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ORTHOWORLD estimates Smith & Nephew (SNN) 3Q17 orthopaedic revenue of US $793.2MM, +3.3% from 3Q16, and YTD revenue of $2,454.1MM, +2.4% vs. the prior year.
ORTHOWORLD estimates for segment growth follow.
| 3Q17 | 3Q16 | $ Change | % Change | |
| Joint Reconstruction | $389.2 | $372.3 | $17.0 | 4.6% |
| Hip | $140.0 | $138.0 | $2.0 | 1.4% |
| Knee | $236.2 | $220.9 | $15.3 | 6.9% |
| Extremities | $13.1 | $13.4 | -$0.3 | -2.5% |
| Trauma | $106.9 | $108.6 | -$1.7 | -1.5% |
| Arthroscopy/Soft Tissue | $297.0 | $287.0 | $10.0 | 3.5% |
| Total | $793.2 | $767.9 | $25.3 | 3.3% |
| 9Mo17 | 9Mo16 | $ Change | % Change | |
| Joint Reconstruction | $1,224.1 | $1,188.7 | $35.4 | 3.0% |
| Hip | $442.0 | $444.0 | -$2.0 | -0.5% |
| Knee | $742.1 | $705.7 | $36.4 | 5.2% |
| Extremities | $40.0 | $39.1 | $1.0 | 2.4% |
| Trauma | $327.0 | $316.0 | $11.0 | 3.5% |
| Arthroscopy/Soft Tissue | $903.0 | $891.0 | $12.0 | 1.3% |
| Total | $2,454.1 | $2,395.7 | $58.4 | 2.4% |
Our revenue reporting method seeks to put all market segments on equal footing. Thus, when a company reports a segment as “Trauma & Extremities,” we apply assumptions and estimates to separate trauma products from extremity joint reconstruction products. To arrive at SNN’s arthroscopy/soft tissue repair number, we add Sports Medicine Joint Repair and Arthroscopic Enabling Technologies.
I mention this because this combination hides SNN’s 3Q17 +9% YoY growth in Sports Medicine Joint Repair, reflecting strong customer demand for shoulder repair products—particularly ex-U.S. A -3% decline in Arthroscopic Enabling Technologies offset that high-single-digit growth, though rollouts of LENS visualization and WEREWOLF COBLATION continue to balance out softness in resection and legacy RF technologies.
SNN’s 4Q acquisition of Rotation Medical will complement its SportsMed franchise, bringing novel tissue regeneration for the rotator cuff. (Leadership noted that Rotation Medical posted $11MM in revenue for the first 9 months of 2017.) Rollout will first focus on the U.S. Further, within 3Q, SNN announced its partnership with Imperial College London that will investigate surgical techniques to treat knee soft tissue injury, taking into account ligament function and biomechanics.
In Recon, Knee growth more than doubled sequentially, supported by VERILAST, JOUNREY II and ANTHEM (the latter specifically developed for emerging markets), plus enhancements to the LEGION revision knee. After three sequential quarters of declines, hips returned to growth, driven by REDAPT revision and POLARSTEM cementless stems.
Hurricane impact was ~$5MM in the quarter. SNN did not report an impact from knee implant pricing initiatives in India for 3Q, due to present inventory levels in the region, but expects to see an affect in the future.
Just after the quarter’s close came the announcement that CEO Olivier Bohuon will retire in 2018, as well as reports that U.S. activist investor, Elliott Management, obtained a greater than 2% stake in SNN. Thus, as one of the company’s top seven shareholders, the investor could be pushing SNN to divest portions of its business to become a more attractive acquisition target. However, following the trading update, sources quoted Mr. Bohuon as saying, “We are not thinking about asset disposals at all at this stage, but improving the complexity of the manufacturing footprint of the company.”
Source: Smith & Nephew plc; ORTHOWORLD Inc. estimates
ORTHOWORLD estimates Smith & Nephew (SNN) 3Q17 orthopaedic revenue of US $793.2MM, +3.3% from 3Q16, and YTD revenue of $2,454.1MM, +2.4% vs. the prior year.
