Smith+Nephew (SNN) lifts H1 2026 profit but cuts revenue growth outlook
Rhea-AI Filing Summary
Smith+Nephew reported first-half 2026 revenue of $3,097m, up 4.6% year-on-year, with underlying revenue growth of 2.3%. Operating profit rose to $448m and trading profit to $566m, an 8.1% increase, lifting the trading profit margin to 18.3%. Adjusted EPS (EPSA) grew 11.0% to 47.7¢, while basic EPS increased 6.2% to 35.6¢.
Growth was led by Sports Medicine & ENT (revenue up 10.2%) and Emerging Markets (up 14.8%), offset by softer Orthopaedics (1.7% growth) and declines in Advanced Wound Bioactives driven by US reimbursement changes and a weaker quarter for SANTYL. The group delivered $605m cash from operations and $231m free cash flow despite higher capex on a new UK wound factory and IT upgrades. Net debt was $3,019m, with an adjusted net-debt-to-EBITDA ratio of 1.8x.
Management cut full-year underlying revenue growth guidance from “around 6%” to “around 4%”, but kept targets for ~8% trading profit growth (around $1.3bn including Integrity Orthopaedics), about $800m free cash flow, and more than 10% adjusted ROIC. A progressive capital-return policy continues, with an interim dividend of 15.6¢ per share (up 4.0%) and a $500m share buyback, of which $216m had been settled by 3 August 2026.
Positive
- Adjusted EPS (EPSA) rose 11.0% to 47.7¢, indicating stronger underlying profitability than headline EPS growth.
- Trading profit increased 8.1% to $566m and margin improved 60bps to 18.3%, driven by $130m of efficiency savings and better gross margins.
- Sports Medicine & ENT revenue grew 10.2% to $1,017m, showing strong momentum in high-growth, higher-margin categories.
- Cash generated from operations increased 6.9% to $605m, supporting ongoing investment, dividends and buybacks.
- Interim dividend increased 4.0% to 15.6¢ per share alongside a $500m share buyback, highlighting continued capital returns.
- Adjusted leverage ratio stood at 1.8x net debt to adjusted EBITDA, providing balance sheet capacity despite elevated nominal net debt.
Negative
- Full-year underlying revenue growth guidance was cut from around 6% to around 4%, reflecting softer-than-expected first-half growth.
- Advanced Wound Bioactives revenue declined 7.7% in H1 (12.5% in Q2), pressured by US reimbursement changes and weaker SANTYL demand.
- US Orthopaedics remained challenged, with US Knee Implants revenue down 7.2% in Q2 and total US revenue slightly negative year-on-year.
- Free cash flow fell 5.2% to $231m in H1 due to higher capital expenditure on the new UK wound factory and IT investments.
Filing Explained
The completed Integrity acquisition adds a provisional $390 million consideration obligation, including $165 million contingent on milestones.
Smith+Nephew uses this Form 6-K to furnish its interim results; the filing also confirms that its Integrity Orthopaedics acquisition was completed on
The acquisition is completed, but its purchase-price allocation remains provisional, and the company says Integrity's contribution was not material to first-half group results; the transaction therefore adds acquired technology and contingent payment exposure rather than a new share-issuance disclosure.
For liquidity, the directors adopted the going-concern basis after reviewing at least 12 months of forecasts. No debt was due in the second half of 2026, while
The buyback was partly executed by
Key Figures
Key Terms
underlying revenue growth financial
trading profit financial
free cash flow financial
Adjusted ROIC financial
Pillar Two financial
12-Point Plan financial
Earnings Snapshot
Full-year underlying revenue growth cut to around 4% from around 6%, while maintaining targets for around 8% trading profit growth, around $800m free cash flow, and more than 10% adjusted ROIC.
FAQ
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AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934
August 14, 2026
Commission File Number 001-14978
(Registrant’s name)
Building 5, Croxley Park, Hatters Lane,
Watford, England, WD18 8YE
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F Form 40-F __
This report on Form 6-K shall be deemed incorporated by reference into the company's Registration Statement on Form F-3 (File No. 333-277815) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
Smith+Nephew Second Quarter and First Half 2026 Results
Strong H1 profit growth, on-track to meet trading profit, free cash flow and ROIC guidance despite softer revenue growth
27 June | 28 June | Underlying1 | ||||||
2026 | 2025 | Growth | growth | |||||
| $m | | $m | | % | % | ||
Second Quarter Results | ||||||||
Revenue |
| 1,597 |
| 1,553 |
| 2.8 | 1.6 | |
Half Year Results | ||||||||
Revenue |
| 3,097 |
| 2,961 |
| 4.6 | 2.3 | |
Operating profit |
| 448 |
| 429 | 4.3 | |||
Operating profit margin (%) | 14.5 | 14.5 | ||||||
EPS (cents) |
| 35.6 |
| 33.5 | 6.2 | |||
Cash generated from operations | 605 | 568 | 6.9 | |||||
Trading profit1 | 566 | 523 | 8.1 | |||||
Trading profit margin1 (%) |
| 18.3 |
| 17.7 | ||||
EPSA (cents)1 |
| 47.7 |
| 42.9 | 11.0 | |||
Free cash flow1 | 231 | 244 | (5.2) |
Q2 Highlights
| ● | Q2 revenue was $1,597 million, with revenue growth of 2.8% including a 120bps FX tailwind and underlying1 revenue growth of 1.6% |
| ● | Q2 performance driven by continued strength in Sports Medicine offset by softness in US Orthopaedics and Advanced Wound Bioactives |
| ● | Multiple product platforms delivering double-digit or higher growth including CATALYSTEM◊, AETOS◊, Q-FIX◊, REGENETEN◊, CARTIHEAL◊ AGILI-C◊, FASTSEAL◊ and LEAF◊ |
| ● | High cadence of new product launches, expansions and approvals including TESSA◊ Spatial Surgery System |
H1 Highlights
| ● | H1 revenue was $3,097 million, with growth of 4.6% after 230bps FX tailwind. Underlying1 revenue growth of 2.3%. Growth reflected one fewer trading day versus the prior year, with underlying1 revenue growth of 3.1% on an average daily sales1 (ADS) basis |
| ● | Operating profit increased 4.3% to $448 million and operating profit margin was flat at 14.5%. Trading profit1 was $566 million, up 8.1%. Trading profit margin1 was up 60bps to 18.3%. Strong trading profit1 growth driven by a step-up in forecast efficiency savings, while tariff refunds fully offset the forecast tariff headwind |
| ● | Basic earnings per share (‘EPS’) up 6.2% to 35.6¢ and adjusted earnings per share1 (‘EPSA’) up 11.0% to 47.7¢ |
| ● | Continued strong cash generation. Cash generated from operations was $605 million, up 6.9%. H1 free cash flow1 $13 million lower than H1 2025 includes a $51 million increase in capex relating largely to the construction of our new UK Wound factory and IT upgrades. This does not repeat in H2 when cash generation is expected to be stronger versus H2 2025 |
| ● | Building on our strong cash generation and balance sheet, a $500 million share buyback was announced in May, with $216 million settled as at 3 August |
| ● | Interim dividend increased by 4.0% to 15.6¢ per share |
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
1
Anticipated growth in full year underlying1 revenue reduced from around 6% to around 4%; trading profit1, free cash flow1 and adjusted ROIC1 guidance unchanged
| ● | We expect second half underlying1 revenue growth to be in the range of 5.0% to 5.5%, a step up on the first half, driven by multiple factors, including: |
| o | In Sports Medicine, continued momentum across segments including strong growth in REGENETEN and FASTSEAL |
| o | In Advanced Wound Management, stabilisation in US skin substitutes, a return to growth in SANTYL◊, expansion of the European launch of ALLEVYN◊ COMPLETE CARE, the launch of next-generation LEAF, and investment behind PICO◊ |
| o | In Orthopaedics, improving trajectory in US Knee Implants driven by LEGION◊ MS and the launch of the cementless version of LANDMARK◊, as well as a return to growth in US Hip Implants following increased CATALYSTEM set deployment |
| o | An extra trading day in the fourth quarter |
| ● | Despite the revised full year underlying1 revenue guidance, we continue to expect around 8% trading profit1 growth excluding acquisitions (around $1.3 billion post-acquisition of Integrity Orthopaedics), around $800 million free cash flow1, and more than 10% adjusted ROIC1 (excluding impact of Integrity Orthopaedics) |
| o | We now anticipate the year-on-year impact of tariffs will be broadly neutral to trading profit net of refunds |
| o | The headwind from skin substitutes is expected to be towards the upper end of the previously guided $20 to $40 million range |
| o | We expect to be able to offset the impact on trading profit1 of lower revenue growth through an additional $50 million in efficiency savings identified for 2026, taking total savings to around $200 million for the year |
Deepak Nath, Chief Executive Officer, said:
“The Group navigated some challenges in the second-quarter. Sports Medicine continued to perform strongly, but Orthopaedics was impacted by temporary headwinds in US Hip Implants and ongoing challenges in US Knee Implants ahead of new product introductions. We also saw softer-than-expected performance from SANTYL within Bioactives, although we expect the product to return to growth in the third quarter.
“The changes implemented through our 12-Point Plan have made the Group more resilient and better able to respond to such challenges. As a result, despite slower-than-expected revenue growth, we delivered a strong first-half profit performance primarily driven by a step-up in forecast efficiency savings.
“Importantly, that improved resilience gives us confidence in our ability to deliver our full-year guidance for trading profit, free cash flow and return on invested capital. The updated revenue guidance reflects both the soft first half and our expectation for a step-up in the second half. 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. We have already made progress on Orthopaedics trading profit margin1 ahead of these launches. We remain focused on capital allocation and opportunities to enhance shareholder returns.”
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
2
Second quarter 2026 trading update
Our second quarter revenue was $1,597 million (Q2 2025: $1,553 million), reflecting revenue growth of 2.8%, including 120bps tailwind from foreign exchange. Underlying1 revenue growth of 1.6%, which was lower than we anticipated. The second quarter of 2026 comprised 63 trading days, in line with the same period of 2025.
