UK's Smith+Nephew cuts 2026 revenue view on weak US knee implant demand

Aug. 4 (Reuters) - British medical products maker Smith+Nephew lowered its revenue growth forecast on Tuesday, hurt by continued weakness in its U.S. orthopaedics unit, even as tighter cost controls pushed half-year profit ahead of expectations.

The group now expects full-year underlying revenue growth of around 4%, compared with its earlier forecast of about 6%, with second-quarter growth of 1.6% missing analysts' expectations of 3.7%.

After a three-year effort to overhaul its U.S. and orthopaedics division through cost cuts and sales initiatives, Smith+Nephew is now undertaking plans to further simplify its portfolio, invest in higher-growth areas and reduce inventory.

Weak demand for knee implants has been weighing on performance in the U.S., its largest market, but the company continues to shift resources into newer products such as its kinematic LANDMARK knee system.

S+N, which also makes wound dressings and other surgical aids, said revenue from its orthopaedics business declined 1% in the quarter, with U.S. knee implant revenue falling 7.2%.

"Orthopaedics is not where we want it to be, but we expect growth to accelerate as we fill portfolio gaps, starting later this year and continuing into 2027," said CEO Deepak Nath.

Trading profit rose 8% to $566 million for the six months ended June 27, beating analysts' estimates of $551 million.

Smith+Nephew reaffirmed its expectations for 2026 trading profit growth, free cash flow, and adjusted return on invested capital, helped by an additional $50 million in efficiency savings.

Smith+Nephew now expects the impact of tariffs to be broadly neutral to trading profit after refunds, while the headwind from U.S. skin substitute reimbursement changes would be towards the upper end of its prior estimates.