Smith & Nephew forecasts a 4% decline in third-quarter underlying revenue

Smith & Nephew forecasts a 4% decline in third-quarter underlying revenue
Written by:
Wajeeh Khan
1st October, 09:11
  • Smith & Nephew forecasts a 4% decline in third-quarter underlying revenue.
  • The medical equipment manufacturer's underlying revenue slid 29% in Q2.
  • Smith & Nephew to buy Integra LifeSciences’ extremity orthopaedics unit.

In an announcement on Thursday, Smith & Nephew plc (LON: SN) said its underlying revenue is expected to see a 4% decline in the fiscal third quarter. Underlying revenue does not account for non-recurring and other exceptional items.

Shares of the company remained flat in premarket trading on Thursday but jumped close to 2% on market open. At £15.50 per share, Smith & Nephew is now 10% down year to date in the stock market after recovering from an even lower £11.52 per share in March when the impact of COVID-19 was at its peak. Confused about choosing a reliable stockbroker to trade online? Here’s a list of the top few to make selection easier for you.

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Smith & Nephew to buy Integra LifeSciences’ extremity orthopaedics unit

The medical equipment manufacturer said that signs of significant recovery were evident in the performance of three of its franchises in Q3. In the prior quarter (Q2), Smith & Nephew had recorded a 29% decline in underlying revenue attributed to the Coronavirus pandemic that has so far infected more than 400 thousand people in the United Kingdom and caused over 42 thousand deaths.  

Smith & Nephew said in a statement on Thursday:

“Monthly group growth rates were broadly stable through the quarter, with some seasonality and monthly variation across both franchises and regions, reflecting the continuing impact of COVID-19.”

The forecast comes only a day after the British multinational expressed plans of buying Integra LifeSciences’ extremity orthopaedics unit for £187 million in cash. According to Smith & Nephew, the acquisition will help it enter the foot and ankle segment, and bring shoulder replacement to its portfolio.

Smith & Nephew also partnered with Avail Medsystems in September

The business traded only at a minor loss and generated £70.13 million in revenue last year. The unit is likely to be slightly dilutive in 2021 and 2022 to trading profit. Smith & Nephew also partnered with Avail Medsystems in September to deliver clinical education and procedural support to customer remotely.

Following the completion of the transaction, Integra LifeSciences will get to widen its focus on surgical instrumentation, neurosurgery, and regenerative medicine products. Its agreement with Smith & Nephew also entails a £32.34 million payment that it’ll make to Consortium of Focused Orthopedists.

At the time of writing, Smith & Nephew has a market cap of £13.54 billion and a price to earnings ratio of 44.45.

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