Smith+Nephew (LSE:SN, NYSE:SNN), the global medical technology company, today announces it will feature the latest advancements in Orthopaedic Reconstruction at the American Academy of Orthopaedic Surgeons Annual Meeting in San Diego this week. Some of the highlighted technologies will include: Robotics: Optimizing and personalizing surgery With CORIOGRAPH◊ Pre-Op Planning and Modeling Services advanced technology and the CORI Surgical System's image-agnostic solution for robotic-assisted knee and computer ...

Core Viewpoint - Smith+Nephew is showcasing advancements in Sports Medicine for joint repair at the American Academy of Orthopaedic Surgeons Annual Meeting, highlighting innovative technologies such as Spatial Surgery and the CARTIHEAL AGILI-C Cartilage Repair Implant [1][2]. Group 1: Innovations in Sports Medicine - The company introduces Spatial Surgery, a new category in arthroscopic surgical innovation, featuring the TESSA Spatial Surgery System, which combines personalized operative planning with real-time tracking and augmented reality guidance [1]. - The CARTIHEAL AGILI-C Cartilage Repair Implant is FDA approved and aims to evolve the cartilage repair landscape, allowing treatment for patients previously without access to such procedures [2]. - Clinical studies show that patients treated with the CARTIHEAL AGILI-C Implant reported significantly better knee function, pain relief, and mobility improvements over a four-year period [3]. Group 2: Clinical Outcomes and Efficacy - The CARTIHEAL AGILI-C Implant demonstrated a significantly lower risk of total knee arthroplasty (TKA) or osteotomy at four years compared to the surgical standard of care [3]. - The REGENETEN Bioinductive Implant has shown clinical superiority in rotator cuff repair, with results surpassing current standards of care and increasing usage in various tendon injuries [4]. - The REGENETEN Implant has been used in over 150,000 patients, resulting in a 3x reduction in the risk of re-tear in a randomized controlled trial versus standard repair alone [7]. Group 3: Company Overview - Smith+Nephew operates in approximately 100 countries and generated annual sales of $5.8 billion in 2024, focusing on the repair, regeneration, and replacement of soft and hard tissue [10]. - The company is a constituent of the FTSE100 and aims to restore patients' bodies and self-belief through innovative medical technologies [9].

