Good morning. Welcome to the Smith & Nephew Q4 and Full Year '25 Results Presentation. I'm Deepak Nath, I'm the Chief Executive Officer, and joining me is John Rogers, our CFO. I'm pleased to report a strong finish to 2025, delivering results at the high end of our guidance on revenue growth, margin and free cash flow. For the full year, underlying revenue growth of 5.3% and importantly, all three of our business units grew by over 5%. Sports Medicine & ENT and in particular, Joint Repair within that had another strong year. And in Orthopaedics, we saw meaningful progress in our U.S. recon business, particularly Hips and in Trauma. When there's more work to do in U.S. Knees, our OUS business, Knees business has remained strong throughout the year. So we had a record year of CORI placements globally and saw continued growth in adoption and utilization of our robot. Advanced Wound Management also had a good performance in 2025, driven by growth in AWD and Bioactives. Innovation remains central to our strategy with over 60% of our growth in 2025 came from products we've launched in the last 5 years. And innovations in all three business units delivered double-digit growth for the year, including Q-FIX, REGENETEN, FASTSEAL, LEGION CONCELOC, CATALYSTEM, EVOS, AETOS, PICO, and LEAF. On profitability, we saw 160 basis points of margin expansion, driven by our enterprise-wide cost savings program and the benefits of all the work we've done in our Orthopedics business dropping through to our P&L. This includes optimizing our manufacturing network, improving productivity, introducing our new sales and operation planning processes and portfolio rationalization. We expect to see further benefits from these initiatives, combined with our Ortho360 operating model and continued revenue growth that will drive us to more than 20% margin in…

Thank you, Deepak. Good morning, everyone. Revenue for Q4 was $1.7 billion, representing 6.2% underlying growth and 8.3% reported, including a 210 bps tailwind from foreign exchange. We had 1 extra trading day year-on-year. And on an average daily sales basis, growth was 4.5%. Growth was broad-based across business units and regions. The U.S. grew 5.6%; other established markets, 7.2%; and emerging markets, 6.4%. Excluding China, underlying growth was 7.2%. I'll now move on to the details by business unit, starting with Orthopaedics, which grew 7.9% on an underlying basis and delivered the strongest quarterly growth for more than 2 years. One extra trading day helped, but even if you normalize for that by looking at average daily sales, growth was still strong and accelerated nicely ahead of Q3. In the U.S., we saw a third consecutive quarter of above-market growth in Hips, acceleration in Knee growth and continued strong Trauma & Extremities growth. Hip performance continues to be driven by the uptake of CATALYSTEM, and we are seeing good competitive conversions, and we plan to increase our CATALYSTEM set deployments to support growth in 2026. U.S. Knee growth improved during the quarter following the launch of LEGION MS, which enables us to benefit from the market shift to media stabilized inserts. We are pleased with our competitive wins with the product and continue to receive positive feedback from existing and new users. In OUS, Knees, Hips, Trauma & Extremities all delivered strong performance, except for some localized weakness in Hips in certain distributor-led markets. Following the launch of CATALYSTEM in Japan, we see growth improving in our OUS Hips over the coming quarters. In Trauma & Extremities, we continue to see good growth from our TRIGEN MAX Tibia, EVOS Plating System, and AETOS Shoulder. Other Recon grew 40.8%. We're…

Thank you, John. So the launch of RISE, our new strategy, which I laid out for you in the Capital Market Day in December, our ambition is to accelerate growth and improve returns. It's been great to see how well this new strategy has resonated internally with this focus on reaching more patients, driving innovation, scaling through investment and executing more efficiently. We're building on the behaviors embedded through the 12-Point Plan with our way to win. Our program to be better every day through a continuous improvement mindset and behaviors. So let me now highlight the key drivers shaping our performance in the first year of RISE, and I'll start here with Sports Medicine. First, the China Joint Repair VBP headwinds have now fully annualized, which means our underlying Joint Repair growth will improve this year. And importantly, we expect the upcoming AET and ENT VBP processes to be significantly less material given the relative size of those businesses. Second, we're continuing to build on the strength of our Shoulder portfolio with our acquisition of Integrity Orthopaedics, and we look forward to driving adoption of TENDON SEAM across our customer base. So I'll come on to this in a moment. Third, we're awaiting FDA approval of TESSA, our first-in-industry spatial surgery arthroscopic platform. This represents a major step forward in how surgeons visualize and execute procedures. And finally, we're also seeing ongoing growth in REGENETEN. The recent AAOS guidelines support for the use of Bioinductive Implants in rotator cuff repairs is reinforcing clinical confidence and expanding usage. I'd like to spend a few minutes on our acquisition of Integrity Orthopaedics, an asset we believe, has the potential to become a key growth driver for our sports medicine portfolio. We announced a deal earlier this year for a total consideration…

