SMITH & NEPHEW PLC (SNN): Financial results for Q2 2026
SMITH & NEPHEW PLC (SNN) furnished an SEC Form 6-K — earnings release. Smith+Nephew Second Quarter and First Half 2026 Results Strong H1 profit growth, on-track to meet trading profit, free cash flow and ROIC guidance despite softer revenue growth 4 August 2026 27 June 28 June Reported Underlying 2026 2025 growth growth $m $m % % Second Quarter Resu
How this was made
The 30-second read
Why it matters
The earnings release provides fresh profit and guidance data, indicating continued resilience but slower revenue growth, which may affect medtech valuations.
Market read
The Q2 earnings and guidance update provide actionable insight for investors in the medtech sector and influence related stocks.
What to watch
FX tailwinds mask underlying growth weakness; upcoming product launches may face delays.
Smith+Nephew Second Quarter and First Half 2026 Results Strong H1 profit growth, on-track to meet trading profit, free cash flow and ROIC guidance despite softer revenue growth
First-half trading profit, EPSA and operating cash generation grew, supported by efficiency savings, but Q2 underlying revenue growth was 1.6% and the company reduced full-year underlying revenue growth guidance to around 4% from around 6%.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q2 revenueother | $1,597 million | – | 2.8% |
| Q2 underlying revenue growthnon-GAAP | 1.6% | – | – |
| H1 revenueother | $3,097 million | – | 4.6% |
| H1 underlying revenue growthnon-GAAP | 2.3% | – | – |
| H1 underlying revenue growth on an average daily sales basisnon-GAAP | 3.1% | – | – |
| Gross profitother | $2,196 million | – | 5.0% |
| Gross profit marginother | 70.9% | – | 30bps |
| Trading gross profitnon-GAAP | $2,203 million | – | 5.5% |
| Trading gross profit marginnon-GAAP | 71.1% | – | 60bps |
| Cost of goods soldother | $(901) million | – | – |
| Selling, general and administrative expensesother | $(1,598) million | – | – |
| Research and development expensesother | $(150) million | – | – |
| Operating profitother | $448 million | – | 4.3% |
| Operating profit marginother | 14.5% | – | – |
| Trading profitnon-GAAP | $566 million | – | 8.1% |
| Trading profit marginnon-GAAP | 18.3% | – | 60bps |
| Profit before taxationother | $380 million | – | 5.0% |
| Taxationother | $(77) million | – | – |
| Effective tax rateother | 20.3% | – | – |
| Attributable profit for the periodother | $303 million | – | – |
| Basic earnings per ordinary shareother | 35.6¢ | – | 6.2% |
| Diluted earnings per ordinary shareother | 35.2¢ | – | – |
| Adjusted earnings per share (EPSA)non-GAAP | 47.7¢ | – | 11.0% |
| Cash generated from operationsother | $605 million | – | 6.9% |
| Net cash inflow from operating activitiesother | $450 million | – | – |
| Trading cash flownon-GAAP | $437 million | – | -10.2% |
| Trading profit to cash conversion rationon-GAAP | 77.3% | – | – |
| Free cash flownon-GAAP | $231 million | – | (5.2%) |
| Capital expenditureother | $(190) million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Q2 Sports Medicine & ENTGrowth reflected continued momentum in Sports Medicine, including shoulder repair, REGENETEN, Q-FIX KNOTLESS, CARTIHEAL AGILI-C, WEREWOLF FASTSEAL 6.0 and the service business. | $527 million | – | 8.6% |
| Q2 Sports Medicine Joint RepairGrowth was led by shoulder repair, including REGENETEN Bioinductive Implant and Q-FIX KNOTLESS All-Suture Anchor. | $293 million | – | 10.6% |
| Q2 Arthroscopic Enabling TechnologiesPerformance was driven by WEREWOLF FASTSEAL 6.0 Hemostasis Wand, the service business and strong demand in China. | $178 million | – | 8.8% |
| Q2 ENT (Ear, Nose and Throat)The decline reflected actions in China to reduce channel inventory ahead of the expected Volume-Based Procurement process. | $56 million | – | (1.6%) |
| Q2 Advanced Wound ManagementPerformance reflected headwinds in Advanced Wound Bioactives and strong comparative periods in Advanced Wound Bioactives and Advanced Wound Devices. | $456 million | – | (2.1%) |
