Smith+Nephew
(NYSE: SNN)
today announced a new strategy aimed at elevating its financial and operational performance across its segments.
The strategy, called “RISE, 2026,” is expected to drive stronger returns for shareholders and raise the standard of care within the company’s businesses. It builds on Smith+Nephew’s 12-Point Plan, announced in 2022. This plan — labeled a success by the company — sought to turn Smith+Nephew into a stronger, more agile and higher-growth company.
RISE features four elements — reach, innovate, scale and execute, according to a news release. Smith+Nephew wants to reach more patients globally by driving the adoption of its differentiated portfolio. It seeks to innovate to enhance the standard of care through new product launches and scaling existing offerings. Scaling can continue through strategic investments, while the company wants to execute efficiently.
“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,” said CEO Deepak Nath. “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.”
What the future looks like for Smith+Nephew
As part of the company’s 12-point plan, Smith+Nephew took actions to optimize its manufacturing footprint and drive operational efficiencies across its network. It also reviewed its overall product portfolio and sought to rationalize and simplify its offerings.
Following this shift, the company is now implementing its Ortho 360 operating model. This aims to drive improved efficiency, profitability and capital returns.
Smith+Nephew says it now sees further opportunities to simplify its product range. This effort can reduce the need for inventory and capital employed in the business and provide a simpler, more efficient offer to customers. The company said it has work ongoing to finalize product families and individual stock keeping units (SKUs), which will be removed from the portfolio over time.
Following this simplification effort, the company expects a gross inventory reduction totaling around $500 million.
Smith+Nephew plans to take a non-cash provision in 2025 around $200 million to achieve this capital requirement reduction.
“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,” the company said.
For 2025, the company remains on track to meet its full-year target of 5.7% revenue growth.
Outlook beyond 2025
As part of the new strategy unveiling, Smith+Nephew also issued its provisional 2026 guidance.
The company expects revenue growth to accelerate to around 6% for the full year. It anticipates profit growth ahead of revenue growth amid operating leverage. The company expects free cash flow to total about $800 million.
RISE also should deliver a further change in financial performance through 2028, the company said. It hopes that the new plan delivers a 6%-7% underlying revenue compound annual growth rate (CAGR), significantly above its historical average.
The company also anticipates 9%-10% trading profit CAGR and more than $1 billion in free cash flow in 2028.
