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Product / Company Performance

Smith & Nephew Up +1.6% in 2Q19 on Sports Medicine -

By Mike Evers, ORTHOWORLD

 

Continued strength in sports medicine and above-market growth in knees and hips before currency headwinds brought modest growth to Smith & Nephew in 2Q19.

  • Knee sales were driven by the JOURNEY II and LEGION Revision knee systems, with the ex-US rollout of the JOURNEY II generating positive results
  • Hip sales increased in the low single digits before currency headwinds, driven by the POLAR3 Total hip system and the REDAPT revision hip
  • The company received positive outcomes data for their OXINIUM bearing surface, with a 9.88% reduction in post-acute 90-day episode of care average cost
  • Trauma saw continued demand for the EVOS system, and within the quarter the company launched the CONQUEST FN system to treat femoral neck factures
  • Sports medicine sales grew on strong U.S. sales of shoulder products, but was offset somewhat by continued softness in resection products
  • Launched NAVIO 7.0 in July, reducing the number of steps in the current workflow by 40%
  • Closed the acquisition of the Brainlab Orthopedic Joint Reconstruction business
  • Announced the acquisition of Atracsys to integrate the fusionTrack 500 optical tracking camera into Smith & Nephew’s next-generation robotics platform
  • The company is committed to investment through both R&D and acquisitions by leveraging their strong balance sheet

 

Performance by Segment

ORTHOWORLD estimates segment sales and growth on an as-reported basis, as follows ($MM):

  2Q19 2Q18 $ Chg % Chg
Joint Replacement $447.1 $443.0 $4.1 0.9%
Knees $278.0 $274.0 $4.0 1.5%
Hips $156.0 $156.0 $0.0 0.0%
Extremities $13.1 $13.0 $0.1 0.9%
Trauma $104.9 $105.0 -$0.1 -0.1%
Sports Medicine $340.0 $330.0 $10.0 3.0%
Total $892.0 $878.0 $14.0 1.6%
  1H19 1H18 $ Chg % Chg
Joint Replacement $887.1 $882.7 $4.3 0.5%
Knees $553.0 $546.0 $7.0 1.3%
Hips $308.0 $311.0 -$3.0 -1.0%
Extremities $26.1 $25.7 $0.3 1.3%
Trauma $210.9 $209.3 $1.7 0.8%
Sports Medicine $673.0 $657.0 $16.0 2.4%
Total $1,771.0 $1,749.0 $22.0 1.3%

 

Sales by Geographic Region

ORTHOWORLD estimates geographic sales and growth as follows ($MM):

Geographic Region 2Q19 2Q18 $ Chg % Chg
US $421.5 $400.1 $21.4 5.4%
Ex-US $470.5 $477.9 -$7.4 -1.6%
Total $892.0 $878.0 $14.0 1.6%

 

Net Earnings Data

Net earnings are as follows, inclusive of all Smith & Nephew revenue.

  Amt % of Sales
Sales $2,485.0  
   Cost of Sales -$648.0 26.1%
   R & D -$139.0 5.6%
   Selling and Admin -$1,279.0 51.5%
   Other -$110.0 4.4%
Net Earnings $309.0 12.4%

 

Sources: Smith & Nephew; ORTHOWORLD estimates.

Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.

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