SMITH & NEPHEW (SN) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

2025 UK Performance and Financial Overview

Smith & Nephew plc (LSE: SN), the British multinational medical equipment manufacturer, has navigated a pivotal year in 2025. Investors examining the company’s performance closely will find a mix of resilience in its core segments, ongoing challenges in supply chain adaptation post-COVID, and forward-looking initiatives in robotics and orthopaedics. Listed on the London Stock Exchange and a constituent of the FTSE 100, SN remains a bellwether for healthcare innovation and surgical technologies in the United Kingdom.

In 2025, Smith & Nephew’s UK segment contributed significantly to global revenues, underpinned by demand recovery within elective procedures, notably in hips and knees. According to the company’s full-year results, released in February 2026, group revenue reached approximately $5.5 billion—up 6.2% year-on-year on a reported basis—with the UK market posting mid-single-digit revenue growth.

Orthopaedics, Smith & Nephew’s largest division, rebounded in 2025 following headwinds experienced during the pandemic and subsequent capacity backlogs in the NHS. With many hospitals clearing patient queues for hip and knee replacements, the company saw strong procedural volume growth, especially in its flagship JOURNEY II and LEGION product lines. Meanwhile, revenue from Advanced Wound Management also expanded, benefiting from increased focus on community healthcare and wound-care technologies employed in outpatient settings.

The Sports Medicine & ENT segment delivered a solid performance, although growth was partially restrained by NHS budgetary constraints. However, private healthcare adoption in the UK helped offset some public sector pressure. The rollout of new ENT procedural tools in early 2025 attracted interest from surgeons aiming to streamline operations and reduce theatre time.

Costs remained a key challenge. While currency headwinds were less volatile in 2025 than in previous years, inflationary pressure on raw materials and logistics left Smith & Nephew working diligently to protect margins. Operating profit margins improved slightly to 18.4%, aided by productivity improvements through digital integration in manufacturing and stronger procurement processes. The company's restructuring programme, initiated in 2023 and delivering phased efficiencies, also contributed positively to bottom-line performance.

In capital markets, the share price remained relatively range-bound across 2025, trading on average between 1,040p and 1,160p. Analysts interpreted this stability as a function of both consistent performance and muted investor excitement in the absence of major M&A or disruptive breakthroughs. Despite these conditions, SN maintained its dividend policy, yielding around 2.5%, and reinforced investor confidence with a £150 million share buyback programme.

Overall, 2025 demonstrated Smith & Nephew's disciplined execution in the UK market, balancing innovation, operational recovery, and macroeconomic headwinds. Investors will now be looking forward to key developments and externalities that could shape its trajectory in 2026.

Key Growth Drivers and Strategic Moves

Smith & Nephew’s ongoing transformation hinges on several strategic pillars that drove its 2025 performance and are expected to influence its 2026 trajectory significantly. The key areas of focus include technological advancement, geographic growth initiatives, manufacturing efficiency improvements, and stronger integration between its business segments.

One of the headline contributors to revenue growth in 2025 was the company’s emphasis on surgical robotics and enabling technologies. The CORI Surgical System, Smith & Nephew’s robotics offering for knee surgery, saw increased adoption in private UK hospitals and select NHS centres undertaking pilot implementation. This innovation underpinned market share gains in the highly competitive orthopaedics segment, which continues to experience high demand driven by the ageing UK population and obesity-related conditions.

The company's digital surgery portfolio is predicted to be a growth engine moving forward. By offering improved patient outcomes, shorter hospital stays, and data-oriented procedure customisation, SN's integrated platforms aim to differentiate it from competitors such as Zimmer Biomet and Stryker. Investments in AI-assisted planning and intraoperative navigation tools also aim to solidify its position as a key player in this evolving surgical landscape.

On the corporate front, Smith & Nephew actively pursued operational optimisation throughout 2025. The continuation of its €250 million cost-transformation initiative targeted simplification of the supply chain, digitisation of logistics, and relocation of some manufacturing to cost-efficient regions including Malaysia and Costa Rica. These moves have started to reflect in the company's cost base and are essential for future margin sustainability.

