A cleaner medtech, with 2026 speed bumps
- The old 12-Point Plan improved margins and cash flow, and the new RISE strategy now carries the turnaround.
- Orthopaedics is the largest unit, with 2025 revenue of $2,437 million out of group revenue of $6,164 million.
- Innovation is still the main growth lever, with management saying recent products drive more than half of growth.
- The biggest 2026 profit hits are about $60 million from tariffs and $20 million to $40 million from skin substitute reimbursement.
- The main upside test is whether LANDMARK can lift U.S. Knees growth after its second-half 2026 launch.
Turnaround now needs proof
Smith & Nephew is a medical device turnaround. The 12-Point Plan has done what it needed to do: margins expanded, free cash flow improved, and the company entered 2026 with a clearer operating model. The new RISE strategy is the next phase. It aims to reach more patients, fund more innovation, use deals where they fit, and run Orthopaedics through the Ortho360 model.
The bull case is that better execution keeps showing up in growth and cash. Management says products launched in the last five years drive over 60% of growth, while the internal view uses a more cautious line that innovation still drives over 50% of growth. Either way, the story depends on new products mattering. The Integrity Orthopaedics deal adds TENDON SEAM to REGENETEN, giving Smith & Nephew a more complete rotator cuff repair offer.
The bear case is also clear. 2026 has unusual profit pressure. Management sized tariff headwinds at about $60 million, up from $17 million in 2025. CMS skin substitute reimbursement changes are expected to cut Smith & Nephew pricing by 20% to 25% in affected settings and create a $20 million to $40 million incremental profit headwind.
The stock also needs a product proof point. U.S. Knees growth is soft in early 2026 as the company tries to manage capital well before LANDMARK arrives. The open question is simple: can LANDMARK bring U.S. Knees back toward market growth by the fourth quarter?
Three ways to sell into care
Smith & Nephew makes money by selling devices and supplies to hospitals, surgery centers, doctors, and wound care providers. Some products are used in one surgery, such as sports medicine repair tools. Others are implants, such as knees and hips. Wound care includes dressings, pumps, and bioactive products used to help wounds heal.
The company reports three global business units: Orthopaedics, Sports Medicine & ENT, and Advanced Wound Management. In 2025, those units generated $2,437 million, $1,934 million, and $1,793 million of revenue, respectively, based on the company annual report and full-year results.
This model breaks when pricing falls faster than volume can rise, or when a launch misses. China value-based procurement, a government buying process that cuts prices, hurt Joint Repair but has now fully annualized. The next China AET and ENT processes matter, but management says they are far less material because those product pools are smaller.
Advanced Wound Management is the most exposed to a near-term rule change. CMS, the U.S. Medicare agency, is changing payment for skin substitutes in physician office and mobile settings. If clinics use fewer products or switch to cheaper ones, the profit hit could be worse than planned.
Products that must carry RISE
EVOS Plating System
EVOS is a trauma plating system used to repair broken bones. It has been one of the key drivers in Core Trauma, where the internal view sees growth above market.
CORI robotic platform
CORI helps surgeons plan and perform joint replacement procedures. The installed base exceeded 1,000 units, giving Smith & Nephew a larger base to support knee and hip growth.
LANDMARK knee system
LANDMARK is the coming knee system launch. The cementless version is expected in the second half of 2026, followed by cemented versions, and it is the key test for U.S. Knees.
REGENETEN and TENDON SEAM
REGENETEN supports biological rotator cuff repair, while TENDON SEAM adds biomechanical repair. Integrity Orthopaedics developed TENDON SEAM, which received FDA approval in 2023.
CARTIHEAL AGILI-C
AGILI-C is a cartilage repair product inside Sports Medicine. It gives the company another way to address knee repair beyond standard soft tissue tools.
PICO and RENASYS EDGE
These wound devices use negative pressure to help wounds heal. They sit in Advanced Wound Management, a unit with good products but tougher 2026 reimbursement pressure.
SANTYL and ALLEVYN COMPLETE CARE
SANTYL and ALLEVYN are established wound care products. They help anchor the wound care franchise, even as skin substitute rules create near-term uncertainty.
2025 revenue mix
The mix uses 2025 business unit revenue from Smith & Nephew's annual report and full-year results: Orthopaedics $2,437 million, Sports Medicine & ENT $1,934 million, and Advanced Wound Management $1,793 million. Orthopaedics is the largest unit, but the 2026 profit debate is concentrated in tariffs, skin substitutes, and U.S. Knees.
What could break the case
Skin substitute reset
High impact · High oddsCMS reimbursement changes affect skin substitutes used in physician office and mobile settings. Smith & Nephew expects a 20% to 25% price reduction in affected areas and a $20 million to $40 million incremental profit headwind in 2026. The danger is that volume also falls, not just price.
Tariffs hit harder than planned
High impact · Medium oddsTariffs are expected to be about a $60 million profit headwind in 2026, compared with $17 million in 2025. That is a large step-up for a company still working to prove margin gains. If mitigation is slow, RISE starts with less room for error.
LANDMARK launch misses
High impact · Medium oddsU.S. Knees growth is soft in early 2026. The company is managing capital efficiency before launching LANDMARK in the second half. If surgeons do not adopt LANDMARK quickly, the U.S. Knees gap may stay open into 2027.
More China pricing pressure
Medium impact · Medium oddsChina Joint Repair value-based procurement has fully annualized, which should help comparisons. But China AET and ENT value-based procurement still takes effect. Management says those are much less material, but pricing cuts can still hurt if volume does not offset them.
Technology and demand shifts
Medium impact · Low oddsThe 20-F names possible GLP-1 effects on the medical device industry and AI-related regulatory change. The 2025 filing also adds an internal risk: the lack of capability and skills in exploring and adopting advanced technology such as artificial intelligence. These are not the core 2026 issue, but they matter for long-term competitiveness.
In one breath
What does Smith & Nephew actually sell?
It sells medical devices used in joint replacement, trauma repair, sports medicine, ENT, and wound care. Examples include knee and hip implants, CORI robotics, rotator cuff repair products, wound pumps, and wound dressings.
Why is LANDMARK important for Smith & Nephew?
LANDMARK is the next knee system and is expected to launch in the second half of 2026. It matters because U.S. Knees growth has been soft, and investors need proof that the new system can close the gap with the market.
What is the biggest 2026 risk?
The biggest near-term risks are profit headwinds from tariffs and CMS skin substitute reimbursement changes. Together, management has framed them as about $60 million from tariffs plus $20 million to $40 million from skin substitutes.
Is China still the main problem?
China is less central than it was because Joint Repair pricing pressure has fully annualized and China is a smaller part of the sales base than before. New AET and ENT value-based procurement rounds still matter, but management says they are much less material.