Jack Reynolds-Clark from RBC. The first is on revenue guidance in 2026. Could you kind of break down what your expectations are for market growth? How much launches contribute to that growth guidance? And what contingency is baked in to that guide? And then could you just run through the phasing through the quarters for revenue guide? And then could you remind us of your expectations for timing of the CORI shoulder -- sorry, shoulder ability in on CORI?

So with '26 and actually right through RISE, one of the benefits of the program we have is the multiple sources of growth. So we're not dependent on any one business unit or any one product to carry us through. And to remind you, we've exited 2025 meaningfully above our historical levels of low single digits. So we've now navigated to above 5%. And when you take the impact of China VBP out of it, we were actually above 7%. So what we're driving to is 6% to 7% growth for the next 3 years. Within that, '26 will be at around 6%, which will be above our market. And each of our business units will contribute to that. Innovation will be -- continue to be a key part of it. As I said, in '25, we were about 60% of our growth comes from new products. To remind you, in '24, we were above 50%. And in '23, we were still above 50%, around about 60%. So we've been consistently above the 50% mark in terms of new products driving growth. In '26, as I indicated, we'll have 16 new products. I mean, you can measure that in different ways, but we expect that new products will continue to deliver above 50% growth into 2026. So '26, around 6% growth ahead of market. We'll see growth coming from each one of our business units, and we'll have innovation that continues to fuel our growth. So that's the overall kind of revenue story. And in terms of our -- anything to add, John?

I can give a little bit of shape around the phasing.

Yes, phasing is great.

So as we said in the presentation, sort of weighted towards the second half. So Q1 will be softer. Obviously, it's 1 fewer trading day in Q1. We think U.S. Knees will be a little bit soft in Q1. We think that will build into Q2. So we're expecting the first half to outturn somewhere between, say, 4.5% to 5% top line growth. Q3 and Q4 will be stronger as we obviously introduced LANDMARK and obviously, ALLEVYN COMPLETE CARE grows through the year. So Q3 and Q4 will be stronger. Q4 also has one more trading day. So that's a little bit of a boost. And so we'd expect the second half to deliver growth of somewhere between 7.5% to 8%. You combine that 4.5% to 5% in the first half with the 7.5% to 8% in the second half, that gets you to or around 6% for the full year. That gives you a little bit of shape on the top line. And then I'll give you -- you didn't ask for it, but I'll give it to you any, because somebody will probably ask, in terms of shaping on the bottom line, again, we've got that 8% growth in our trading profit for the full year. Again, it's naturally going to be swayed to the second half given the revenue bias towards the second half. So I'd expect profit growth in the first half to be of the order of 5.5% to 6%, something of that nature, profit growth in the second half to be around 9% to 10%. The two combined gets you to your around 8%. So I'm not going to break it out by quarter, but hopefully, that gives you a little bit of a shape. So effectively building through the year, partly driven by the fact we've got one fewer trading day in Q1 and one more trading day in Q4.

And your question on CORI Shoulder. The CORIOGRAPH, which is our planning platform launched, I think, middle of last year, the key unlock is, of course, execution, and we're starting the year now that's launched. So we've got a whole AETOS portfolio, stemless -- short stem and CORI Shoulder now planning and execution. So the ability to do both reverse and anatomic and the ability to do both adenoid and humoral and with CORI to do preoperative planning, intraoperative and postoperative kind of insight. So not only a complete solution, a highly differentiated solution. Veronika next, David?