| Q2 Advanced Wound CareGrowth was driven by the foam portfolio, led by ALLEVYN COMPLETE CARE and ALLEVYN AG. | $204 million | – | 3.7% |
| Q2 Advanced Wound BioactivesThe decline was driven by skin-substitute reimbursement-rule changes and a soft quarter for SANTYL following a strong Q1. | $144 million | – | (12.7%) |
| Q2 Advanced Wound DevicesPerformance included double-digit growth from LEAF and strong Emerging Markets performance from PICO and RENASYS. | $108 million | – | 3.8% |
| Q2 OrthopaedicsThe decline reflected ongoing US Knee Implants issues ahead of launches, temporary US Hip Implants headwinds and strong comparative periods. | $614 million | – | (1.0%) |
| Q2 Knee ImplantsPerformance reflected portfolio and capital discipline and an ongoing market shift towards cementless, partly mitigated by LEGION MS and LEGION CONCELOC. | $247 million | – | (4.3%) |
| Q2 Hip ImplantsCATALYSTEM Primary Hip System continued to grow strongly, but set-deployment delays and a higher proportion of retentions affected US performance. | $165 million | – | 0.5% |
| Q2 Other ReconstructionGrowth reflected the comparator period and contract mix, while CORI Surgical System installations grew double digit globally. | $36 million | – | 0.8% |
| Q2 Trauma & ExtremitiesPerformance was driven by EVOS Plating System, IM Nails and AETOS Shoulder System. | $166 million | – | 2.4% |
| H1 Sports Medicine & ENTSports Medicine Joint Repair and Arthroscopic Enabling Technologies growth more than offset the decline in ENT. | $1,017 million | – | 7.7% |
| H1 Advanced Wound ManagementAdvanced Wound Care and Advanced Wound Devices growth was offset by Advanced Wound Bioactives declines. | $867 million | – | (0.1%) |
| H1 OrthopaedicsHip Implants, Other Reconstruction and Trauma & Extremities growth did not offset the decline in Knee Implants. | $1,213 million | – | (0.1%) |
| H1 USUS growth was constrained by Orthopaedics and Advanced Wound Bioactives. | $1,591 million | – | 0.3% |
| H1 Other Established MarketsPerformance reflected growth across Europe, Japan, Australia, Canada and New Zealand. | $958 million | – | 1.4% |
| H1 Emerging MarketsGrowth included double-digit growth from China. | $548 million | – | 10.6% |
Full year 2026 and second half 2026 outlook
- RevenueSecond half revenue growth in the range of 5.0% to 5.5%; full year revenue growth of around 4%; on a reported basis, second half revenue growth in the range of 5.1% to 5.6% and full year revenue growth of around 5.2%
- NoteAround 8% trading profit growth excluding acquisitions
- NoteAround $1.3 billion post-acquisition of Integrity Orthopaedics
- NoteAround $800 million free cash flow
- NoteMore than 10% adjusted ROIC (excluding impact of Integrity Orthopaedics)
- NoteThe net year-on-year impact of tariffs to be broadly neutral to trading profit
- NoteThe headwind from skin substitutes is expected to be towards the upper end of the previously guided $20 to $40 million range
- NoteAround $200 million for the year in total efficiency savings
- NoteIntegrity Orthopaedics is expected to be marginally dilutive to trading profit in 2026, broadly neutral in 2027 and accretive from 2028
Capital returns
- A $500 million share buyback was announced on 6 May 2026 to be completed within twelve months.
- $216 million had settled as at 3 August 2026.
- The Group purchased 9,076,588 shares under the programme for a total cost of $137 million and had an obligation to purchase additional shares amounting to $113 million at 27 June 2026.
- The 2026 interim dividend is 15.6 US cents per ordinary share (31.2¢ per ADS), a 4.0% increase year-on-year.
- The 2025 final dividend totaling $205 million was paid on 27 May 2026.
- The 2026 interim dividend is payable on 6 November 2026 to shareholders whose names appear on the register at the close of business on 2 October 2026.