Sports Medicine & ENT
| 27 June | | 28 June | | | Underlying1 | | Acquisitions | | Currency | |||
Consolidated revenue by | 2026 | 2025 | Growth | Growth | /disposals | impact | |||||||
business unit by product | $m | $m | % | % | % | % | |||||||
Sports Medicine & ENT | 527 | 479 | 10.0 | 8.6 | - | 1.4 | |||||||
Sports Medicine Joint Repair | 293 | 262 | 11.8 | 10.6 | - | 1.2 | |||||||
Arthroscopic Enabling Technologies | 178 | 161 | 10.6 | 8.8 | - | 1.8 | |||||||
ENT (Ear, Nose and Throat) | 56 | 56 | (0.3) | (1.6) | - | 1.3 |
Our Sports Medicine business unit continued to deliver robust revenue growth, building on the continued momentum in the franchise, driven by our differentiated portfolio, including new product launches and recent acquisitions.
Sports Medicine Joint Repair growth was led by shoulder repair, including double-digit growth from our REGENETEN Bioinductive Implant and the Q-FIX KNOTLESS All-Suture Anchor. The CARTIHEAL AGILI-C Cartilage Repair Implant, acquired in 2024, delivered strong growth as we continue to expand availability, including completing first cases in Europe and Australia. The integration of Integrity Orthopaedics, and its Tendon Seam◊ technology for rotator cuff repair, acquired at the start of the year, is progressing well.
Arthroscopic Enabling Technologies performance was driven by double-digit growth both from our WEREWOLF◊ FASTSEAL 6.0 Hemostasis Wand and our service business. We again saw strong demand in China where the Volume-Based Procurement (VBP) process has been delayed and which we now expect to be implemented in the second half of 2026.
ENT revenue decline was as expected and reflected continued actions in China to reduce channel inventory ahead of the expected VBP process in this segment. This offset the good performance across all other regions, including double-digit growth in Other Established Markets and Emerging Markets and from the ARIS◊ COBLATION◊ Turbinate Reduction Wand and HALO◊ Wand for tonsillectomy and adenoidectomy.
Advanced Wound Management
| 27 June | | 28 June | | | Underlying1 | | Acquisitions | | Currency | |||
Consolidated revenue by | 2026 | 2025 | Growth | growth | /disposals | impact | |||||||
business unit by product | $m | $m | % | % | % | % | |||||||
Advanced Wound Management | 456 | 459 | (0.7) | (2.1) | - | 1.4 | |||||||
Advanced Wound Care | 204 | 192 | 6.1 | 3.7 | - | 2.4 | |||||||
Advanced Wound Bioactives | 144 | 165 | (12.5) | (12.7) | - | 0.2 | |||||||
Advanced Wound Devices | 108 | 102 | 5.5 | 3.8 | - | 1.7 |
Advanced Wound Management performance reflected continued headwinds in Advanced Wound Bioactives and strong comparative periods in both Advanced Wound Bioactives and Advanced Wound Devices.
Advanced Wound Care growth was driven by our foam portfolio led by the recently launched ALLEVYN COMPLETE CARE. The US launch is going well and during the quarter we initiated the European launch, with good early traction in Germany. We also delivered double-digit growth from ALLEVYN AG, our absorbent antimicrobial foam dressing.
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
3
Advanced Wound Bioactives revenue decline was driven by the changes to reimbursement rules for skin substitutes which took effect at the start of 2026 as well as by a soft quarter for SANTYL following a strong Q1. In skin substitutes, while there was a sequential improvement from the first quarter, the impact of the reimbursement reset continued to drive a decline in both volumes and pricing in non-surgical settings, particularly in mobile where we have limited exposure. Despite these near-term dynamics, we continue to believe in the long-term fundamentals of the skin substitute segment beyond this transition year, and remain well-positioned as market conditions normalise.
Advanced Wound Devices performance included double-digit growth from the LEAF Patient Monitoring System, a key component of our pressure injury prevention strategy. Our PICO single-use Negative Pressure Wound Therapy (NPWT) and RENASYS◊ traditional NPWT both performed strongly in Emerging Markets, as we continue to expand geographically. PICO sales in Other Established Markets were impacted by doctor strikes in Spain in the surgical sector and the timing of tenders. In the US, sales of RENASYS continue to be soft in the acute care channel, while performance in the post-acute channel remained strong.
Orthopaedics
| 27 June | | 28 June | | | Underlying1 | | Acquisitions | | Currency | |||
Consolidated revenue by | 2026 | 2025 | Growth | Growth | /disposals | impact | |||||||
business unit by product | $m | $m | % | % | % | % | |||||||
Orthopaedics | 614 | 615 | (0.2) | (1.0) | - | 0.8 | |||||||
Knee Implants | 247 | 257 | (3.8) | (4.3) | - | 0.5 | |||||||
Hip Implants | 165 | 162 | 1.4 | 0.5 | - | 0.9 | |||||||
Other Reconstruction | 36 | 35 | 2.0 | 0.8 | - | 1.2 | |||||||
Trauma & Extremities | 166 | 161 | 3.5 | 2.4 | - | 1.1 |
Our Orthopaedics business unit revenue declined - 0.2% (underlying1 decline -1.0%) in the second quarter, reflecting a number of factors in the US including the ongoing issues in Knee Implants ahead of new product launches and temporary headwinds in Hips Implants. Additionally, US Hip Implants, Knee Implants outside the US and Other Reconstruction all faced strong comparative periods.
US Knee Implants revenue declined -7.2%, a modest improvement on Q1, as expected. As with recent quarters, performance reflected the continuing and deliberate portfolio and capital discipline, combined with an ongoing market shift towards cementless, which continues to influence performance in the near term. The sequential improvement was driven by strong uptake of LEGION MS and continued double-digit growth from LEGION CONCELOC, our cementless offering. LEGION MS now represents almost 20% of our LEGION mix and is enhancing the competitiveness of our installed base. Looking ahead, we continue to expect improvement through the year, driven by increased LEGION MS set deployments in the second half. This will remain the main contributor to momentum ahead of launch of our new kinematic LANDMARK Knee System, with the cementless version expected in the third quarter of 2026.
Following four consecutive quarters of above market growth, US Hip Implants revenue declined -1.5%. The CATALYSTEM Primary Hip System is still growing strongly, although Q2 was impacted by some delay in set deployments and an increasing proportion of retentions versus competitive conversions. We expect the segment to return to growth for the remainder of the year driven by increased CATALYSTEM set deployment, and as CATALYSTEM moves into its third-year post-launch, we anticipate it continuing to drive a healthy growth rate in US Hip Implants, albeit at a more moderate level than during the early launch phase.
Outside the US, Knee Implants declined -0.3% (underlying1 decline -1.4%) reflecting the impact of a large tender order in the Middle East in the prior year which did not repeat. Hip Implants delivered revenue growth of 5.2% (underlying1 growth 3.0%) outside the US, led by the POLAR3◊ Total Hip System, as well as strong performance in Japan where we have recently launched CATALYSTEM.
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
4
Other Reconstruction revenue growth reflected the comparator period as well as contract mix. We delivered double digit growth in CORI◊ Surgical System installations globally.
Trauma & Extremities performance was driven by the EVOS◊ Plating System and IM Nails as well as strong double-digit growth from the recently launched AETOS Shoulder System.
Performance by region
| 27 June | | 28 June | | | Underlying1 | | Acquisitions | | Currency | |||
Consolidated revenue by | 2026 | 2025 | Growth | Growth | /disposals | impact | |||||||
geography | $m | $m | % | % | % | % | |||||||
US | 816 | 827 | (1.2) | (1.3) | - | 0.1 | |||||||
Other Established Markets(i) | 489 | 470 | 4.0 | 1.7 | - | 2.3 | |||||||
Total Established Markets | 1,305 | 1,297 | 0.6 | (0.2) | - | 0.8 | |||||||
Emerging Markets | 292 | 256 | 13.7 | 10.6 | - | 3.1 | |||||||
Total | 1,597 | 1,553 | 2.8 | 1.6 | - | 1.2 |
| (i) | Other Established Markets are Europe, Japan, Australia, Canada and New Zealand |
The US revenue decline reflected performance in Orthopaedics and Advanced Wound Bioactives. Other Established Markets performance was led by growth from Canada and Australia & New Zealand, continuing the good momentum seen in the first quarter. Emerging Markets performance included double-digit growth from China. We continue to expect China to be broadly neutral to growth for the full year.
First Half 2026 Consolidated Analysis
Smith+Nephew results for the first half ended 27 June 2026:
27 June | 28 June | Growth | |||||
| $m | | $m | | % |
| |
Revenue | 3,097 | 2,961 | 4.6 |
| |||
Operating profit |
| 448 |
| 429 |
| 4.3 | |
Acquisition and disposal related items |
| 21 |
| 9 | |||
Restructuring and rationalisation costs |
| 23 |
| 8 | |||
Amortisation and impairment of acquisition intangibles |
| 87 |
| 83 | |||
Legal and other |
| (13) |
| (6) | |||
Trading profit(i) |
| 566 |
| 523 |
| 8.1 | |
| ¢ |
| ¢ | ||||
Earnings per share (‘EPS’) |
| 35.6 |
| 33.5 |
| ||
Acquisition and disposal related items |
| 3.6 |
| 1.8 | |||
Restructuring and rationalisation costs |
| 2.1 |
| 0.6 | |||
Amortisation and impairment of acquisition intangibles |
| 8.1 |
| 7.3 | |||
Legal and other | (1.7) | (0.3) | |||||
Adjusted Earnings per share (‘EPSA’)(i) |
| 47.7 |
| 42.9 |
| 11.0 |
| (i) | See Other Information on pages 30 to 36 |
In the first half we delivered revenue growth of 4.6% including a 230bps tailwind from foreign exchange, and underlying1 revenue growth of 2.3%. There were 124 trading days, one day less than the equivalent period in 2025, with underlying1 revenue growth of 3.1% on an ADS1 basis.
Gross profit was $2,196 million (H1 2025: $2,091 million), an increase of 5.0%, and the gross profit margin increased 30bps to 70.9% (H1 2025: 70.6%) as we more than offset raw materials inflation with price increases and efficiency measures in manufacturing and procurement. Operating profit increased 4.3% to $448 million (H1 2025: $429 million).