Veronika Dubajova from Citi. Two questions from me, please. The first one, I just want to go back to joint repair. Obviously, Deepak, you said that the China headwind has annualized out now, but we've had it basically for eight quarters. So I just want to confirm what's happening in Joint Repair China specifically and sort of what gives you the confidence this year that it's not going to be a drag to the overall Joint Repair number to the extent that we've seen. Obviously, the China improvement is a big part of the guide for the year. So if you can talk about that, please? And then just kind of a big picture question around the margin and organic and inorganic development. Obviously, very exciting to see organic margin improvement this year, but it is being eaten away by Integra. (sic) [ Integrity ] So I don't know if you can maybe talk a little bit more broadly how you think about capital allocation and M&A sort of having an impact on the bottom line growth? And to what extent that's sort of a favorable trade-off that you're willing to take? And maybe if there is anything else in the pipeline beyond Integra that we should be kind of looking out for this year?

Integrity.

Integrity -- Sorry, Integrity. I'm so sorry. Clearly, my second cup of coffee hasn't kicked in.

Right. So let me talk about Joint Repair. So as we mentioned, Joint Repair has annualized at this point. So going forward, we'll have a clean kind of comp or rather Joint Repair growth alloyed by China VBP. And that is a key part of our growth story, as you highlighted. And as we've called out a number of times, when you actually dissect our sports growth, it's been well balanced across geographies. You take China out of it, and we've actually grown high single-digit growth, not only across markets, but actually across categories, which is one of the key features of our Sports Medicine, which is a balanced portfolio selling that we've undertaken. So I feel very, very good about commercializing our portfolio and now that the impact of China VBP and Joint Repair is going away. What is left, though, is AET. Right? The AET part started last year. I think it will be Q3, right, John, something like that, Q3 or early into Q4 by the time we fully lap AET. But the impact to the group is relatively small at this point, right? And then the other part is we report ENT and Sports together. It's ENT that's not going through this. And it started kind of towards late last year. We'll fully annualize that towards the end of this year. But again, both of those while important to those business segments at a group level will now be a relatively small portion of the portfolio. So overall, like I said, I feel very, very good about the continued momentum that -- the momentum we've built and capitalizing on that momentum as we go into 2026. In terms of margin, as we noted, we've driven 240 bps of margin improvement over the life of the 12-Point…

And maybe if I can just -- if I will just give you a little bit more on China as well. There's obviously a topic that comes up a lot in conversation. Just to sort of set the scene, in 2024 in sort of Greater China, I think we said this number before, we were doing around $210 million, $220 million or so of sales. In 2025, we saw broadly a sort of a reduction of 1/3 as a consequence of all the impacts that we talked about. So roughly getting to about $160 million. Actually, when we look at 2026, it's actually a very similar number to 2025. So we're really not expecting to see much relative movement in our Greater China sales, '26 on '25. Now actually, you need to unpack that a little bit because it's a combination of a couple of factors taking place, one of which is we're actually expecting to see Sports recover a little bit. Now the reason why that's the case is because we've done a really successful job of managing channel inventory in 2025. We've taken inventory where we've had to, we've taken inventory out of the channel. So we are confident, and we can start to come through in Q4 of last year, which is the reason that gives us confidence. So we expect to see a little bit of a bounce in our Sports business in China. Of course, for the overall number to be flat, that means at least negative somewhere. And of course, the negative exists in the AET and in the ENT that we haven't really seen the impact of that in '25. It's going to really come through in '26. That's the negative. But overall, those two play a draw to be neutral on the…

David.

David Adlington, JPMorgan. You've seen two or three of your competitors in skin substitutes, downgrade their -- downgrade the expectations in the last few weeks that you've maintained yours that you had before Christmas. Just wondered if you could talk about what you're seeing in the market and your assumptions around price and volumes for this year? And then secondly, one more for John. The inventory write-down, $159 million, is that all coming from the portfolio rationalization? Or is there anything more underlying in there? And is that now complete? Or should we expect more changes coming through?