What drove it
- Sports Medicine benefited from differentiated products, new launches, recent acquisitions and double-digit growth from REGENETEN, Q-FIX KNOTLESS, CARTIHEAL AGILI-C and WEREWOLF FASTSEAL 6.0.
- Reported H1 revenue growth included a 230bps foreign-exchange tailwind, while Q2 reported revenue growth included a 120bps foreign-exchange tailwind.
- H1 growth reflected one fewer trading day, while underlying revenue growth on an average daily sales basis was 3.1%.
- Trading profit growth was driven by a step-up in forecast efficiency savings, while tariff refunds fully offset the forecast tariff headwind.
- $130 million of efficiency savings was realised in the first half, including $50 million from 12-Point Plan and zero-based budgeting activities and $80 million from additional opportunities.
- Gross profit margin improvement reflected price increases and manufacturing and procurement efficiency measures that more than offset raw-materials inflation.
- Sports Medicine & ENT trading profit margin increased 160bps to 24.7%, and Orthopaedics trading profit margin increased 30bps to 13.0%.
Concerns
- Q2 underlying revenue growth of 1.6% was lower than anticipated.
- US Orthopaedics was affected by ongoing US Knee Implants challenges and temporary US Hip Implants headwinds.
- Advanced Wound Bioactives declined due to reimbursement-rule changes for skin substitutes and softer SANTYL performance.
- Advanced Wound Management trading profit margin declined 10bps to 22.0% reflecting changes to reimbursement in skin substitutes.
- Trading cash flow declined to $437 million and free cash flow declined to $231 million, reflecting higher capital expenditure.
- Net debt increased to $3,019 million from $2,759 million at 31 December 2025.
- The filing identifies ongoing legal expenses for metal-on-metal hip claims.
What to watch
- Second-half revenue growth guidance of 5.0% to 5.5%.
- The planned return to growth in SANTYL in the third quarter.
- Stabilisation in US skin substitutes.
- US Knee Implants momentum from LEGION MS deployments and the expected third-quarter 2026 launch of the cementless LANDMARK Knee System.
- US Hip Implants recovery through increased CATALYSTEM set deployment.
- The expected implementation of China Volume-Based Procurement in the second half of 2026.
- Delivery of the additional $50 million in efficiency savings identified for 2026.
- Free cash flow progression in the second half, when cash generation is expected to be stronger than in H2 2025.
- The Q3 Trading Report scheduled for 6 November 2026.
Balance sheet and cash flow
- Cash and cash equivalents were $754 million at 27 June 2026.
- Cash and cash equivalents net of overdrafts were $750 million at 27 June 2026.
- Net debt was $3,019 million at 27 June 2026, compared with $2,759 million at 31 December 2025.
- Net debt excluding lease liabilities was $2,822 million at 27 June 2026.
- The net debt to adjusted EBITDA ratio was 1.8x.
- The Group had access to committed facilities of $4.7 billion.
- Borrowings were $3,588 million at 27 June 2026.
- No debt is due for repayment in the second half of 2026.
- A $350 million US Corporate Bond and $140 million of private placement debt is due for repayment in the first half of 2027.
- Acquisitions, net of cash acquired, were $(221) million.
- The Group completed the acquisition of Integrity Orthopaedics on 21 January 2026 for fair value consideration of $390 million.
Analysis
Smith+Nephew delivered $3,097 million of H1 revenue, up 4.6% on a reported basis and 2.3% on an underlying basis. The growth profile softened in Q2, when revenue was $1,597 million and underlying growth was 1.6%, below the company’s expectations. Sports Medicine & ENT remained the principal source of growth, while Advanced Wound Management and Orthopaedics each recorded a 0.1% underlying revenue decline in the first half.
The sales shortfall was concentrated in US Orthopaedics and Advanced Wound Bioactives. US Knee Implants remained under pressure ahead of product introductions, and US Hip Implants faced delays in CATALYSTEM set deployments and a greater mix of retentions. Advanced Wound Bioactives was affected by skin-substitute reimbursement changes and a soft SANTYL quarter. Conversely, Sports Medicine Joint Repair and Arthroscopic Enabling Technologies maintained strong growth, with product momentum across REGENETEN, Q-FIX, CARTIHEAL AGILI-C and FASTSEAL.
