Smith & Nephew (SN) Q3 2025 TU earnings summary

Executive summary

• Q3 2025 revenue reached $1,501 million, up 5.0% underlying and 6.3% reported year-over-year, with growth driven by sports medicine, advanced wound management, and U.S. hips, offset by softer knees and China headwinds easing.

• Innovation pipeline and new product launches, including the 12-Point Plan, supported profitability and margin expansion.

• Operational improvements and cost discipline led to a free cash flow guidance increase to ~$750 million.

• Group growth was balanced across geographies, with China headwinds easing and business units trending positively.

• Over half of growth came from products launched in the last five years.

Financial highlights

• Q3 revenue was $1.5 billion, with 5.0% underlying and 6.3% reported growth, aided by a 130bps FX tailwind.

• U.S. revenue grew 5.5%, other established markets 3.9%, and emerging markets 5.4%.

• Advanced Wound Management led with 6.0% underlying growth, followed by Sports Medicine & ENT at 5.1% and Orthopaedics at 4.1%.

• Trading margin guidance for the year remains at 19%-20%, with expectations to land at the midpoint or slightly above.

• Free cash flow guidance raised from >$600 million to ~$750 million due to working capital and operational efficiencies.

Outlook and guidance

• Full-year underlying revenue growth expected around 5.0%, with trading margin in the 19%-20% range.

• Margin expansion anticipated beyond 2025, despite headwinds from tariffs ($15–$20 million) and reimbursement changes.

• Guidance includes a 150bps growth headwind from China and one fewer trading day than 2024.

• Management confident in meeting guidance, citing strong Q4 pipeline, new product launches, and extra trading day.

• Margin expansion in H2 driven by cost reductions and network optimization, offsetting China and tariff headwinds.