Yes. So in terms of skin subs, we are seeing the channel adapt to the changes that are coming. So just to remind everyone, it's really in the physician office and the mobile channels where we're seeing most of the impact. And within that mobile is more impacted than physician office or the hospital outpatient segment, right? So -- but in the Surgical segment, we're continuing to see growth. So in terms of parsing what different players have said, it really has to do with the mix of our business is how much of our business is in each of those channels. The other factor within that is the type of products you have within each segment, right? You've got products that you can segment both from a customer standpoint and from a price standpoint. So put all these pieces together, what we're seeing is definitely impact in terms of price that has hit. To remind everyone, typically within the physician office segment and mobile segment, the payment terms or reimbursement levels or cycles are between 40 and 45 -- 30 and 45 days. So we're now heading into a period with the first tranche of reimbursements have gone in and physician offices are starting to see just what comes through from CMS around that. So there's still a fair amount of uncertainty in the channel in terms of not only utilization, but how these products get reimbursed and the mechanism under which the CMS is actually reimbursing those products. So what we've said is the guidance we've provided for our business in terms of how we're impacted hasn't fundamentally changed from last year. But longer term, David, I'm very, very bullish on the segment. Once we get through this period of adaptation, we believe that the clinical unmet need is there. There will be a drive towards using products that have clinical evidence -- and as you know, we've invested considerably over the years to develop not only products, but clinical evidence to drive the appropriate use of those products. And that combined with the growing unmet need based on demographics, right, makes us an attractive channel. And inventory, do you want to take that?

Well, I was going to say just maybe give a little bit of color around the -- how do you get to our 20% to 40% impact on the bottom line. I mean we've said before that our skin subs business is around a couple of hundred million. If you look at the -- we think that from a pricing perspective, we think for our portfolio, we'll see a sort of price reduction of around sort of 20%, 25% or so. Now that's a lot lower than the overall industry will see, because we haven't necessarily participated in quite the same high price points as the inventory average. So we will expect prices to come down a little bit. At the same time, we would expect our volumes to be broadly neutral, maybe even a little bit positive as we grab a little bit more share from the channel. So overall, a sort of 15% to 20% reduction in our revenues. If you work out that on the 200 and drop that through as a margin, that gives you your 20% to 40% impact on our bottom line that we put in our margin bridge. So there's lots of assumptions that build into that, lots of uncertainty around that, but that's just the basis on which we give the guidance. And we haven't seen anything in the market to date that would want to take that guidance and that's a broad -- a reasonably broad range of about $20 million to $40 million. In terms of the inventory and the portfolio rationalization, that we see this as being really positive thing. This is -- we've taken this opportunity to accelerate the rationalization of our product portfolio. It means circa 2/3 reduction in our Ortho SKU count, a circa 10% reduction in our Sports SKU count. And these only represent in '26, probably about 7% of our sales. So it's a huge number of SKUs representing a very small percentage of our sales, which we will expect to -- over the next 2, 3 years to roll off. And this is an opportunity for us to simplify the portfolio, offer our customers our latest products. And it's very much building on the work. There was a portfolio rationalization work that was kicked off at the very beginning of the 12-Point Plan. This is the second wave of that a little bit more focused on Trauma. The initial plan was more focused on Knees and Hips. But we see this as being a really positive thing. And we don't -- by the way, we don't anticipate any further changes. And for the avoidance of doubt, the $159 million charge is just the portfolio rationalization. We haven't hidden anything else in there. It's simply what it is, but it's a very -- we think it's a very positive thing for the business.

Just to reinforce something here, which is we've called out Ortho360 a couple of times today. We've mentioned that actually in our Capital Market Day. It's really important to emphasize how we're running this business better than we have historically. So balancing capital deployment, growth and margin, so we achieve a better balance across those things that we've historically done, is an important part of how we operate this business. It's not chasing growth at all costs, but rather drive the right kind of balance. So they've historically been not as disciplined around deploying capital in this business, which has led to some of the challenges around ROIC and inventory that we've seen. So it's really important to emphasize where we're operating this business better in a more disciplined rate than we historically ever have done. Question here, the last question in the room and then we go to questions. We go to the phone.