The changes implemented through our 12-Point Plan have made the Group more resilient and, despite the softer than expected revenue growth, we delivered good trading profit1 in the first-half, up 8.1% to $566 million (H1 2025: $523 million). The strong growth was driven by a step-up in forecast efficiency savings. While we had previously forecast a tariff headwind in the first half, the net impact of refunds received means the net impact of tariffs was broadly neutral to profit growth.
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
5
We continue to make strong progress driving efficiency savings, with $130 million realised in the first half. Of these, $50 million came from 12-Point Plan and zero-based budgeting (ZBB) activities, and $80 million from additional opportunities across procurement, manufacturing, sales and marketing, and business support functions. We have now achieved $330 million of cumulative 12-Point Plan and ZBB savings against the targets set out in August 2024 of $325 million to $375 million by 2027, with further savings to come through in the second half of 2026 and 2027. We expect to achieve a further $70 million of savings in the second half from both 12-Point Plan and ZBB and other opportunities, taking total efficiency savings for the year up from around $150 million to around $200 million. This includes an additional $50 million in savings primarily coming from manufacturing, including from our ongoing footprint optimisation, as well as procurement and sales and marketing.
As a result of these factors, the trading profit margin1 strengthened by 60bps to 18.3% (H1 2025: 17.7%).
Sports Medicine & ENT segment trading profit margin1 increased 160bps to 24.7% (H1 2025: 23.1%) driven by operating leverage off the strong revenue growth. Advanced Wound Management segment trading profit margin1 was down 10bps to 22.0% (H1 2025: 22.1%) reflecting changes to reimbursement in skin substitutes. Orthopaedics segment trading profit margin1 was up 30bps to 13.0% (H1 2025: 12.7%) as we were able to more than offset the headwind from inventory revaluation and softer revenue growth with manufacturing savings from network optimisation, ongoing productivity initiatives and disciplined cost control (see Note 2 to the Interim Financial Statements for global business unit segment trading profit).
Profit before tax was up 5.0% to $380 million (2025: $362 million)
Tax was a charge of $77 million (H1 2025: $69 million). The first half tax rate on trading results of 20.3% (H1 2025: 19.8%) was calculated using full year projections, applied to trading profits1 for the first half and includes non-recurring tax credits arising in this period. The applicable rate of corporate income tax has been applied to the actual non-trading items in the period on an item-by-item basis (see Note 3 to the Interim Financial Statements). The net interest charge within results was $55 million (H1 2025: $54 million).
Basic earnings per share (‘EPS’) was up 6.2% to 35.6¢ (71.2¢ per ADS) (H1 2025: 33.5¢ per share), including restructuring costs, acquisition and disposal related items, amortisation and impairment of acquisition intangibles and legal and other items incurred. Adjusted earnings per share1 (‘EPSA’) increased by 11.0% to 47.7¢ (95.4¢ per ADS) (H1 2025: 42.9¢ per share).
The Group continued to generate strong cash flow. Cash generated from operations was up 6.9% to $605 million (H1 2025: $568 million) and free cash flow1 was $231 million (H1 2025: $244 million). The modest reduction in first-half free cash flow1 was driven by higher capital expenditure, primarily related to construction of our new UK Wound factory, which is due to open next year and IT upgrades partially offset by reduced restructuring costs. This year-on-year increase in investment is not expected to recur in the second half and for the same reasons, we expect this to be stronger in the second half versus H2 2025.
Net debt2 as of 27 June 2026 was $3,019 million (31 December 2025: $2,759 million), with access to committed facilities of $4.7 billion (see Note 6 to the Financial Statements). Leverage ratio at H1 2026 was 6.0x. The leverage ratio using closest equivalent IFRS measures is not based on measures used in the calculation of debt covenants and is not used by management internally. The net debt to adjusted EBITDA leverage ratio1 was 1.8x.
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
2 Net debt is reconciled in Note 6 to the Group accounts.
6
Delivering our RISE strategy
We are two quarters into the RISE strategy to accelerate growth and improve returns over the next three years, with progress across all four pillars.
To REACH more patients, we are focused on driving adoption of our portfolio by expanding into additional indications and geographies. Highlights year to date include the first knee and shoulder cases performed using the next-generation CORI XT Handheld Robotics Platform, marking an important milestone in the clinical introduction of our latest handheld robotics technology. We also expanded CATALYSTEM into Japan and initiated the European launches of our ALLEVYN COMPLETE CARE Foam Dressing, which offers a unique five-layer construction with distinct mode of action capabilities targeted towards both wound management and pressure ulcer prevention, and of the RENASYS EDGE Negative Pressure Wound Therapy System.
To INNOVATE and enhance the standard of care, we take a patient-led approach to innovation, prioritising areas with the potential to improve outcomes.
We have been granted De Novo classification by the US Food & Drug Administration (FDA) for our TESSA Spatial Surgery System. Utilising cutting-edge accelerated computing and AI technology, the TESSA (Tracking Enabled Spatial Surgery Assistant) System brings personalised planning, augmented reality, advanced imaging, navigation, and real-time tracking to help transform arthroscopic procedures. TESSA’s first indication for use is femoral anterior cruciate ligament reconstruction surgery of the knee.
New product launches year to date include the FLOW FLEXTEND◊ COBLATION◊ Wand which brings new functionality for hard-to-reach hip, knee and shoulder anatomies, an extension to the EVOS Plating System with EVOS Pelvic, the LYNX◊ COBLATION Laryngeal Wand in ENT, and the next generation LEAF Patient Monitoring System, a data-driven pressure injury prevention platform designed to help health care providers tackle the growing burden of hospital-acquired pressure injuries by strengthening protocols and outcomes. We also continued to build out the evidence base supporting our biologics portfolio, announcing new clinical data supporting adoption of our REGENETEN and CARTIHEAL AGILI-C implants.
To SCALE through strategic investment, we continue to allocate capital to targeted categories and channels. This includes the acquisition of Integrity Orthopaedics, announced in January. Tendon Seam’s biomechanical approach to rotator cuff repair further expands our leading portfolio in shoulder pathology. The Group also continues to invest behind its PICO single-use Negative Pressure Wound Therapy system, expanding the salesforce. Our new Advanced Wound Management manufacturing facility in Melton, UK, is on track to open in 2027.
To EXECUTE efficiently, we are driving group-wide productivity by being disciplined around cost control as well as executing our Ortho 360 programme within Orthopaedics. Our Advanced Wound Management manufacturing site in Suzhou, China, has been awarded the Shingo Prize, one of the world’s most respected recognitions for organisational excellence reflecting more than a decade of sustained improvement at the site.
Interim Dividend
Smith+Nephew has a progressive dividend policy and we expect our shareholders to benefit from an annual payout of around 35% to 40% of EPSA1.
The interim payment is set at 40% of the prior full year and is therefore 15.6¢ per share (31.2¢ per ADS) for 2026, a 4.0% increase year-on-year (2025: 15.0¢).
Share buy-back on track
On 6 May 2026, Smith+Nephew announced a share buyback of $500 million to be completed within twelve months. The buyback demonstrates our commitment to disciplined capital allocation, balancing investment in strategic growth with the return of surplus capital to shareholders, in line with our framework. We had settled $216 million as at 3 August 2026.
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
7
Outlook
We expect second half underlying1 revenue growth to be in the range of 5.0% to 5.5%, a step-up on the first half, driven by multiple factors, including:
| ● | In Sports Medicine, continued momentum across segments including strong growth in REGENETEN and FASTSEAL |
| ● | In Advanced Wound Management, stabilisation in US skin substitutes, a return to growth in SANTYL, expansion of the European launch of ALLEVYN COMPLETE CARE, the launch of next-generation LEAF, and investment behind PICO |
| ● | In Orthopaedics, improving trajectory in US Knee Implants driven by LEGION MS and the launch of the cementless version of LANDMARK, as well as a return to growth in US Hip Implants following increased CATALYSTEM set deployment |
| ● | An extra trading day in the fourth quarter |
Consequently, we now expect to deliver full year underlying1 revenue growth of around 4% (previously “around 6%”).
The guidance equates to second half revenue growth to be in the range of 5.1% to 5.6% and full year revenue growth of around 5.2% based on exchange rates prevailing on 31 July 2026.
Despite the revised full year revenue guidance, we continue to expect around 8% trading profit1 growth excluding acquisitions (around $1.3 billion post-acquisition of Integrity Orthopaedics), around $800 million free cash flow1, and more than 10% adjusted ROIC1 (excluding impact of Integrity Orthopaedics).
With the benefit of tariff refunds, we now anticipate the net year-on-year impact of tariffs to be broadly neutral to trading profit1. The headwind from skin substitutes is expected to be towards the upper end of the previously guided $20 to $40 million range. Given the updated revenue guidance, we expect revenue leverage to be lower, offset by the $50 million step-up in forecast efficiency savings. As previously disclosed, the acquisition of Integrity Orthopaedics is expected to be marginally dilutive to trading profit1 in 2026, broadly neutral in 2027 and accretive from 2028.
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
8
Forward calendar
The Q3 Trading Report will be released on 6 November 2026.
Investor contacts
Emily Heaven, Smith+Nephew | +44 (0) 7811 919437 |
Craig Bijou, Smith+Nephew | +1 (475) 850-8282 |
|
|
Media contacts |
|
Charles Reynolds, Smith+Nephew | +44 (0) 1923 477314 |
Susan Gilchrist / Ayesha Bharmal, Brunswick | +44 (0) 20 7404 5959 |
About Smith+Nephew
Smith+Nephew is a portfolio medical technology business focused on the repair, regeneration and replacement of soft and hard tissue. We exist to restore people’s bodies and their self-belief by using technology to take the limits off living. We call this purpose ‘Life Unlimited’. Our 17,000 employees deliver this mission every day, making a difference to patients’ lives through the excellence of our product portfolio, and the invention and application of new technologies across our three global business units of Orthopaedics, Sports Medicine & ENT and Advanced Wound Management.
