Smith+Nephew (NYSE: SNN) shares sunk today on third-quarter results that failed to reach the consensus sales forecast.
Shares of SNN fell more than 12% to $32.06 apiece in morning trading on the New York Stock Exchange today. Around the same time, SN shares were down more than 12% to 1,223.50 pence apiece on the London exchange.
The London-based orthopedic giant reported $1.5 billion in sales. While that marked 6.3% year-over-year growth, it fell just short of Wall Street’s $1.51 billion revenue projection.
Smith+Nephew reported 5.1% growth in its Orthopaedics business, seeing strong growth in U.S. hip implants. However, weaker U.S. knee implant performance offset this growth. The company also reported 6.4% growth in Sports Medicine & ENT, highlighting strong growth outside of China and value-based purchasing headwinds beginning to abate. Advanced Wound Management saw 7.8% growth, thanks in large part to advanced wound bioactive products.
The company said it continues to see a higher cadence of product launches, underpinning future growth. It also said it completed a $500 million share buyback, reflecting its strong cash generation and balance sheet.
In the quarter, the company shared a handful of milestones, including new evidence highlighting the clinical performance of its Regeneten bioinductive implant, the relocation of its CFO to the U.S. to enhance oversight and the launch of its Coriograph pre-op planning and modeling services for total shoulder arthroplasty in the U.S.
Smith+Nephew expects full-year reported growth of around 5.7%, reaffirming its prior guidance. It anticipates an expansion of its trading profit margin to between 19% and 20%. The outlook includes an expected net impact of $15 million to $20 million from tariffs in 2025. Expected tariff impact remains unchanged from previous projections.
“Our third quarter results again demonstrate how the 12-point plan has improved Smith+Nephew’s revenue growth profile, keeping us on track to meet our full-year outlook for revenue growth and a step-up in trading profit margin,” said Smith+Nephew CEO Deepak Nath. “Additionally, we are pleased to be able to raise our guidance for improved free cash flow, which we now expect to be around $750 million, a more than five-fold increase since 2023.
“As we approach the end of the 12-point plan our business is undoubtedly in a better place. We have embedded greater accountability, faster decision making, better execution, and increased customer focus. New products are demonstrably driving higher levels of revenue growth, and our pipeline is full of further exciting innovation.”
It’s a rough week for major orthopedic device company stocks. Yesterday, Zimmer Biomet’s stock tumbled on mixed Q3 results. Late last week, Stryker raised its revenue guidance on the back of a Street-beating Q3, but its stock is down a bit, too, though the dip in SYK shares mirrors the S&P 500. Meanwhile, Johnson & Johnson intends to separate its DePuy Synthes Orthopaedics business.
