Smith+Nephew Unveils ‘RISE’ Strategy, Sets Ambitious 2028 Financial Targets

Smith+Nephew (LSE: SN, NYSE: SNN) has announced its new strategic plan, RISE, aimed at significantly accelerating financial and operational performance, and driving shareholder value.

The company projects substantial growth in revenue, profit, free cash flow, and Return on Invested Capital (ROIC) by 2028.

The medical technology firm updated its 2025 full-year guidance, anticipating a trading profit margin of at least 19.5% and upgrading expected free cash flow to around $800 million.

Further portfolio rationalization opportunities have been identified, leading to an estimated $200 million non-cash inventory provision in 2025. This move is intended to reduce complexity, improve efficiency, and lower capital requirements.

Smith+Nephew's 2028 financial targets include a 6-7% underlying revenue compound annual growth rate (CAGR), significantly exceeding the company’s historical average. A 9-10% trading profit CAGR is also targeted, driven by operating leverage and efficiencies. The company aims to generate more than $1 billion in free cash flow in 2028 and achieve a 12-13% post-tax ROIC, substantially above its Weighted Average Cost of Capital (WACC).

The RISE strategy builds upon the foundation laid by the 12-Point Plan, which began in 2022. The four key elements of RISE are: reaching more patients by expanding the adoption of the company's portfolio, innovating to enhance the standard of care through new product launches, scaling through strategic capital allocation, and executing efficiently to improve margins and returns.

For the full year 2025, Smith+Nephew anticipates underlying revenue growth of around 5% (approximately 5.8% based on exchange rates as of December 4, 2025).

The trading profit margin is expected to be at least 19.5%, within the previously guided range of 19.0% to 20.0%. Free cash flow guidance has been raised to around $800 million, driven by improved working capital management and operational efficiency.

Post-tax ROIC is projected to exceed 9% for the year, excluding the impact of portfolio rationalization, surpassing the company's WACC.

As part of the portfolio rationalization efforts, Smith+Nephew expects to reduce gross inventory by approximately $500 million. A non-cash provision of around $200 million will be recorded in the 2025 accounts to facilitate this reduction. This initiative aims to simplify the product range, reduce capital requirements, and allow the company to focus on its latest technology products.

The company also provided provisional guidance for the full year 2026, projecting underlying revenue growth of around 6%. Profit growth is expected to outpace revenue growth, driven by operating leverage. Free cash flow is anticipated to remain around $800 million, and post-tax ROIC is expected to significantly increase to over 10%, well above the company's WACC.

Deepak Nath, Chief Executive Officer, commented, “Smith+Nephew's new RISE strategy represents an ambitious but achievable new chapter. Our actions under the 12-Point Plan have created a fundamentally stronger business than three years ago and a springboard for future growth. RISE is our roadmap to reach more patients, deliver new categories of innovation, and further accelerate our financial performance.”