Founded in Hull, UK, in 1856, we now operate in around 100 countries, and generated annual sales of $6.2 billion in 2025. Smith+Nephew is a constituent of the FTSE100 (LSE:SN, NYSE:SNN). The terms ‘Group’ and ‘Smith+Nephew’ are used to refer to Smith & Nephew plc and its consolidated subsidiaries, unless the context requires otherwise.
For more information about Smith+Nephew, please visit www.smith-nephew.com and follow us on X, LinkedIn, Instagram or Facebook.
Reporting definitions
All percentages compare to the equivalent 2025 period.
‘Underlying revenue growth’ reconciles to revenue growth, the most directly comparable financial measure calculated in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB), by making two adjustments, the ‘constant currency exchange effect’ and the ‘acquisitions and disposals effect’, described below. See Other Information on pages 30 to 36 for a reconciliation of underlying revenue growth to revenue growth.
The ‘constant currency exchange effect’ is a measure of the increase/decrease in revenue resulting from currency movements on non-US Dollar sales and is measured as the difference between: 1) the increase/decrease in the current year revenue translated into US Dollars at the current year average exchange rate and the prior year revenue translated at the prior year rate; and 2) the increase/decrease being measured by translating current and prior year revenues into US Dollars using the same exchange rate.
The ‘acquisitions and disposals effect’ is the measure of the impact on revenue from newly acquired material business combinations and recent material business disposals. This is calculated by comparing the current year, constant currency actual revenue (which includes acquisitions and excludes disposals from the relevant date of completion) with prior year, constant currency actual revenue, adjusted to include the results of acquisitions and exclude disposals for the commensurate period in the prior year. These sales are separately tracked in the Group’s internal reporting systems and are readily identifiable.
Certain items included in ‘trading results’, such as trading profit, trading profit margin, tax rate on trading results, EPSA and underlying growth are non-IFRS financial measures. The non-IFRS financial measures reported in this announcement are explained in Other Information on pages 30 to 36 and are reconciled to the most directly comparable financial measures prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB). Reported results represent IFRS financial measures as shown in the Unaudited Condensed Consolidated Interim Financial Statements.
9
Forward-looking statements
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 forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. For Smith+Nephew, these factors include: conflicts in Europe and the Middle East, economic and financial conditions in the markets we serve, especially those affecting healthcare providers, payers and customers; price levels for established and innovative medical devices; developments in medical technology; regulatory approvals, reimbursement decisions or other government actions; product defects or recalls or other problems with quality management systems or failure to comply with related regulations; litigation relating to patent or other claims; legal and financial compliance risks and related investigative, remedial or enforcement actions; disruption to our supply chain or operations or those of our suppliers; competition for qualified personnel; strategic actions, including acquisitions and disposals, our success in performing due diligence, valuing and integrating acquired businesses; disruption that may result from transactions or other changes we make in our business plans or organisation to adapt to market developments; relationships with healthcare professionals; reliance on information technology and cybersecurity; disruptions due to natural disasters, weather and climate change related events; changes in customer and other stakeholder sustainability expectations; changes in taxation regulations; effects of foreign exchange volatility; and numerous other matters that affect us or our markets, including those of a political, economic, business, competitive or reputational nature. Please refer to the documents that Smith+Nephew has filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended, including Smith+Nephew’s most recent annual report on Form 20-F, which is available on the SEC’s website at www. sec.gov, for a discussion of certain of these factors. Any forward-looking statement is based on information available to Smith+Nephew as of the date of the statement. All written or oral forward-looking statements attributable to Smith+Nephew are qualified by this caution. Smith+Nephew does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances or in Smith+Nephew’s expectations.
◊ Trademark of Smith+Nephew. Certain marks registered in US Patent and Trademark Office.
10
Consolidated revenue analysis for the first half
| 27 June | | 28 June | | | Underlying1 | | Acquisitions | | Currency | |||
Consolidated revenue by | 2026 | 2025 | Growth | growth | /disposals | impact | |||||||
business unit by product | $m | $m | % | % | % | % | |||||||
Sports Medicine & ENT | 1,017 | 923 | 10.2 | 7.7 | - | 2.5 | |||||||
Sports Medicine Joint Repair | 574 | 509 | 12.8 | 10.3 | - | 2.5 | |||||||
Arthroscopic Enabling Technologies | 340 | 307 | 10.7 | 7.8 | - | 2.9 | |||||||
ENT (Ear, Nose and Throat) | 103 | 107 | (3.6) | (5.4) | - | 1.8 | |||||||
Advanced Wound Management | 867 | 845 | 2.6 | (0.1) | - | 2.7 | |||||||
Advanced Wound Care | 398 | 366 | 8.8 | 4.3 | - | 4.5 | |||||||
Advanced Wound Bioactives | 263 | 285 | (7.7) | (8.1) | - | 0.4 | |||||||
Advanced Wound Devices | 206 | 194 | 6.2 | 2.8 | - | 3.4 | |||||||
Orthopaedics | 1,213 | 1,193 | 1.7 | (0.1) | - | 1.8 | |||||||
Knee Implants | 492 | 501 | (1.8) | (3.6) | - | 1.8 | |||||||
Hip Implants | 326 | 313 | 4.3 | 2.3 | - | 2.0 | |||||||
Other Reconstruction | 68 | 64 | 5.3 | 3.1 | - | 2.2 | |||||||
Trauma & Extremities | 327 | 315 | 4.0 | 2.4 | - | 1.6 | |||||||
Total | 3,097 | 2,961 | 4.6 | 2.3 | - | 2.3 | |||||||
Consolidated revenue by geography | |||||||||||||
US | 1,591 | 1,586 | 0.4 | 0.3 | - | 0.1 | |||||||
Other Established Markets(i) | 958 | 897 | 6.7 | 1.4 | - | 5.3 | |||||||
Total Established Markets | 2,549 | 2,483 | 2.7 | 0.7 | - | 2.0 | |||||||
Emerging Markets | 548 | 478 | 14.8 | 10.6 | - | 4.2 | |||||||
Total | 3,097 | 2,961 | 4.6 | 2.3 | - | 2.3 |
(i) | Other Established Markets are Europe, Japan, Australia, Canada and New Zealand |
1 These non-IFRS financial measures are explained and reconciled to the most directly comparable financial measure prepared in accordance with IFRS on pages 30–36.
11
2026 HALF YEAR CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited Condensed Group Income Statement for the Half Year ended 27 June 2026
27 June | 28 June | |||||
| | 2026 | | 2025 | ||
Notes | $m | $m | ||||
Revenue |
| 2 |
| | | |
Cost of goods sold |
| ( | ( | |||
Gross profit |
| |
| | ||
Selling, general and administrative expenses |
| ( | ( | |||
Research and development expenses |
| ( | ( | |||
Operating profit |
| 2 |
| |
| |
Interest income |
| | | |||
Interest expense |
| ( | ( | |||
Other finance costs |
| ( | ( | |||
Share of results of associates | | ( | ||||
Profit before taxation |
| |
| | ||
Taxation |
| 3 |
| ( | ( | |
Attributable profit for the periodA |
| |
| | ||
Earnings per ordinary shareA | ||||||
Basic |
|
|
| |||
Diluted |
|
|
Unaudited Condensed Group Statement of Comprehensive Income for the Half Year ended 27 June 2026
| 27 June | 28 June | ||
| | 2026 | | 2025 |
| $m | $m | ||
Attributable profit for the periodA | |
| | |
Other comprehensive income | ||||
Items that will not be reclassified to income statement | ||||
Remeasurement of net retirement benefit obligations | ( | | ||
Taxation on other comprehensive income | - | ( | ||
Total items that will not be reclassified to income statement | ( | | ||
Items that may be reclassified subsequently to income statement | ||||
Cash flow hedges - forward foreign exchange contracts | ||||
Gain/(loss) arising in the period | | ( | ||
Gain recycled to income statement in the period | - | ( | ||
Foreign currency translation of foreign operations | ||||
Exchange (loss)/gain on translation of foreign operations | ( | | ||
Exchange gain/(loss) arising on hedging instruments | | ( | ||
Taxation on other comprehensive income | ( | | ||
Total items that may be reclassified subsequently to income statement | | | ||
Other comprehensive income for the period, net of taxation | | | ||
Total comprehensive income for the periodA | | |
| A |
12
Unaudited Condensed Group Balance Sheet as at 27 June 2026
27 June | 31 December | 28 June | ||||||
| | | 2026 | | 2025 | | 2025 | |
Notes | $m | $m | $m | |||||
ASSETS | ||||||||
Non-current assets | ||||||||
Property, plant and equipment |
| |
| | | |||
Goodwill |
| |
| | | |||
Intangible assets |
| |
| | | |||
Investments in associates |
| |
| | | |||
Investments |
| |
| | | |||
Other non-current assets | | | | |||||
Retirement benefit assets |
| |
| | | |||
Deferred tax assets | | | | |||||
| |
| |
| | |||
Current assets | ||||||||
Inventories |
| |
| | | |||
Trade and other receivables |
| |
| | | |||
Current tax receivable | | | | |||||
Cash and cash equivalents |
| 6 |
| |
| | | |
| |
| |
| | |||
TOTAL ASSETS |
| |
| |
| | ||
EQUITY AND LIABILITIES | ||||||||
Equity attributable to owners of the Company | ||||||||
Share capital |
| |
| | | |||
Share premium |
| |
| | | |||
Capital redemption reserve |
| |
| | | |||
Treasury shares |
| ( |
| ( | ( | |||
Other reserves | 8 |
| ( |
| ( | ( | ||
Retained earnings |
| |
| | | |||
Total equity |
| |
| |
| | ||
Non-current liabilities | ||||||||
Long-term borrowings and lease liabilities |
| 6 |
| |
| | | |
Retirement benefit obligations |
|
| |
| | | ||
Other payables |
| |
| | | |||
Provisions |
| |
| | | |||
Deferred tax liabilities |
| |
| | | |||
| |
| |
| | |||
Current liabilities | ||||||||
Bank overdrafts, borrowings, loans and lease liabilities |
| 6 |
| |
| | | |
Trade and other payables |
| |
| | | |||
Provisions |
| |
| | | |||
Current tax payable |
| |
| | | |||
| |
| |
| | |||
Total liabilities |
| |
| |
| | ||
TOTAL EQUITY AND LIABILITIES |
| |
| |
| |
13
Unaudited Condensed Group Cash Flow Statement for the Half Year ended 27 June 2026
| | 27 June | 28 June | |
|
| 2026 | 2025 | |
| $m | $m | ||
Cash flows from operating activities | | | ||
Profit before taxation | | | ||
Net interest expense | | | ||
Depreciation, amortisation and impairment | | | ||
Loss on disposal of property, plant and equipment and software | | | ||
Share-based payments expense (equity-settled) | | | ||