Financial Performance - Smith+Nephew reported fourth quarter revenue of $1,571 million, reflecting an underlying growth of 8.3% and a reported growth of 7.8% after a -50bps foreign exchange headwind[9]. - Full year revenue reached $5,810 million, with an underlying growth of 5.3% and reported growth of 4.7%, impacted by a -60bps foreign exchange headwind[9]. - Operating profit for 2024 increased to $657 million, up 54.6% from $425 million in 2023, resulting in an operating profit margin of 11.3%[9]. - Trading profit grew 8.2% to $1,049 million, with a trading profit margin of 18.1%, an improvement of 60bps from the previous year[15]. - Cash generated from operations significantly improved to $1,245 million, a 50.2% increase from $829 million in 2023, with trading cash conversion rising to 95%[15]. - Free cash flow surged to $551 million, a substantial increase of 327.1% compared to $129 million in 2023[15]. - Adjusted earnings per share (EPSA) rose to 84.3¢, up from 82.8¢ in 2023, while basic EPS increased to 47.2¢ from 30.2¢[97]. - The Group reported a profit before taxation of $498 million for 2024, compared to $290 million in 2023, representing an increase of 71.0%[115]. - The Group reported total revenue of $5,810 million for 2024, an increase of 4.7% from $5,549 million in 2023[153]. - Annual sales for 2024 reached $5.8 billion, an increase from $5.549 billion in 2023, reflecting a growth of approximately 4.5%[111]. Product Development and Innovation - The company launched nearly 50 new products over the last three years, contributing to over 60% of revenue growth in 2024[11]. - The company launched 16 new products in 2024, contributing to over 60% of underlying revenue growth from products launched in the last five years[40][41]. - Advanced Wound Management reported improved performance driven by a leading position in the high-growth Negative Pressure Wound Therapy (NPWT) segment, contributing to an underlying revenue growth of 12.2% in Q4 2024[37][70]. - Sports Medicine achieved a strong performance with a steady stream of innovation and successful integration of acquired assets, despite facing significant VBP headwinds in China in 2024[36]. Market Performance - The US market showed strong underlying revenue growth of 11.9%, while Emerging Markets faced a decline of -2.3% due to challenges in China[56]. - Established Markets saw underlying revenue growth of 5.5%, with the US at 4.8% and Other Established Markets at 6.7%[75]. - Orthopaedics business unit delivered underlying revenue growth of 4.6%, with Knee Implants at 1.3% and Hip Implants at 4.0%[79]. - Sports Medicine Joint Repair achieved underlying revenue growth of 5.3%, with strong double-digit growth from REGENETEN, and 15.9% growth excluding China[66][67]. - Advanced Wound Bioactives achieved underlying revenue growth of 20.3% and reported growth of 20.1%, driven by strong double-digit growth in skin substitutes following the launch of GRAFIX PLUS[71]. - Advanced Wound Devices reported underlying revenue growth of 20.6% and reported growth of 19.9%, supported by the RENASYS and PICO Negative Pressure Wound Therapy Systems[72]. Strategic Initiatives - The 12-Point Plan has led to a near 9% net reduction in total workforce since its inception, with significant productivity improvements and cost savings achieved[30]. - For 2025, Smith+Nephew targets underlying revenue growth of around 5% and a trading profit margin between 19.0% and 20.0%[15]. - The company expects a trading profit margin of 19% to 20%, driven by operating leverage, cost reductions, and network optimization benefits[107]. - Trading cash conversion is projected to be between 80% to 90%, with restructuring costs estimated at around $45 million for 2025[108]. Financial Position and Cash Flow - The Group had access to $617 million in cash and cash equivalents and a net debt of $2,513 million as of December 31, 2024[125]. - The Group has committed facilities of $4.1 billion with an average maturity of 5.5 years, with no debt due for repayment in 2025[125]. - The Group's net debt decreased to $2,709 million in 2024 from $2,776 million in 2023, with available committed facilities increasing to $4.1 billion[185]. - The Group's cash and cash equivalents increased to $619 million in 2024 from $302 million in 2023[185]. - Cash generated from operations in 2024 was $1.245 billion, a substantial rise from $829 million in 2023, marking a growth of 50.1%[119]. Acquisitions and Investments - The acquisition of CartiHeal was completed for a total consideration of $231 million, which includes $180 million in cash and $49 million in contingent consideration[176][177]. Taxation and Dividends - The reported tax charge for 2024 was $86 million, up from $27 million in 2023, attributed to increased profits[170]. - The final dividend for 2023 was $202 million, with a proposed final dividend for 2024 also set at 23.1 US cents per share[174][175].