ORTHOWORLD estimates for segment growth follow.
Q17
Q16
$ Change
% Change
...
ORTHOWORLD estimates Smith & Nephew (SNN) 3Q17 orthopaedic revenue of US $793.2MM, +3.3% from 3Q16, and YTD revenue of $2,454.1MM, +2.4% vs. the prior year.
ORTHOWORLD estimates for segment growth follow.
| 3Q17 | 3Q16 | $ Change | % Change | |
| Joint Reconstruction | $389.2 | $372.3 | $17.0 | 4.6% |
| Hip | $140.0 | $138.0 | $2.0 | 1.4% |
| Knee | $236.2 | $220.9 | $15.3 | 6.9% |
| Extremities | $13.1 | $13.4 | -$0.3 | -2.5% |
| Trauma | $106.9 | $108.6 | -$1.7 | -1.5% |
| Arthroscopy/Soft Tissue | $297.0 | $287.0 | $10.0 | 3.5% |
| Total | $793.2 | $767.9 | $25.3 | 3.3% |
| 9Mo17 | 9Mo16 | $ Change | % Change | |
| Joint Reconstruction | $1,224.1 | $1,188.7 | $35.4 | 3.0% |
| Hip | $442.0 | $444.0 | -$2.0 | -0.5% |
| Knee | $742.1 | $705.7 | $36.4 | 5.2% |
| Extremities | $40.0 | $39.1 | $1.0 | 2.4% |
| Trauma | $327.0 | $316.0 | $11.0 | 3.5% |
| Arthroscopy/Soft Tissue | $903.0 | $891.0 | $12.0 | 1.3% |
| Total | $2,454.1 | $2,395.7 | $58.4 | 2.4% |
Our revenue reporting method seeks to put all market segments on equal footing. Thus, when a company reports a segment as “Trauma & Extremities,” we apply assumptions and estimates to separate trauma products from extremity joint reconstruction products. To arrive at SNN’s arthroscopy/soft tissue repair number, we add Sports Medicine Joint Repair and Arthroscopic Enabling Technologies.
I mention this because this combination hides SNN’s 3Q17 +9% YoY growth in Sports Medicine Joint Repair, reflecting strong customer demand for shoulder repair products—particularly ex-U.S. A -3% decline in Arthroscopic Enabling Technologies offset that high-single-digit growth, though rollouts of LENS visualization and WEREWOLF COBLATION continue to balance out softness in resection and legacy RF technologies.
SNN’s 4Q acquisition of Rotation Medical will complement its SportsMed franchise, bringing novel tissue regeneration for the rotator cuff. (Leadership noted that Rotation Medical posted $11MM in revenue for the first 9 months of 2017.) Rollout will first focus on the U.S. Further, within 3Q, SNN announced its partnership with Imperial College London that will investigate surgical techniques to treat knee soft tissue injury, taking into account ligament function and biomechanics.
In Recon, Knee growth more than doubled sequentially, supported by VERILAST, JOUNREY II and ANTHEM (the latter specifically developed for emerging markets), plus enhancements to the LEGION revision knee. After three sequential quarters of declines, hips returned to growth, driven by REDAPT revision and POLARSTEM cementless stems.
Hurricane impact was ~$5MM in the quarter. SNN did not report an impact from knee implant pricing initiatives in India for 3Q, due to present inventory levels in the region, but expects to see an affect in the future.
Just after the quarter’s close came the announcement that CEO Olivier Bohuon will retire in 2018, as well as reports that U.S. activist investor, Elliott Management, obtained a greater than 2% stake in SNN. Thus, as one of the company’s top seven shareholders, the investor could be pushing SNN to divest portions of its business to become a more attractive acquisition target. However, following the trading update, sources quoted Mr. Bohuon as saying, “We are not thinking about asset disposals at all at this stage, but improving the complexity of the manufacturing footprint of the company.”
Source: Smith & Nephew plc; ORTHOWORLD Inc. estimates
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JV
Julie Vetalice is ORTHOWORLD's Editorial Assistant. She has covered the orthopedic industry for over 20 years, having joined the company in 1999.