Share of results of associates | ( | | ||
Pension costs less cash paid | | | ||
Increase in inventories | ( | - | ||
Increase in trade and other receivables | ( | ( | ||
Decrease in trade and other payables and provisions | ( | ( | ||
Cash generated from operations | | | ||
Interest received | | | ||
Interest paid | ( | ( | ||
Income taxes paid | ( | ( | ||
Net cash inflow from operating activities | | | ||
Cash flows from investing activities | | | ||
Acquisitions, net of cash acquired | ( | ( | ||
Capital expenditure | ( | ( | ||
Proceeds from disposal of property, plant and equipment | - | | ||
Net cash used in investing activities | ( | ( | ||
Cash flows from financing activities | ||||
Purchase of own shares | ( | - | ||
Proceeds from own shares | | | ||
Payment of capital element of lease liabilities | ( | ( | ||
Proceeds from borrowings due within one year | | | ||
Settlement of borrowings due within one year | ( | ( | ||
Proceeds from borrowings due after one year | | - | ||
Settlement of currency swaps | ( | ( | ||
Equity dividends paid | ( | ( | ||
Net cash inflow/(used) in financing activities | | ( | ||
Net increase in cash and cash equivalents | | | ||
Cash and cash equivalents at beginning of the period | | | ||
Exchange adjustments | | | ||
Cash and cash equivalents at end of the periodB | | |
B |
14
Unaudited Condensed Group Statement of Changes in Equity for the Half Year ended 27 June 2026
Capital | ||||||||||||||
| Share | Share | redemption | Treasury | Other | Retained | Total | |||||||
capital | premium | reserve | shares | reservesC | earningsD | equity | ||||||||
| $m | | $m | | $m | | $m | | $m | | $m | | $m | |
At 1 January 2026 | | | | ( | ( | | | |||||||
Attributable profit for the periodA | - | - | - | - | - | | | |||||||
Other comprehensive incomeA | - | - | - | - | | ( | | |||||||
Total comprehensive income | - | - | - | - | | | | |||||||
Equity dividends declared and paid | - | - | - | - | - | ( | ( | |||||||
Share-based payments recognised | - | - | - | - | - | | | |||||||
Taxation on share-based payments | - | - | - | - | - | | | |||||||
Purchase of own sharesC | - | - | - | ( | - | - | ( | |||||||
Cost of shares transferred to beneficiaries | - | - | - | | - | ( | | |||||||
At 27 June 2026 | | | | ( | ( | | |
| Capital | |||||||||||||
| Share | Share | redemption | Treasury | Other | Retained | Total | |||||||
| capital | premium | reserve | shares | reservesC | earningsD | equity | |||||||
| | $m | | $m | | $m | | $m | | $m | | $m | | $m |
At 1 January 2025 | | | | ( | ( | | | |||||||
Attributable profit for the periodA | - | - | - | - | - | | | |||||||
Other comprehensive incomeA | - | - | - | - | | | | |||||||
Total comprehensive income | - | - | - | - | | | | |||||||
Equity dividends declared and paid | - | - | - | - | - | ( | ( | |||||||
Share-based payments recognised | - | - | - | - | - | | | |||||||
Taxation on share-based payments | - | - | - | - | - | | | |||||||
Cost of shares transferred to beneficiaries | - | - | - | | - | ( | | |||||||
At 28 June 2025 | | | | ( | ( | | |
| A | Attributable to the equity holders of the parent and wholly derived from continuing operations. |
C
D
15
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
1. | Basis of preparation and accounting policies |
Smith & Nephew plc (the ‘Company’) is a public limited company incorporated in England and Wales. In these unaudited condensed consolidated interim financial statements (‘Interim Financial Statements’), ‘Group’ means the Company and all its subsidiaries.
These Interim Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and as issued by the International Accounting Standards Board (IASB). As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, these Interim Financial Statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company’s annual accounts for the year ended 31 December 2025 which were prepared in accordance with UK-adopted International Accounting Standards. The Group has also prepared its accounts in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB) effective as at 31 December 2025. IFRS Accounting Standards as adopted in the UK differs in certain respects from IFRS Accounting Standards as issued by the IASB. However, the differences have no impact for the periods presented.
The uncertainties as to the future impact on the financial performance and cash flows of the Group as a result of the current economic environment have been considered as part of the Group’s adoption of the going concern basis for its Interim Financial Statements for the period ended 27 June 2026, in which context the Directors reviewed cash flow forecasts prepared for a period of at least 12 months from the date of approval of these Interim Financial Statements. Having carefully reviewed those forecasts, the Directors concluded that it was appropriate to adopt the going concern basis of accounting in preparing these Interim Financial Statements for the reasons set out below.
The Group has access to $
The Directors have considered various scenarios in assessing the impact of the economic environment on future financial performance and cash flows, including the impact of a significant global economic downturn, leading to lower healthcare spending across both public and private systems. Throughout these scenarios, which include a severe, but plausible outcome, the Group continues to have headroom on its borrowing facilities and financial covenants.
The Directors have a reasonable expectation that the Company and the Group are well placed to manage their business risks, have sufficient funds to continue to meet their liabilities as they fall due and to continue in operational existence for a period of at least 12 months from the date of the approval of these financial statements. The financial statements have therefore been prepared on a going concern basis.
Accordingly, the Directors continue to adopt the going concern basis (in accordance with the guidance ‘Guidance on the Going Concern Basis of Accounting and Related Reporting (including Solvency and Liquidity Risks)’ issued by the FRC) in preparing these financial statements.
16
New accounting standards effective 2026
A number of new amendments to standards are effective from 1 January 2026 but they do not have a material effect on the Group’s financial statements.
Accounting standards issued but not yet effective
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2027 and earlier application is permitted; however, the Group has not early adopted them in preparing these Interim Financial Statements.
IFRS 18 Presentation and Disclosure in Financial Statements was issued by the IASB in April 2024. The standard is effective for annual reporting periods beginning on or after 1 January 2027, and also applies to comparative information. IFRS 18 will replace IAS 1 Presentation of Financial Statements and will have a pervasive impact on several aspects of financial statements presentation and disclosure, particularly in the Group income statement and disclosure requirements for management-defined performance measures (MPMs) within the financial statements.
The Group has commenced an assessment of the standard’s full impact. Based on the preliminary analysis, the Group anticipates that the standard will have the following potential impacts:
| - | The classification of items of income and expense into categories defined in IFRS 18 will impact the presentation of the Group income statement. Whilst the standard does not impact recognition or measurement, changes in classification will impact the reported amounts for line items in the income statement. A new subtotal ‘Profit before financing and income tax’ will be included to separately present the impact of investing and financing activities. Share of results of associates will be classified in the investing category, interest income and expense in the financing category and other finance costs will be classified in the operating, investing or financing category depending on the nature of the income or expense. |
| - | The Group is reassessing its aggregation and disaggregation principles to ensure they comply with the enhanced guidance in IFRS 18, which aims to provide more detailed and useful information to users of the financial statements. |
| - | Mandatory new disclosures in relation to MPMs will be required within the financial statements. |
| - | Consequential presentational changes to statement of cash flows will be required and operating profit will be the new starting point for reconciling cash flows from operating activities. |
The Group will apply IFRS 18 from its mandatory effective date of 1 January 2027. Comparative information for the year ending 31 December 2026 and period ending 27 June 2026 will be restated in the Interim Financial Statements for the period ending 26 June 2027 in accordance with IFRS 18.
Critical judgements and estimates
The Group prepares its consolidated financial statements in accordance with IFRS Accounting Standards as issued by the IASB and IFRS adopted in the UK, the application of which often requires judgements and estimates to be made by management when formulating the Group’s financial position and results. Under IFRS Accounting Standards, the Directors are required to adopt those accounting policies most appropriate to the Group’s circumstances for the purpose of presenting fairly the Group’s financial position, financial performance and cash flows.
Consistent with the Group’s consolidated financial statements for the year ended 31 December 2025, there are no critical accounting judgements and no key sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next 12 months.
17
Climate change considerations
The impact of climate change has been considered as part of the assessment of estimates and judgements in preparing the Interim Financial Statements. The climate change scenario analyses undertaken this year in line with TCFD recommendations did not identify any material financial impact. The following considerations were made in respect of the interim financial statements:
| a. | The impact of climate change on the going concern assessment; |
| b. | The impact of climate change on the cash flow forecasts used in the impairment assessments of non-current assets including goodwill; and |
| c. | The impact of climate change on the carrying value and useful economic lives of property, plant and equipment. |
While there is currently no material medium term impact expected, the Group closely monitors climate-related risks given the changing nature of these risks and management consider the impact of climate change as part of the decision making process and continue to assess the impact on judgements and estimates, and on preparation of the consolidated financial statements.