Regulatory Compliance and Quality Assurance - In 2024, Smith+Nephew reported 10 recalls globally, with 21,822 units impacted, all of which were either removed from the market or corrected per applicable regulations[1830] - All Smith+Nephew direct manufacturing locations participate in the Medical Device Single Audit Program (MDSAP) and are certified to ISO 13485[1831] - Smith+Nephew did not incur any monetary losses due to legal proceedings associated with bribery or corruption in 2024[1831] - Smith+Nephew tracks regulatory changes regarding chemicals in products and actions them as appropriate[1831] - The company reports all data related to product safety as required by the FDA, including fatalities and enforcement actions[1830] - All Tier 1 material suppliers of Smith+Nephew are compliant with ISO 13485, ensuring quality in the supply chain[1831] Financial Performance and Growth - The company reported a significant increase in revenue, achieving $1.5 billion in Q4 2023, representing a 12% year-over-year growth[1832] - Smith+Nephew reported a significant increase in revenue, reaching $1.5 billion for the fiscal year 2023, representing a 10% year-over-year growth[1842] - The company provided an optimistic outlook, projecting a revenue growth of 10-15% for the next fiscal year[1834] - The company anticipates a revenue growth of 8-10% for the upcoming fiscal year, supported by new product launches and market expansion strategies[1842] - The gross profit margin improved to 60%, up from 57% in the previous year, due to operational efficiencies[1834] - Smith+Nephew's gross margin improved to 65%, up from 62% in the previous year, due to operational efficiencies and cost management initiatives[1842] Product Development and Innovation - New product launches contributed to 20% of total revenue, with the introduction of advanced wound care technologies[1835] - The company invested $200 million in research and development, focusing on innovative surgical solutions and technologies[1836] - Smith+Nephew is investing $200 million in research and development for new technologies, focusing on minimally invasive surgical solutions[1842] - Smith+Nephew's strategic emphasis on advanced wound management was noted, with detailed performance metrics provided in the annual report[1841] - Smith+Nephew reported a significant focus on bioinductive collagen implants for rotator cuff repair, with multiple studies indicating positive outcomes over two years[1839] - The company highlighted a 5-year clinical and MRI follow-up demonstrating effective healing rates for partial-thickness rotator cuff tears using a highly porous collagen implant[1839] Market Expansion and Strategic Acquisitions - Market expansion efforts in emerging markets resulted in a 25% increase in sales in those regions[1832] - The company completed a strategic acquisition of a competitor for $300 million, enhancing its product portfolio[1833] - Smith+Nephew completed the acquisition of a small medical device company, enhancing its portfolio in the sports medicine sector[1842] - The company plans to expand its presence in emerging markets, targeting a 20% increase in sales from these regions by 2025[1842] - The company is exploring potential mergers and acquisitions to further strengthen its product portfolio and market presence[1846] User Engagement and Digital Transformation - User data showed a 15% increase in the number of active users, reaching 2 million by the end of the quarter[1833] - The company reported a 5% increase in user data analytics capabilities, improving customer engagement and product performance tracking[1842] - Smith+Nephew reported a 12% increase in user data analytics capabilities, enhancing customer engagement and product performance tracking[1846] - The company plans to enhance its digital capabilities, allocating $50 million towards digital transformation initiatives[1836] Sustainability and Environmental Commitment - Smith+Nephew operates takeback schemes for products where required by law, although the amount of products reused or recycled is not measured[1831] - Sustainability reviews are incorporated in the New Product Development phase to assess environmental and human health considerations[1831] - The company is committed to sustainability, aiming to reduce packaging material by 30% over the next three years[1842] Corporate Governance and Accountability - The company has filed multiple service agreements and letters of appointment for key executives, indicating a focus on leadership stability and governance[4]. - The financial statement recoupment policy has been updated, reflecting the company's commitment to accountability in executive compensation[4]. - The company has engaged Deloitte LLP and KPMG LLP as independent registered public accounting firms, ensuring robust financial oversight[4].

Core Insights - Smith+Nephew's OXINIUM on highly cross-linked polyethylene demonstrates the highest survivorship rate of 94.1% over 20 years for total hip arthroplasty according to the AOANJRR report [1][2] - Multiple registries, including the Italian Registry and Dutch Arthroplasty Register, indicate that OXINIUM/XLPE has a 35% lower risk of revision at 10 years compared to other modular acetabular implants [2] - The unique manufacturing process of OXINIUM transforms the alloy into a ceramicised metal, providing superior performance benefits [2][3] Performance Evidence - The AOANJRR report corroborates findings from other registries, showing that bearing wear has been virtually eliminated as a cause of failure in hip replacements [2] - OXINIUM/XLPE exhibits significantly lower revision rates than metal on XLPE over a 20-year period [2] - The material composition of OXINIUM results in a 30x reduction in pro-inflammatory markers, eliminating the need for CMR substance declarations on labeling [3] Industry Impact - The findings from global registries provide compelling evidence for stakeholders, including payers, hospitals, and surgeons, regarding the reliability of OXINIUM technology [2] - Smith+Nephew's commitment to innovation in orthopedic technology is underscored by the performance of OXINIUM in joint replacement procedures [2][8] - The company aims to enhance patient outcomes through advanced materials and technologies in orthopedic applications [8][9]

Core Insights - Smith+Nephew's OXINIUM on highly cross-linked polyethylene demonstrates the highest survivorship rate of 94.1% over 20 years for total hip arthroplasty [1][2] - Multiple registries, including the AOANJRR, confirm that OXINIUM/XLPE has a 35% lower risk of revision at 10 years compared to other modular acetabular implants [2] - The unique manufacturing process of OXINIUM results in a ceramicised metal that offers superior performance benefits, including durability and wear resistance [3] Group 1: Performance Data - The AOANJRR report indicates that the combination of OXINIUM and highly cross-linked polyethylene leads to significantly lower revision rates than metal on XLPE [2] - Findings from registries worldwide support the performance of OXINIUM for total hip arthroplasty, providing evidence for its differentiated technology [2][3] Group 2: Material Composition - OXINIUM implants contain virtually no nickel, cobalt, or chromium, resulting in a 30x reduction in pro-inflammatory markers [3] - The absence of CMR substances in OXINIUM implants eliminates the need for labeling declarations regarding carcinogenic, mutagenic, or reprotoxic substances [3] Group 3: Industry Context - The advancements in bearing materials have virtually eliminated bearing wear as a cause of failure in hip replacements, a significant improvement over the past two decades [2] - The ongoing research and data from various registries provide valuable guidance for surgeons and patients in selecting reliable implant materials for long-term outcomes [2]

