Smith+Nephew (NYSE:SNN) shares took a hit today on third-quarter results that highlighted ongoing struggles in China.
Shares of SNN were down more than 12% to $25.35 apiece by the afternoon today.
The London-based orthopedic giant is the latest medtech company to report issues in that region. GE HealthCare, Philips, Siemens Healthineers, BD and Intuitive also recently highlighted issues in the Chinese medtech market in their latest earnings reports, indicating that it could have broader implications for the industry.
Smith+Nephew reported sales of $1.4 billion for the three months ended Sept. 28, 2024. That marked a 4% year-over-year increase. However, excluding China, growth totaled nearly 6%, with the region impacted by worse-than-expected headwinds across the surgical business.
For individual segment revenue growth, Orthopedics grew 2.3%, Sports Medicine & ENT went up 3.9% and Advanced Wound Management grew 6.5%.
Despite growth across the board, the China headwinds led Smith+Nephew to cut its full-year revenue growth guidance. After previously projecting between 5% and 6%, the company now expects growth to cap around 4.5%, primarily due to the China impact.
Given the update to the 2024 outlook and uncertainty in China, the compay expanded its trading profit margin for 2025 for between 19% and 20%.
“China VBP was a significant headwind that masked Sports Medicine’s strong performance across the rest of the world. Advanced Wound Management delivered its best quarter this year, with all segments performing well,” said CEO Deepak Nath. “We continue to deliver on longer-term growth drivers, including robotics adoption and product innovation, as well as improving productivity. While the revised outlook reflects the headwinds across our surgical businesses in China, we remain convinced that our transformation to a higher growth company, with the ability to drive operating leverage through to the bottom line, is on the right course.”