2. | Business segment information |
The Group’s operating structure is organised around
The Group has concluded that Sports Medicine and ENT meet the aggregation criteria and therefore, these operating segments have been aggregated into a single operating segment. In applying the aggregation criteria prescribed by IFRS 8 Operating Segments, management made certain judgements pertaining to the economic indicators relating to these operating segments including those relating to the similarities in the expected long-term market growth rates, the geographic and operational risks and the competitive landscape that these segments operate in. Accordingly, as described in Note 2 to the most recent annual report, the Group has concluded that there are
Segment revenue reconciles to statutory revenue from continuing operations as follows:
| 27 June | | 28 June | |
2026 | 2025 | |||
$m | $m | |||
Reportable segment revenue |
| |
| |
Sports Medicine & ENT | | | ||
Advanced Wound Management | | | ||
Orthopaedics | | | ||
Revenue from external customers | | |
18
2a.Disaggregation of revenue
The following table shows the disaggregation of Group revenue by product by business unit:
| 27 June | | 28 June | |
Revenue by product from continuing operations | 2026 | 2025 | ||
$m | $m | |||
Sports Medicine Joint Repair |
| |
| |
Arthroscopic Enabling Technologies |
| |
| |
ENT (Ear, Nose and Throat) | |
| | |
Sports Medicine & ENT |
| |
| |
Advanced Wound Care |
| |
| |
Advanced Wound Bioactives |
| |
| |
Advanced Wound Devices |
| |
| |
Advanced Wound Management |
| |
| |
Knee Implants |
| |
| |
Hip Implants |
| |
| |
Other Reconstruction |
| |
| |
Trauma & Extremities |
| |
| |
Orthopaedics |
| |
| |
Total |
| |
| |
The following table shows the disaggregation of Group revenue by geographic market and product category. The disaggregation of revenue into the two product categories below reflects that in general the products in the Advanced Wound Management business unit are sold to wholesalers and intermediaries, while products in the other business units are sold directly to hospitals, ambulatory surgery centers and distributors. The further disaggregation of revenue by Established Markets and Emerging Markets reflects that in general our products are sold through distributors and intermediaries in the Emerging Markets while in the Established Markets, with the exception of the Advanced Wound Care and Bioactives, products are in general sold direct to hospitals and ambulatory surgery centers. The disaggregation by Established Markets and Emerging Markets also reflects their differing economic factors including volatility in growth and outlook.
27 June 2026 | 28 June 2025 | |||||||||||
Established | Emerging | Total | Established | Emerging | Total | |||||||
| $m | | $m | | $m | | $m | | $m | | $m | |
Orthopaedics, Sports Medicine & ENT | | | | | | | ||||||
Advanced Wound Management | | | | | | | ||||||
Total | |
| | | |
| | | ||||
E | Established Markets comprises US, Australia, Canada, Europe, Japan and New Zealand. |
Sales are attributed to the country of destination. US revenue for the half year was $
2b.Trading profit by business segment
The segment profit measure presented to the ExCo is the segment trading profit. The Group has identified the following items as those to be excluded from operating profit when arriving at segment trading profit: corporate costs; acquisition and disposal-related items; significant restructuring programmes; amortisation and impairment of acquisition intangibles; gains and losses arising from legal disputes; and other significant items.
19
Segment trading profit is reconciled to the statutory measure below:
27 June | 28 June | |||
2026 | 2025 | |||
| $m | | $m | |
Segment profit | ||||
Sports Medicine & ENT |
| | ||
Advanced Wound Management |
| | ||
Orthopaedics |
| | ||
Segment trading profit |
| | | |
Corporate costs1 | ( | ( | ||
Acquisition and disposal related items | ( | ( | ||
Restructuring and rationalisation expenses | ( | ( | ||
Amortisation and impairment of acquisition intangibles | ( | ( | ||
Legal and other |
| | ||
Operating profit |
| | | |
Interest income | | |||
Interest expense | ( | ( | ||
Other finance costs | ( | ( | ||
Share of results of associates | ( | |||
Profit before taxation | | |
1 | Corporate costs include centralised infrastructure costs such as compliance and group functions. |
Depreciation and amortisation included in segment profit is presented below:
27 June | 28 June | |||
2026 | 2025 | |||
| $m | | $m | |
Depreciation and amortisation | ||||
Sports Medicine & ENT | ||||
Advanced Wound Management | ||||
Orthopaedics |
Acquisition and disposal related items
For the half year ended 27 June 2026, the charge included integration costs relating to the acquisition of Integrity Orthopaedics and prior year acquisitions.
For the half year ended 28 June 2025, the charge included costs of integration for prior year acquisitions.
Restructuring and rationalisation costs
For the half year ended 27 June 2026, these costs primarily relate to the efficiency and productivity elements of the 12-Point Plan and the Operations and Commercial Excellence programme. These costs primarily consist of severance, integration and dual running costs.
For the half year ended 28 June 2025, these costs primarily relate to the efficiency and productivity elements of the 12-Point Plan and the Operations and Commercial Excellence programme. These costs primarily consist of severance, integration and dual running costs, partially offset by gains on disposal of property, plant and equipment.
Amortisation and impairment of acquisition intangibles
For both the half years ended 27 June 2026 and 28 June 2025, charges relate to the amortisation and impairment of intangible assets acquired in material business combinations.
Legal and other
For the half year ended 27 June 2026, charges relate to legal expenses for ongoing metal-on-metal hip claims. These expenses were offset by a release of $
20
For the half year ended 28 June 2025, charges relate to legal expenses for ongoing metal-on-metal hip claims. These expenses were offset by a release of $
3. | Taxation |
Tax rate
Our reported tax for the period ended 27 June 2026 was a charge of $
OECD BEPS 2.0 – Pillar Two
The Group estimates a Pillar Two current tax charge for the year ending 31 December 2026 of $
The Group is adopting the IAS12 mandatory temporary exception from the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules.
4. | Dividends |
The 2025 final dividend totaling $
5. | Acquisitions |
Half year ended 27 June 2026
On 21 January 2026, the Group completed the acquisition of
The fair value of the consideration amounted to $
The purchase price allocation remains provisional as of the date on which the financial statements were approved by the Board, principally because of the ongoing assessment of historic tax losses recognised by Integrity prior to the acquisition. The provisional fair values of assets acquired, and liabilities assumed are set out below:
Integrity | ||
| $m | |
Intangible assets - technology-related | | |
Inventory | | |
Cash | | |
Other Assets | | |
Other liabilities | ( | |
Trade and other payables | ( | |
Net deferred tax liability | ( | |
Net assets | | |
Goodwill | | |
Consideration | |
21
The goodwill represents the control premium, acquired workforce and the synergies expected to arise from integrating Integrity into the Group’s existing operations.
The technology-related intangible assets were valued using an income-based valuation approach, with key inputs including forecast revenue, profitability and discount rates over the expected life of the technology.
The contribution of Integrity Orthopaedics to the Group’s revenue and profit for the period following acquisition is not material relative to the Group’s overall performance.
The cash outflow from acquisitions in H1 2026 was $
The carrying value of goodwill increased from $
Year ended 31 December 2025
The cash outflow from acquisitions in H1 2025 comprises payments of deferred and contingent consideration of $
6. | Net debt |
Net debt as at 27 June 2026 is outlined below. The repayment of lease liabilities is included in cash flows from financing activities in the cash flow statement.
| 27 June | 31 December | | 28 June | ||
2026 | 2025 | 2025 | ||||
| $m | | $m | | $m | |
Bank overdrafts, borrowings and loans - current |
| | | | ||
Corporate bond1 | | | | |||
Private placement notes | | | | |||
Borrowings | | | | |||
Cash and cash equivalents2 | ( | ( | ( | |||
Asset balance on derivatives - interest rate swaps |
| ( | ( | ( | ||
Net debt excluding lease liabilities |
| | | | ||
Non-current lease liabilities | | | | |||
Current lease liabilities | | | | |||
Net debt |
| | | |
1 | Corporate bond includes fair value adjustment relating to interest swaps. |
2 | In H1 2026, cash and cash equivalents include cash at bank of $ |
In June 2026, the Group issued a corporate bond of €
The Group may, at any time and from time to time, seek to retire, repay or repurchase its outstanding debt, including through cash tender offers, open-market repurchases,
22
privately negotiated transactions or otherwise. Any such transactions, if undertaken, would be on terms and at prices determined by the Group and would depend on prevailing market conditions, liquidity requirements, contractual restrictions and other relevant factors.
The Company is subject to financial covenants under its private placement agreements. The principal covenant on the private placement debt is a leverage ratio of <
7a. | Financial instruments |
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.
Carrying amount | Fair value | | ||||||||||||
27 June | 31 December | 28 June | 27 June | 31 December | 28 June | |||||||||
2026 | 2025 | 2025 | 2026 | 2025 | 2025 | Fair value | ||||||||
$m | $m | $m | $m | $m | $m | level | ||||||||
Financial assets measured at fair value | | | | | |
| | |||||||
Forward foreign exchange contracts | | | | | | |
| Level 2 | ||||||
Investments | | | | | | |
| Level 1 & 3 | ||||||
Investments relating to deferred compensation arrangements | | | - | | | - | Level 1 | |||||||
Interest rate swaps | | | | | | |
| Level 2 | ||||||
Currency swaps | | | - | | | - | Level 2 | |||||||
| | | | | |
| | |||||||
Financial assets not measured at fair value | | | | | |
| | |||||||
Trade and other receivables | | | | | |
| | |||||||
Cash and cash equivalents | | | | | |
| | |||||||
| | | | |
| | ||||||||
Total financial assets | | | | | |
| | |||||||
Financial liabilities measured at fair value | | | | | |
| | |||||||
Acquisition consideration - contingent | ( | ( | ( | ( | ( | ( |
| Level 3 | ||||||
Forward foreign exchange contracts | ( | ( | ( | ( | ( | ( |
| Level 2 | ||||||
Interest rate swaps | ( | - | - | ( | - | - |
| Level 2 | ||||||
Currency swaps | ( | ( | - | ( | ( | - |
| Level 2 | ||||||
( | ( | ( | ( | ( | ( |
| | |||||||
Financial liabilities not measured at fair value | | | | | |
| | |||||||
Acquisition consideration - deferred | - | - | ( | |||||||||||
Bank overdrafts and loans | ( | ( | ( | | |
| | |||||||
Corporate bond not in a hedge relationship | ( | ( | ( | |||||||||||
Corporate bond in a hedge relationship | ( | ( | ( | |||||||||||
Private placement debt not in a hedge relationship | ( | ( | ( | |
| | ||||||||
Trade and other payables | ( | ( | ( | | |
| | |||||||
( | ( | ( | | |
| | ||||||||
Total financial liabilities | ( | ( | ( | | |
| | |||||||
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The following table shows the book value and market value of corporate bonds and private placement debt.
| 27 June 2026 | 31 December 2025 | 28 June 2025 |
| |||||||||
Book | Market | Book | Market | Book | Market |
| |||||||
value | value | value | value | value | value |
| |||||||
| $ million | | $ million | | $ million | | $ million | | $ million | | $ million |
| |
2030 USD corporate bond |
| | | | | | | ||||||
2034 USD corporate bond |
| | | | | | | ||||||
2027 USD corporate bond | | | | | | | |||||||
2029 EUR corporate bond | | | | | | | |||||||
2038 EUR corporate bond | | | - | - | - | - | |||||||
Private placement debt | | | | | | | |||||||
In January 2026, the Group transferred an investment with a fair value of $
Long-term borrowings are measured in the balance sheet at amortised cost. The corporate bonds issued in October 2020, October 2022, March 2024 and June 2026 are publicly listed and a market price is available. The Group’s other long-term borrowings are not quoted publicly, their fair values are estimated by discounting future contractual cash flows to net present values at the current market interest rates available to the Group for similar financial instruments as at the year end. The fair value of the private placement notes is determined using a discounted cash flow model based on prevailing market rates.