Richard Felton from Goldman Sachs. Two questions, please, both on Shoulders. I think it's 13 or 14 consecutive quarters where REGENETEN has been called out as a strong contributor to growth. Could you help us with roughly how much that product contributes to your Sports Medicine business today? And then on the AAOS guidance, what does that change in practice? Is it because of that guidance, that shifts reimbursement conversations? Does that guidance have a material impact on surgeon behavior? Anything you can help us with to frame how material that shift in guidance is to be really helpful. And the second one also on Shoulders. Deepak, I think you referenced REGENETEN Integrity addresses a TAM of $1.2 billion. How do you get to that $1.2 billion? Is that all rotated cuffs? Is it a subset of rotated cuffs done with Bioinductive Implants today? Any parameters to provide color around that and how fast it's growing?

So REGENETEN, I think -- we haven't called out REGENETEN, have we previously? Sorry, I need to confirm what you've actually...

I think we've given some rough guidance, I think you can give a -- at least range.

So think multiple hundred million, okay. So I've got to be careful on what I say. So it's a key driver of growth. As you rightly note, we've -- it's been a fantastic story for us. And as we've said, we took a relatively small -- when it was launched when we acquired it, kind of like Integrity, right, early stages. And what we've done is put it into our channel, our commercial sales organization. And we've done more, right? We've invested in developing clinical evidence. We've, in previous earnings calls, called out the wonderful data that have come out right, at different time points, 1 year initially and then 2-year time points in terms of statistically significant reduction in retail rates that we've seen with REGENETEN, right? So that's been a great story. So it's not only the commercial channel strength, but also the evidence investment that leads to the kind of utilization that we've seen. What the guidance does is actually help surgeons determine the appropriate use. So there's different levels of clinical evidence, right? So this doesn't -- over time, we'll have this be reimbursed, right? But today, it's part of the DRG. There's not a specific reimbursement for REGENETEN. What it helps surgeons do is, take all the clinical data they've seen in papers. Now that the society has now come up with guidance and appropriate use of it, it's a way to further increase adoption, is the way to think about it. The $1.2 billion market is about $875 million of it is mechanical, biomechanical repair, right? It's the sutures and anchors and everything else that goes into repairing rotator cuff. And that's all rotator cuff, Richard. And the remaining bit of it is biologics. And within that, we are a large part of that.…

[Operator Instructions] Our first question comes from Graham Doyle from UBS.

Just one on skin subs and then on LANDMARK. On skin subs, the flat volumes assumption, it's quite a benign assumption versus what we're seeing in the market over the past sort of 1.5 months. How would you expect that to sort of flow in H1? Would you expect maybe down 50 plus 50 in H2? And then just on LANDMARK Knee, could you just talk us through how you imagine the ramp would be? So is there -- are there things you need to do on inventory or getting people ready for that launch? And do the old factors sort of slow down to launch? Do you then ramp up quite quickly? Just to get a sense when we're modeling that, that would be really helpful.

Sure thing. Let me start off with skin substance, and John, maybe you can take the phasing of it, right? So in terms of flat volume, and John kind of alluded to it in his remarks earlier, fundamentally, when you double-click, it has to do with parts of our portfolio we're actually seeing growth. And OASIS, for example, in our portfolio, we're seeing very significant uptick in volumes and usage and utilization of that product and price impacts that impact one or the other part of the portfolio. So in terms of volumes, it's both channels, as I said earlier, right, where the volumes are quite stable in the surgical channel. And then when you look at hospital outpatient, physician office and in mobile, the greatest impact actually is in mobile and physician office, right? And in terms of our mix of business, what we're seeing is gains in one area offsetting declines in another, right, as the channel depth. So the net impact of which will be a draw. As I said, it's still early going yet. So in terms of how the channel is responding to it, we're now in the first early stages of physician offices billing right, from the utilization they've had in the early part of the year and now in a position to see how CMS is responding in terms of reimbursement. And that will help inform how the balance of the half goes and how H2 is kind of set up. Anything you want to color to that, John?

