either in person or
virtually.

In person attendance at these events requires pre-registration. Investors and
analysts should register via Smith+Nephew's website at
https://www.smith-nephew.com/en/about-us/investors
(https://www.smith-nephew.com/en/who-we-are/investors#quarterly-reporting) .

The sessions will also be webcast and the presentations made available via the
website.

London - 8 December 2025

The London event will introduce Smith+Nephew's new strategy following the
conclusion of the 12-Point Plan, including mid-term priorities and financial
goals. This will be held at The Royal College of Surgeons from 1pm to 5pm GMT
/ 8am to 12pm EST on 8 December.

New York - 11 December 2025

The New York event will provide greater detail on Smith+Nephew's innovative
portfolio that will drive the next phase of growth. This event will be held at
the New York Stock Exchange from 2pm to 6pm GMT / 9am to 1pm EST on 11
December.

The New York event will include insight from the following Smith+Nephew
customers and Key Opinion Leaders:

·    Michael Ast, MD, is Chief of the Knee Service, Chief Medical
Innovation Officer, and Director of Ambulatory Surgery Center Strategy at the
Hospital for Special Surgery (HSS). Dr Ast specialises in hip and knee
replacement surgery focusing on rapid-recovery, short-stay, and outpatient
surgery. He is an expert in minimally invasive techniques and robotics. Dr Ast
will discuss the trend of joint replacements transitioning to Ambulatory
Surgery Centers (ASCs) and the unique ASC needs that must be addressed.

·    Ravi Bashyal, MD, FAAOS, Director of Outpatient Hip and Knee
Replacement Surgery at NorthShore University in Chicago. Dr Bashyal
specialises in robotic minimally invasive hip and knee replacement and was an
early adopter of PICO(◊) to manage the risk of surgical site complications.
He has published extensively on reducing surgical site infections and
complications. Dr Bashyal will talk about the impact of surgical site
complications in orthopaedic surgery for the patient, surgeon, and system. He
will also discuss how PICO has enabled him to manage the risk and improve
patient outcomes, and his work to educate other surgeons on complication
reduction, improving the standard of care.

·    Steven Haas, MD, orthopaedic surgeon at HSS and New York-Presbyterian
Hospital in New York City. He is also Professor of Clinical Orthopaedic
Surgery at Weill Cornell Medical College and currently serves as President of
The Knee Society. Dr Haas chaired the Knee Service at HSS for 18 years. Dr
Haas will discuss modern knee arthroplasty and the rise of robotic-assisted
knee surgery.

·    Anil Ranawat, MD, Chief of the Hip and Joint Preservation Division of
the Sports Medicine Institute at HSS and Orthopaedic Surgeon for the New York
Rangers. He is also the Medical Director for HSS NJ and PA Department. Dr
Ranawat will talk about Smith+Nephew's comprehensive Sports Medicine product
portfolio, including how he uses REGENETEN(◊) and CARTIHEAL(◊) to improve
patient outcomes and the potential he sees for advanced enabling technologies,
such as Spatial Surgery (including the TESSA(◊) Spatial Surgery System), to
shape the future of arthroscopic surgery.

The person responsible for arranging the release of this announcement on
behalf of the Company is Helen Barraclough, Company Secretary.

 

Enquiries

 Investors
 Emily Heaven                      +44 (0) 7811 919437
 Cora McCallum                     +44 (0) 1923 477433
 Craig Bijou                       +1 (475) 850-8282
 Smith+Nephew

 Media
 Charles Reynolds                  +44 (0) 1923 477314
 Smith+Nephew
 Susan Gilchrist / Ayesha Bharmal  +44 (0) 20 7404 5959
 Brunswick

 

About Smith+Nephew

Smith+Nephew is a portfolio medical technology business focused on the repair,
regeneration and replacement of soft and hard tissue. We exist to restore
people's bodies and their self-belief by using technology to take the limits
off living. We call this purpose 'Life Unlimited'. Our 17,000 employees
deliver this mission every day, making a difference to patients' lives through
the excellence of our product portfolio, and the invention and application of
new technologies across our three global business units of Orthopaedics,
Sports Medicine & ENT and Advanced Wound Management.

Founded in Hull, UK, in 1856, we now operate in more than 100 countries, and
generated annual sales of $5.8 billion in 2024. Smith+Nephew is a constituent
of the FTSE100 (LSE:SN, NYSE:SNN). The terms 'Group' and 'Smith+Nephew' are
used to refer to Smith & Nephew plc and its consolidated subsidiaries,
unless the context requires otherwise.

For more information about Smith+Nephew, please visit www.smith-nephew.com
(http://www.smith-nephew.com/) and follow us on LinkedIn
(http://www.linkedin.com/company/smith-%26-nephew) , Instagram
(https://www.instagram.com/smithnephewmeded/) , Facebook
(http://www.facebook.com/smithnephewplc) or X
(http://www.twitter.com/smithnephewplc) .

 

Forward-looking Statements

 

This document may contain forward-looking statements that may or may not prove
accurate. For example, statements regarding expected revenue growth and
trading profit margins, market trends and our product pipeline are
forward-looking statements. Phrases such as "aim", "plan", "intend",
"anticipate", "well-placed", "believe", "estimate", "expect", "target",
"consider" and similar expressions are generally intended to identify
forward-looking statements. Forward-looking statements involve known and
unknown risks, uncertainties and other important factors that could cause
actual results to differ materially from what is expressed or implied by the
statements. For Smith+Nephew, these factors include: conflicts in Europe and
the Middle East, economic and financial conditions in the markets we serve,
especially those affecting healthcare providers, payers and customers; price
levels for established and innovative medical devices; developments in medical
technology; regulatory approvals, reimbursement decisions or other government
actions; product defects or recalls or other problems with quality management
systems or failure to comply with related regulations; litigation relating to
patent or other claims; legal and financial compliance risks and related
investigative, remedial or enforcement actions; disruption to our supply chain
or operations or those of our suppliers; competition for qualified personnel;
strategic actions, including acquisitions and disposals, our success in
performing due diligence, valuing and integrating acquired businesses;
disruption that may result from transactions or other changes we make in our
business plans or organisation to adapt to market developments; relationships
with healthcare professionals; reliance on information technology and
cybersecurity; disruptions due to natural disasters, weather and climate
change related events; changes in customer and other stakeholder
sustainability expectations; changes in taxation regulations; effects of
foreign exchange volatility; and numerous other matters that affect us or our
markets, including those of a political, economic, business, competitive or
reputational nature. Please refer to the documents that Smith+Nephew has filed
with the U.S. Securities and Exchange Commission under the U.S. Securities
Exchange Act of 1934, as amended, including Smith+Nephew's most recent annual
report on Form 20-F, which is available on the SEC's website at www. sec.gov,
for a discussion of certain of these factors. Any forward-looking statement is
based on information available to Smith+Nephew as of the date of the
statement. All written or oral forward-looking statements attributable to
Smith+Nephew are qualified by this caution. Smith+Nephew does not undertake
any obligation to update or revise any forward-looking statement to reflect
any change in circumstances or in Smith+Nephew's expectations.

(◊) Trademark of Smith+Nephew. Certain marks registered in US Patent and
Trademark Office.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDGZMGZGNDGKZZ



            Copyright 2019 Regulatory News Service, all rights reserved