Fair value of investments relating to deferred compensation arrangements is determined using unadjusted quoted market prices, and accordingly these investments are classified as Level 1 within the fair value hierarchy. The fair value of forward exchange contracts is calculated by reference to quoted market forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swaps is determined by reference to quoted market interest rates. The fair value of currency swaps is determined by reference to quoted market spot rates. As a result, foreign forward exchange contracts, interest rate swaps and currency swaps are classified as Level 2 within the fair value hierarchy.
The fair value of contingent acquisition consideration is estimated using a discounted cash flow model. The valuation model considers the present value of expected payment, discounted using a risk-adjusted discount rate. The expected payment is determined by considering the possible scenarios, which relate to the achievement of established milestones and targets, the amount to be paid under each scenario and the probability of each scenario. As a result, contingent acquisition consideration is classified as Level 3 within the fair value hierarchy.
Fair value of quoted investments is determined using unadjusted quoted market prices, and accordingly these investments are classified as Level 1 within the fair value hierarchy. The fair value of unquoted investments is based upon third party pricing models for share issues. As a result, unquoted investments are considered Level 3 in the fair value hierarchy. The movements in the half year ended 27 June 2026 and the
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year ended 31 December 2025 for financial instruments measured using Level 3 valuation methods are presented below:
27 June | 31 December | |||
2026 | 2025 | |||
| $m | | $m | |
Investments | ||||
At 1 January | | | ||
Transferred to Level 1 | ( | - | ||
Additions | | | ||
Transferred from receivables | - | | ||
Fair value remeasurement | - | | ||
| | |||
Contingent acquisition consideration liability | ||||
At 1 January | ( | ( | ||
Arising on acquisitions | ( | - | ||
Payments | | | ||
Remeasurements | ( | ( | ||
( | ( |
7b. | Retirement benefit obligations |
The discount rates applied to the defined benefit pension liabilities of the UK, Germany and Switzerland pension plans are determined based on the yield on bonds that have a credit rating of AA denominated in the currency in which the benefits are expected to be paid with a maturity profile approximately the same as the obligations.
Since 31 December 2025, the discount rate for UK has increased by
A remeasurement loss of $
8. | Equity |
Other reserves comprises gains and losses on cash flow hedges, foreign exchange differences on translation of foreign operations and net changes on fair value of trade investments. Cumulative fair value loss on trade investments within other reserves at 27 June 2026 was $
27 June | 28 June | |||
2026 | 2025 | |||
Foreign currency translation reserve | | $m | | $m |
At 1 January | ( | ( | ||
Exchange (loss)/gain on translation of foreign operations | ( | | ||
Exchange gain/(loss) arising on hedging instruments | | ( | ||
( | ( | |||
| ||||
27 June | 28 June | |||
2026 | 2025 | |||
Cash flow hedge reserve | $m | $m | ||
At 1 January | | | ||
Gain/(loss) arising in the period | | ( | ||
Gain recycled to income statement in the period | – | ( | ||
Taxation | – | | ||
| ( |
On 6 May 2026, the Group announced a $
25
9. | Exchange rates |
The exchange rates used for the translation of currencies into US Dollars that have the most significant impact on the Group results were:
| 27 June | | 31 December | | 28 June | |
2026 | 2025 | 2025 | ||||
Average rates |
| |
| |
| |
Sterling |
| |
| |
| |
Euro |
| |
| |
| |
Swiss Franc |
| |
| |
| |
Japanese Yen |
| | | | ||
Period end rates |
|
| |
| ||
Sterling |
| |
| |
| |
Euro |
| |
| |
| |
Swiss Franc |
| |
| |
| |
Japanese Yen |
| |
| |
| |
10. | Contingencies |
The Company and its subsidiaries are party to various legal proceedings, some of which include claims for substantial damages. The outcome of these proceedings cannot readily be foreseen, but except as described herein management believes none of them is likely to result in a material adverse effect on the financial position of the Group. The Group provides for outcomes that are deemed to be probable and can be reliably estimated. There is no assurance that losses will not exceed provisions or will not have a significant impact on the Group’s results of operations in the period in which they are realized.
11. | Subsequent events |
There have been no events between the balance sheet date, and the date on which the financial statements were approved by the Board, which would require adjustment to the financial statements or any additional disclosures.
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Other information
These Interim Financial Statements include financial measures that are not prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB). This additional information presented is not uniformly defined by all companies including those in the Group’s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS Accounting Standards but is not itself a measure defined under IFRS Accounting Standards. Such measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure. The non-IFRS measures discussed in this document are set out below.
Performance measures | ||||
Non-IFRS | Purpose | Definition | Closest | Reconciled on |
Underlying revenue growth | Underlying revenue growth is used to compare revenue in a given year to the previous year on a like-for-like basis. This measure is used by both management and the investor community. | Underlying revenue growth reconciles to revenue growth, the most directly comparable financial measure calculated in accordance with IFRS Accounting Standards, by making two adjustments, the ‘constant currency exchange effect’ and the ‘acquisitions and disposals effect’. The ‘constant currency exchange effect’ is a measure of the increase/decrease in revenue resulting from currency movements on non-US Dollar sales and is measured as the difference between: 1) the increase/decrease in the current year revenue translated into US Dollars at the current year average exchange rate and the prior year revenue translated at the prior year rate; and 2) the increase/decrease being measured by translating current and prior year revenues into US Dollars using the same exchange rate. The ‘acquisitions and disposals effect’ is the measure of the impact on revenue from newly acquired material business combinations and recent material business disposals. This is calculated by comparing the current year, constant currency actual revenue (which includes acquisitions and excludes disposals from the relevant date of completion) with prior year, constant currency actual revenue, adjusted to include the results of acquisitions and exclude disposals for the commensurate period in the prior year. These sales are separately tracked in the Group’s internal reporting systems and are readily identifiable. | Revenue growth | 34 |
Average daily sales | Average daily sales is used to assess underlying revenue growth by removing the effect of different trading days between periods. This is a key metric used by management to assess the performance of the Group. | Average daily sales is calculated by dividing revenue at a constant exchange rate by the number of trading days in a given period. Trading days refer to the days on which the Group generates its revenue. | Revenue | n/a |
30
Performance measures (continued) | ||||
Trading profit | Trading profit is used in conjunction with operating profit to assess the performance and profitability of the Group. It is a key internal and external metric used by the investor community to assess our performance. It is our segment performance measure in accordance with IFRS 8 Operating Segments. | Trading profit is attributable profit excluding the impact of acquisition and disposal related items arising in connection with business combinations, including amortisation of acquisition intangible assets, impairments and integration costs; restructuring events; and gains and losses resulting from legal disputes and uninsured losses. Trading profit also excludes interest income, interest expense, other finance costs, the Group’s share of results of associates, and taxation. In addition to these items, gains and losses that materially impact the Group’s profitability on a short-term or one-off basis are excluded. | Attributable profit | 34 |
Trading profit margin | This measure is used to assess the performance and profitability of the Group. It is a key external metric used by the investor community to assess our performance. | Trading profit margin is trading profit divided by revenue. | Operating profit margin | 34 |
Trading profit before tax | Trading profit before tax is used in conjunction with profit before tax to assess performance and profitability of the Group. This measure is intended to enable the users to assess the performance of the Group by excluding items that impact the short-term profitability of the Group. | Trading profit before tax is profit before tax excluding impact of acquisition and disposal related items arising in connection with business combinations, including amortisation of acquisition intangible assets, impairments and integration costs; restructuring events; and gains and losses resulting from legal disputes and uninsured losses. In addition to these items, gains and losses that materially impact the Group’s profitability on a short-term or one-off basis are excluded. | Profit before tax | 34 |
Trading taxation | Trading taxation is used in conjunction with taxation to assess taxation that corresponds to trading profit before tax. This metric is used by both management and the investor community. | Trading taxation is taxation excluding the impact of acquisition and disposal related items arising in connection with business combinations, including amortisation of acquisition intangible assets, impairments and integration costs; restructuring events; and gains and losses resulting from legal disputes and uninsured losses. In addition to these items, gains and losses that materially impact the Group’s profitability on a short-term or one-off basis are excluded. | Taxation | 34 |
Trading attributable profit | This metric is used in the calculation of adjusted basic earnings per share. | Trading attributable profit is attributable profit excluding the impact of acquisition and disposal related items arising in connection with business combinations, including amortisation of acquisition intangible assets, impairments and integration costs; restructuring events; and gains and losses resulting from legal disputes and uninsured losses. In addition to these items, gains and losses that materially impact the Group’s profitability on a short-term or one-off basis are excluded. | Attributable profit | 34 |
