Smith+Nephew Reports 48.2 Percent Rise in Q2 Sales

Like its industry peers, Smith+Nephew plc’s sales bounced back strongly in the second quarter.

In the three-month period ended July 3, revenue rose 48.2 percent to $1.33 billion; the total included a 140 basis points benefit from acquisitions and 650 basis points benefit from foreign exchange (primarily due to movements in the euro, renminbi, and Australian dollar). On an underlying basis revenue was up 40.3 percent year-on-year, reflecting a weak comparator as Q2 2020 saw the peak impact of COVID on the business. Compared to Q2 2019, second-quarter 2021 revenue was down 1 percent on an underlying basis.  

“Our performance in the first half of 2021 demonstrates the value of our continued investment in our portfolio, our pipeline and our people,” CEO Roland Diggelmann said. “This has put us in a strong position as COVID restrictions eased and levels of elective surgery began to return to normal, with new products and recently acquired assets performing well across the portfolio. Looking ahead, we believe we are well positioned to deliver on our guidance for this year. We also remain focused on setting ourselves up for sustainable success in the medium-term, prioritising revenue growth from our R&D pipeline, unlocking further value from acquisitions, and driving commercial and operational excellence.”
  
The second quarter comprised 64 trading days, one more than the equivalent period in 2020. The second quarter of 2019 comprised 63 trading days.
 
All three franchises delivered strong year-on-year revenue growth in the quarter, with Orthopaedics up 43.4 percent (53 percent reported), Sports Medicine & ENT up 50.9 percent (58.5 percent reported) and Advanced Wound Management up 27.2 percent (33.5 percent reported). The company’s performance reflects the easing of COVID restrictions and increased levels of elective surgery in many markets, as well as decisions made during the last 12 months to maintain investment in the sales force, new product development and launches, and focus on improving commercial execution.
 
Encouragingly, two of the company’s franchises delivered positive underlying revenue growth over 2019 levels, with Sports Medicine & ENT up 1.3 percent and Advanced Wound Management up 5.1 percent. Although Orthopaedics revenue was down 6.2 percent underlying against Q2 2019, the franchise built on its first quarter 2021 performance as restrictions on elective surgery continued to ease, albeit held back by near-term supply constraints in some product lines.
 
Geographically, revenue growth was 46.8 percent against Q2 2020 (53.9 percent reported) in Established Markets and 16.2 percent (26.4 percent reported) in Emerging Markets.
 
In Established Markets, the United States delivered 51.3 percent revenue growth (54.1 percent reported to $677 million) as elective surgery levels recovered strongly across the majority of categories. Revenue from Other Established Markets was up 40.1 percent (53.7 percent reported to $422 million), with surgery volumes improving in Europe over the first quarter, although still below pre-COVID levels, and Japan and Australia weakened as some restrictions were reimposed.
 
In Emerging Markets, performance from China was held back by distributor ordering patterns ahead of the previously highlighted new government tendering programme, and other markets including India, Middle East and Latin America continued to be impacted by COVID-related restrictions.
 
Orthopaedics
Knee Implants revenue was up 58.8 percent (65.5 percent reported to $226 million) and Hip Implants up 37.2 percent (43.6 percent reported to $161 million) as volumes improved in Established Markets, with Knee Implants performance in particular reflecting an especially weak Q2 2020 comparator. Hip Implants included good performances from the REDAPT Revision Hip System and OR3O Dual Mobility Hip System. The company remains on track to launch its cementless knee implant system later this year following required regulatory clearances/approvals. 
 
Other Reconstruction delivered revenue growth of 64 percent (72.1 percent reported to $21 million) driven by U.S. sales of a new handheld robotics platform the CORI Surgical System. The company also announced a new study showing that computer-guided technology for total hip arthroplasty, such as Smith+Nephew’s RI.HIP NAVIGATION, significantly reduces the risk of revision and increases patient satisfaction when using company-made implants.
 
In Trauma & Extremities, revenue was up 28.2 percent (44.3 percent reported to $149 million, including 11.4 percent benefit from the Extremity Orthopaedics acquisition). This included strong performances from the EVOS Plating System as well as from the TAYLOR SPATIAL FRAME External Fixator as elective limb deformity case volumes started to recover.
 
Sports Medicine & ENT
Sports Medicine Joint Repair delivered revenue growth of 55.9 percent (63.6 percent reported to $211 million) in the quarter. Within this the company delivered a good performance across both meniscal and shoulder repair, driven by technologies developed by Smith+Nephew and acquired assets. In July Smith+Nephew announced the launch of the FAST-FIX FLEX Meniscal Repair System extending its leading meniscal repair portfolio.
 
Arthroscopic Enabling Technologies revenue was up 45.5 percent (53 percent reported to $147 million), with good growth from the COBLATION technologies and high definition video portfolio. Smith+Nephew launched the DOUBLEFLO Inflow/Outflow Pump and 4KO (Optimized) Arthroscopes and Laparoscopes in the quarter.
 
ENT revenue was up 45.2 percent (51.8 percent reported to $33 million), although overall padiatric procedures remain below historical levels with tonsillectomies and ear tubes showing slow recovery. As a result the introduction of Tula, a new system for in-office delivery of ear tubes to treat recurrent or persistent ear infections, continued to be impacted.
 
Advanced Wound Management
Advanced Wound Care revenue was up 20.6 percent (29.4 percent reported to $186 million) driven by good growth from the ALLEVYN Life range of foam dressings. All regions contributed to the robust performance, including a strong quarter in the United States.
 
Advanced Wound Bioactives revenue was up 29.9 percent (30.6 percent reported to $132 million) including growth from the enzymatic debrider SANTYL and a strong quarter from the acquired skin substitute products GRAFIX and STRAVIX.
 
Advanced Wound Devices revenue was up 42.8 percent (52.6 percent reported to $69 million), reflecting strong demand for the negative pressure wound therapy portfolio in the United States and Europe, supported by recovering levels of elective surgery.