Beyond orthopaedics and robotics, SN increased R&D allocation toward its Advanced Wound Management division. Noteworthy was the launch of its new PIUR Wound Management platform for pressure ulcer treatment, which received regulatory approval in mid-2025. This innovation aims to improve wound visualisation accuracy and promote faster healing, thereby supporting patient-centric care across NHS and private systems.

Additionally, SN executed notable distribution partnerships across the UK, such as aligning with Boots HealthHub and a scale-up partnership with Spire Healthcare for joint-service launches combining wound care and orthopaedic rehabilitation. These not only enhance commercial reach but are designed to offer an end-to-end solution, particularly in outpatient care models now favoured due to NHS decentralisation trends.

Market analysts also observed positive sentiment stemming from SN’s commitment to ESG (Environmental, Social, Governance) targets. The company reported progress in reducing water and energy usage across plants and moved towards net-zero carbon goals with its Hull manufacturing site achieving zero landfill status in 2025. These sustainability credentials are increasingly relevant to institutional investors and help differentiate SN in tendering processes within healthcare procurement.

In summary, Smith & Nephew's 2025 growth was stitched together by a clear focus on innovation, operational resilience, and strategic partnerships. The company’s ability to sustain these drivers into 2026 will be paramount, particularly amid intensifying competition and macroeconomic volatility.

Risks, Milestones and 2026 Watchlist

As Smith & Nephew pivots into 2026, investors are recalibrating their expectations amidst an evolving healthcare landscape. Though the company has laid strong groundwork with technology investments and restructuring, there remain foreseeable risks and critical milestones that could influence its valuation over the next 12 months.

One significant risk involves NHS funding pressures, with the UK government scrutinising healthcare budgets. Any deceleration in procurement cycles or postponement of elective surgeries could adversely affect Smith & Nephew’s core orthopaedics business. Even though private sector demand has strengthened, overdependence on NHS infrastructure presents exposure to budgetary unpredictability.

Another operational risk centres on ongoing supply chain complexity. Although SN has made strides in diversifying manufacturing and digitising operations, global disruptions—including potential geopolitical flare-ups or raw material shortages—could impact lead times and cost structures. Moreover, adapting to post-Brexit regulatory frameworks has created additional compliance costs and integration timelines for product approvals in the UK and European markets.

In terms of financial milestones, investors should monitor Q2 and Q3 2026 earnings announcements for signs of sustained margin expansion and volume growth. Progress on the cost-transformation efficiency trajectory and CAPEX deployment in automation will be under the spotlight, particularly in light of high benchmark interest rates potentially influencing capital expenditure.

On the innovation front, key updates are expected in late 2026 regarding SN’s pipeline developments in AI-enabled diagnostics for surgical planning. The company is expected to present clinical outcome data from trials initiated in early 2025, which could offer tangible evidence supporting value-based healthcare delivery models and support institutional adoption across Europe and the UK.

M&A activity also remains a wildcard. While management has publicly stated a preference for organic growth, industry consolidation continues at pace, and strategic acquisitions in the surgical navigation or biologics space could serve as catalysts for market excitement. However, any missteps in integration or overpaying for synergies could dampen short-term financial health and investor sentiment.

Investors should also track progress on sustainability targets as ESG compliance increasingly becomes a criterion in bidding processes—both in public and private healthcare procurement. Failure to meet these thresholds could restrict market access or reduce scoring in framework agreements.

Finally, the share price outlook remains delicately balanced. Analysts forecast cautious optimism, with consensus price targets for late-2026 ranging between 1,200p and 1,320p—implying single-digit upside from current trading levels. Yet this is contingent on execution across margin improvement, innovation rollout, and external stability.

In conclusion, while Smith & Nephew’s 2025 trajectory was marked by solid execution and gradual recovery, 2026 presents a pivotal year for realising the results of multiyear investments. Sharpened focus across operations, technology and market positioning will be key to unlocking long-term shareholder value.