Profit expanded faster than revenue. Operating profit increased 4.3% to $448 million, while trading profit increased 8.1% to $566 million and the trading profit margin rose 60bps to 18.3%. The gross profit margin rose 30bps to 70.9%, supported by price increases and operational efficiencies. The company realised $130 million of efficiency savings in H1, and tariff refunds made the net tariff impact broadly neutral to profit growth. EPSA increased 11.0% to 47.7¢, ahead of the 6.2% increase in basic EPS to 35.6¢.
Cash generation remained positive but investment reduced conversion. Cash generated from operations rose 6.9% to $605 million, while trading cash flow declined 10.2% to $437 million and free cash flow declined to $231 million. The company attributed the reduction principally to a $51 million increase in capital expenditure related largely to the new UK Wound factory and IT upgrades. Net debt was $3,019 million and the adjusted net debt to EBITDA ratio was 1.8x. Capital allocation included a $500 million buyback, of which $216 million had settled as at 3 August, and a 4.0% increase in the interim dividend to 15.6¢ per share.
Management reduced its full-year underlying revenue growth expectation to around 4% from around 6%, while retaining targets for around 8% trading profit growth excluding acquisitions, around $800 million free cash flow and more than 10% adjusted ROIC excluding Integrity Orthopaedics. The bridge to the guidance relies on second-half revenue growth of 5.0% to 5.5%, stabilisation in US skin substitutes, SANTYL returning to growth, improved US Orthopaedics execution, an additional Q4 trading day and around $200 million of full-year efficiency savings. The revised outlook makes the second-half recovery in Wound and Orthopaedics, alongside delivery of cost savings, the central operational focus.
Management, verbatim
The Group navigated some challenges in the second-quarter. Sports Medicine continued to perform strongly, but Orthopaedics was impacted by temporary headwinds in US Hip Implants and ongoing challenges in US Knee Implants ahead of new product introductions. We also saw softer-than-expected performance from SANTYL within Bioactives, although we expect the product to return to growth in the third quarter.
Deepak Nath, Chief Executive Officer
As a result, despite slower-than-expected revenue growth, we delivered a strong first-half profit performance primarily driven by a step-up in forecast efficiency savings.
Deepak Nath, Chief Executive Officer
Importantly, that improved resilience gives us confidence in our ability to deliver our full-year guidance for trading profit, free cash flow and return on invested capital.
Deepak Nath, Chief Executive Officer
Not in the filing
stated, not guessed- Q2 gross profit, gross margin, operating profit, operating margin, net income, EPS, cash flow and free cash flow were not reported.
- Q2 segment trading profit and segment trading profit margin were not reported.
- Prior-quarter comparisons for reported metrics were not reported.
- Full-year 2026 gross margin guidance was not reported.
- Full-year 2026 operating expense guidance was not reported.
- Full-year 2026 tax-rate guidance was not reported.
- A separate previous-release outlook was not provided, so no reported-results comparison with prior guidance is included.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Smith & Nephew PLC filed a Form 6‑K on Aug 4, 2026 reporting Q2 2026 results, H1 performance, a $500M share buyback, and updated H2 guidance.
Ticker impact
Smith & Nephew reported Q2 2026 results with $1.597B revenue, 8% profit growth and raised H2 guidance, affecting its stock.
Modest upside expected as guidance remains stable and buyback proceeds, but revenue slowdown may limit rally.
Strong profit growth and cash generation signal strength, yet underlying revenue deceleration and reliance on FX tailwinds create uncertainty.
Market effects
Highlights performance of sports medicine and orthopaedics, influencing peers such as Zimmer Biomet and other medtech firms.
UK and European markets may see modest lift from the earnings beat and buyback news.
Adds to the broader healthcare earnings season, shaping global medtech sentiment.
Counterpoint
Revenue slowdown could signal deeper demand weakness and margin pressure despite the buyback.
Key entities
- CompanySmith & Nephew PLC
UK‑based medical device maker reporting Q2 2026 earnings.
- ExecutiveDeepak Nath
CEO of Smith & Nephew, quoted on performance and outlook.
- Acquired BusinessIntegrity Orthopaedics
Recent acquisition contributing to Q2 results.
