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Smith & Nephew: Initiation Of Coverage- A Hidden Orthopaedics Turnaround With $840 Million Free Cash Flow & Buybacks!

Smith & Nephew reported a solid finish to fiscal 2025, delivering underlying revenue growth of 5.3%, with all three business units—Orthopaedics, Sports Medicine & ENT, and Advanced Wound Management (AWM)—posting growth above 5%. The company highlighted strong performances within Joint Repair and U.S. Orthopaedics, notably in hips and trauma, while acknowledging ongoing challenges in U.S. knees. Innovation continues to be a growth driver, with over 60% of 2025’s growth stemming from products launched within the last five years, contributing to double-digit growth in key innovations such as Q-FIX, REGENETEN, and CATALYSTEM. Profitability improved with a 160 basis points expansion in trading margin to 19.7%, aided by cost savings programs, manufacturing optimization, and streamlined sales and operational planning. Free cash flow rose 52.5% to $840 million, supporting a $500 million share buyback program and moving the company toward its goal of margin and return on invested capital (ROIC) improvements.