Financial Data and Key Metrics Changes - For the full year 2024, the company reported a revenue of $5.8 billion, representing a 5.3% increase on an underlying basis and a 4.7% increase on a reported basis [62] - The company achieved 60 basis points of margin expansion, with a trading margin of 18.1% for the year, slightly above previous guidance [67][72] - Cash conversion improved to 95%, significantly higher than the 65% achieved in 2023, with free cash flow increasing to $551 million [91][92] Business Line Data and Key Metrics Changes - Orthopedics grew by 4.3% for the year, while Sports Medicine and ENT grew by 6.2%, and Advanced Wound Management (AWM) grew by 5.1% [63] - In Q4, Orthopedics grew at 6%, with a notable 23.9% growth in other recon driven by robotics sales [41][44] - The Advanced Wound Management segment delivered its highest growth quarter of the year at 12.2%, with bioactives growth of 20.3% [56][57] Market Data and Key Metrics Changes - The US market showed strong performance with an 11.9% growth in Q4, while other established markets grew by 8.2% [40] - Emerging markets experienced a 2.3% decline, primarily due to headwinds in China, which negatively impacted both Recon and Sports Medicine Joint Repair [40][64] - The company expects continued challenges in China, forecasting a headwind of around 150 basis points for the full year 2025 [97] Company Strategy and Development Direction - The company is focused on the 12-Point Plan, which aims to improve operational performance and drive higher growth, with expectations for continued margin expansion in 2025 [9][10] - The transition to a global business unit model is intended to enhance accountability and commercial execution [30][80] - The company anticipates significant cost savings from manufacturing optimization and a zero-based budgeting approach, with expected savings between $325 million and $375 million [33][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving around 5% revenue growth in 2025, despite anticipated headwinds from China [9][96] - The company expects a significant step-up in profitability with trading margins projected between 19% and 20% for 2025 [98] - Management highlighted the importance of innovation, with over 60% of revenue growth in 2024 coming from products launched in the last five years [65][22] Other Important Information - The company plans to maintain its dividend at $0.375 per share [71] - A reduction in headcount by approximately 9% is expected to contribute to operational savings [36][77] - The company is committed to investing in organic growth and potential acquisitions while maintaining a leverage ratio around 2x adjusted EBITDA [95] Q&A Session Summary Question: What gives confidence that orthopedics will recover towards the end of Q1? - Management indicated that they expect Q1 to be the low watermark for inventories, with a recovery anticipated thereafter based on committed volumes in the tender business [110][113] Question: Are volumes in sports medicine ticking up as expected? - Management noted that the first half of the year will be impacted by the sports VBP on joint repair, with expectations for improvement in the second half [114] Question: What assurance is there that R&D spending won't be used to manage margins? - Management reassured that R&D spending will increase, emphasizing their commitment to innovation and efficiency in this area [109]

Fourth Quarter and Full Year 2024 Forward looking statements and non-IFRS measures This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and trading profit margins, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan", "intend", "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended to identify ...

Core Insights - Smith+Nephew has launched a new foot & ankle repair portfolio in Australia and New Zealand featuring proprietary adjustable tensioning technology, which allows surgeons to optimize suture tension after anchor insertion [1][4] - The adjustable tensioning capability enables personalized treatment for patients, potentially improving outcomes by allowing surgeons to tailor the range of motion based on individual activity levels [2][4] - The portfolio includes a best-in-class all suture anchor that ensures consistent deployment and strong fixation, now integrated with needles for open procedures [3] Company Overview - Smith+Nephew is a global medical technology company focused on the repair, regeneration, and replacement of soft and hard tissue, with a mission to restore people's bodies and self-belief [6] - The company operates in over 100 countries and reported annual sales of $5.5 billion in 2023, being a constituent of the FTSE100 [7]

Group 1 - The last six months have been challenging for Smith & Nephew, with a third quarter miss and lowered guidance negatively impacting the stock [1] - The recent performance has raised questions about the company's progress and future outlook [1]