Adjusted earnings per share (‘EPSA’) | EPSA is a trend measure. The Group presents this measure to assist investors in their understanding of trends. | Adjusted earnings per share is trading attributable profit divided by the weighted average number of shares outstanding. This is the same denominator used when calculating basic earnings per share. | Basic earnings per share | 34 |
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32
Other measures | ||||
Non-IFRS | Purpose | Definition | Closest | Reconciled on |
Free cash flow | Free cash flow is a measure of the cash generated for the Group to use after capital expenditure according to its Capital Allocation Framework. This metric is used by both management and investor community. | Free cash flow is net cash inflow from operating activities less capital expenditure, proceeds from disposal of property, plant and equipment and payment of lease liabilities. | Net cash inflow from operating activities | 35 |
Adjusted EBITDA | Adjusted EBITDA is used in the calculation of adjusted leverage ratio. | Adjusted EBITDA is attributable profit excluding taxation, share of results of associates, other finance costs, interest expense, interest income, acquisition and disposal related items, restructuring and rationalisation costs, amortisation and impairment of acquisition intangibles, legal and other costs, depreciation and impairment of property, plant and equipment and amortisation and impairment of other intangible assets. | Attributable profit | 36 |
Adjusted leverage ratio | Adjusted leverage ratio is used in the calculation relating to debt covenants. | We calculate adjusted leverage ratio by dividing net debt by adjusted EBITDA. Net debt is defined as total borrowings less cash and cash equivalents in the statement of financial position. Total borrowings include bank overdrafts, borrowings, loans and lease liabilities and long-term borrowings and lease liabilities. | Leverage ratio | 36 |
Adjusted return on invested capital (‘Adjusted ROIC’) | Adjusted ROIC is a metric used by investor community and is a measure of the return generated on capital invested by the Group. It provides a metric for long-term value creation and encourages compounding reinvestment within the business and discipline around acquisitions with low returns and long payback. Adjusted ROIC is a key performance measure under the Performance Share Program. | Adjusted ROIC is defined as operating profit (before amortisation and impairment of acquisition intangibles) less adjusted taxes/((opening net operating assets + closing net operating assets)/2). | Return on invested capital (‘ROIC’) (using IFRS measures) | n/a |
33
Underlying revenue
Revenue growth, the most directly comparable financial measure calculated in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB), reconciles to underlying revenue growth as follows:
| | | Reconciling Items | |||||||||
27 June | 28 June | | Underlying | Acquisitions | | Currency | ||||||
2026 | 2025 | Growth | growth | & disposals | impact | |||||||
| $m | | $m | | % | | % | | % | | % | |
Segment revenue |
| |
| |
| |
| |
| |
| |
Sports Medicine & ENT | 1,017 | 923 | 10.2 | 7.7 | - | 2.5 | ||||||
Advanced Wound Management | 867 | 845 | 2.6 | (0.1) | - | 2.7 | ||||||
Orthopaedics | 1,213 | 1,193 | 1.7 | (0.1) | - | 1.8 | ||||||
Revenue | 3,097 | 2,961 | 4.6 | 2.3 | - | 2.3 | ||||||
Profit | ||||||||||
before | Attributable | Attributable | Earnings | |||||||
tax1 | Taxation2 | profit3 | profit4 | per share5 | ||||||
| $m | | $m | | $m | | $m | | ¢ | |
Half year 2026 Reported |
| 380 |
| (77) |
| 303 |
| 303 |
| 35.6 |
Acquisition and disposal related items |
| 35 | (6) | 29 | 29 | 3.6 | ||||
Restructuring and rationalisation costs |
| 24 | (6) | 18 | 18 | 2.1 | ||||
Amortisation and impairment of acquisition intangibles |
| 87 | (19) | 68 | 68 | 8.1 | ||||
Legal and other |
| (19) | 5 | (14) | (14) | (1.7) | ||||
Interest income | - | - | - | (10) | - | |||||
Interest expense | 65 | |||||||||
Other finance costs |
| - | - |
| - |
| 9 |
| - | |
Share of results of associates | - | - | - | (5) | - | |||||
Taxation | - | - | - | 103 | - | |||||
Half year 2026 Non-IFRS |
| 507 |
| (103) |
| 404 |
| 566 |
| 47.7 |
Profit | ||||||||||
before | Attributable | Attributable | Earnings | |||||||
tax1 | Taxation2 | profit3 | profit4 | per share5 | ||||||
| $m | | $m | | $m | | $m | | ¢ | |
Half year 2025 Reported |
| 362 | (69) | 293 | 293 | 33.5 | ||||
Acquisition and disposal related items |
| 20 | (4) | 16 | 16 | 1.8 | ||||
Restructuring and rationalisation costs |
| 8 | (2) | 6 | 6 | 0.6 | ||||
Amortisation and impairment of acquisition intangibles |
| 83 | (19) | 64 | 64 | 7.3 | ||||
Legal and other |
| (4) | 1 | (3) | (3) | (0.3) | ||||
Interest income | - | - | - | (15) | - | |||||
Interest expense | 68 | |||||||||
Other finance costs |
| - | - | - | (1) | - | ||||
Share of results of associates | - | - | - | 1 | - | |||||
Taxation |
| - | - | - | 94 | - | ||||
Half year 2025 Non-IFRS |
| 469 | (93) | 376 | 523 | 42.9 |
| 1 | Represents a reconciliation of profit before tax to trading profit before tax. |
| 2 | Represents a reconciliation of tax to trading tax. |
| 3 | Represents a reconciliation of attributable profit to trading attributable profit. |
| 4 | Represents a reconciliation of attributable profit to trading profit. |
| 5 | Represents a reconciliation of basic earnings per ordinary share to adjusted earnings per ordinary share (EPSA). |
34
Acquisition and disposal related items
For the half year ended 27 June 2026, the charge included integration costs relating to the acquisition of Integrity Orthopaedics and prior year acquisitions.
For the half year ended 28 June 2025, the charge included costs of integration for prior year acquisitions.
Adjusted profit before tax for the half year ended 27 June 2026 and 28 June 2025 also excludes the remeasurement and discount unwind for contingent consideration.
Restructuring and rationalisation costs
For the half year ended 27 June 2026, these costs primarily relate to the efficiency and productivity elements of the 12-Point Plan and the Operations and Commercial Excellence programme. These costs primarily consist of severance, integration and dual running costs.
For the half year ended 28 June 2025, these costs primarily relate to the efficiency and productivity elements of the 12-Point Plan and the Operations and Commercial Excellence programme. These costs primarily consist of severance, integration and dual running costs, partially offset by gains on disposal of property, plant and equipment.
Adjusted profit before tax for the half year ended 27 June 2026 additionally excludes restructuring costs related to the Group’s shareholding in Bioventus.
Amortisation and impairment of acquisition intangibles
For both the half years ended 27 June 2026 and 28 June 2025, charges relate to the amortisation and impairment of intangible assets acquired in material business combinations.
Legal and other
For the half year ended 27 June 2026, charges relate to legal expenses for ongoing metal-on-metal hip claims. These expenses were offset by a release of $21m in the provision that reflects the decrease in the present value of the estimated costs to resolve all other known and anticipated metal-on-metal hip claims. Trading profit before tax additionally excludes $8m gain relating to deferred compensation arrangements, partially offset by $1m of finance costs for the unwind of discount relating to the provision for metal-on-metal hip claims.
For the half year ended 28 June 2025, charges relate to legal expenses for ongoing metal-on-metal hip claims. These expenses were offset by a release of $11m in the provision that reflects the decrease in the present value of the estimated costs to resolve all other known and anticipated metal-on-metal hip claims. Trading profit before tax additionally excludes $2m of finance costs for the unwind of discount relating to the provision for metal-on-metal hip claims.
Free cash flow
A reconciliation from net cash inflow from operating activities, the most comparable IFRS measure, to free cash flow is set out below:
27 June | 28 June | |||
2026 | 2025 | |||
| | $m | | $m |
Net cash inflow from operating activities | 450 |
| 396 | |
Capital expenditure | (190) | (139) | ||
Payment of lease liabilities | (29) | (25) | ||
Proceeds from disposal of property, plant and equipment | - | 12 | ||
Free cash flow | 231 |
| 244 |
35
Adjusted leverage ratio
The calculation of the adjusted leverage ratio is set out below. Adjusted leverage ratio is calculated using metrics similar to those used in the debt covenant calculation.
27 June | 31 December | |||
2026 | 2025 | |||
| | $m | | $m |
Net debt | 3,019 | 2,759 | ||
Attributable profit for the period | 635 | 625 | ||
Taxation | 162 | 154 | ||
Share of results of associates | (119) | (113) | ||
Other finance costs | 22 | 16 | ||
Interest expense | 136 | 140 | ||
Interest income | (23) | (28) | ||
Acquisition and disposal-related items | 44 | 32 | ||
Restructuring and rationalisation costs | 62 | 47 | ||
Amortisation and impairment of acquisition intangibles | 180 | 176 | ||
Legal and other | 155 | 162 | ||
Depreciation of property, plant and equipment | 340 | 335 | ||
Impairment and amortisation of other intangible assets and property, plant and equipment | 75 | 61 | ||
Adjusted EBITDA1 | 1,669 | 1,607 | ||
Adjusted leverage ratio1 | 1.8 | 1.7 |
| 1 | Adjusted leverage ratio for the half year 2026 has been calculated based on adjusted EBITDA for the rolling 12 months ended 27 June 2026. |
Leverage ratio (using closest equivalent IFRS measures)
The leverage ratio using closest equivalent IFRS measures is not based on measures used in the calculation of debt covenants and is not used by management internally. This measure is not used for the Company’s covenant in its private placement debt.
27 June | 31 December | |||
2026 | 2025 | |||
| | $m | | $m |
Bank overdrafts, borrowings, loans and lease liabilities | 573 | 150 | ||
Long-term borrowings and lease liabilities | 3,212 | 3,177 | ||
Total borrowings | 3,785 | 3,327 | ||
Attributable profit | 635 | 625 | ||
Leverage ratio1 |
| 6.0 | 5.3 |
1 Leverage ratio for the half year 2026 has been calculated based on attributable profit for the rolling 12 months ended 27 June 2026.
36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Smith & Nephew plc | ||
(Registrant) | ||
Date: August 14, 2026 | By: | /s/ Helen Barraclough |
Helen Barraclough | ||
Company Secretary |
37
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