Not really. I mean, Graham, I actually thought we were being quite detailed in the guidance that we were giving for the year as a whole. So in terms of the volume impact and the pricing impact, I don't think I want to get drawn into specifically quarter-by-quarter other than to say, to Deepak's point, it's still working its way through as we speak. I'd expect half 1 to be a little bit softer, half 2 to be a little bit stronger as the market starts to normalize. But I don't think we're going to get drawn on very specific guidance quarter-by-quarter on skin subs.

Okay. Good. In terms of LANDMARK, this will come in stages. So in the second half, I think end of Q3, Q4, we'll launch LANDMARK first on cementless and then we'll bring forward cemented in the first half of 2027. The focus there is one platform that combines the best of essentially our existing platforms in terms of degree of personalization, ease of implantation, and preserving some of the benefits of kinematics and the other benefits that we have within our existing portfolio. The other important kind of design considerations around LANDMARK is trade efficiency. We've brought this thinking in CATALYSTEM and with AETOS, because what we're looking ahead to is ASC, where space matters and trade efficiency is super important. So we've built that thinking now into LANDMARK, not only is it about the designs of the implant itself but also making the procedure more efficient. More efficient, not only in terms of ease of implantation, but also the mechanics of getting to a case, less capital intensive, right? So those are the features of LANDMARK. And it also is comes in cementless and cemented and with the medial stabilized kind of paradigm, which is where the market is going. And keep in mind today, we've got cementless on the LEGION platform, and we don't have this on the JOURNEY platform. So LANDMARK allows us to fill kind of the gap that we've got for JOURNEY today, right? And so the way we expect to launch as you know, this will be a build over time. So we'll in the back half of the year with the cementless launch will have kind of the initial kind of foray into this. And then, as we go into the first half of '27, we'll have both cemented and cementless. It will be the same instruments for cemented and cementless, right? So again, keeping that trade efficiency paradigm front and center in what we do. So hopefully, that addresses your question, Graham.

And just to -- sorry, just to build on a comment that we also made in the presentation that we're also mindful -- we're very mindful as to how we're deploying capital on our existing platforms in the buildup to the launch of LANDMARK in the second half. Because we want to make sure that we maintain our capital efficiency. We've continued to build over the last couple of years. And for that reason, we do expect the first half to be a little bit softer, therefore, on U.S. Knees as we grow. So Q1 will be a little bit softer, because of the fewer trading day. We'll expect to see that grow a little bit in Q2, but then it's really Q3 and Q4 upon the launch of LANDMARK where we expect to see U.S. Knees grow in line with the market by the end of the year. So that's the sort of trajectory we're expecting U.S. Knees.

And this type of capital discipline, again, as part of Ortho360, we've actually -- 360 we've displayed in how we've launched CATALYSTEM. It's very different to how we've done it. You've seen all the growth numbers, right? We are above market now. Again, in Q4, we exceeded the market in U.S. Hips, right? So as important as that growth is how we've achieved that is, in many ways, even more important because we brought a high level of capital discipline in terms of how we approach that launch the market. And you should expect the same with LANDMARK. It's a bit more complicated because we've got to straddle -- we've got multiple elements of our portfolio and needs that we have to navigate through, but we will strike a better balance in terms of growth, capital deployment and margin. It's not just growth for the sake of growth, right? Super important to keep in mind. So we'll take one more question online, and then we'll turn come back to the room if there aren't any.

Our next question comes from Kane Slutzkin from Deutsche Bank. ahead.

Just on CORI, could you just talk a little bit on the competition you're seeing in the sort of smaller handheld space. We obviously recently had Mako announced a limited market release of the handheld. So just wondering what you're seeing there are presumably they're going to be targeting the same sort of ASC space. And then just on J&J spinning out of its Ortho business. I assume, are we expecting sort of a bit of disruption in the market over the next sort of year or so due to that split out? And if so, what are the sort of challenges and opportunity you're seeing there? And just finally, I did notice there was a shortage of bone cement in the U.K. I mean, I appreciate U.K. is probably small in your life nowadays, do you have any comments around that?

Yes. So first, CORI, it's important to keep in mind that when we talk about CORI ASCs and we said something like excess of 40% of our placements in '25 have been into ASC, it's important to remember that CORI isn't just for the ASC. And while it is a handheld robot, fundamentally, it's a robot across a whole range of settings, hospitals, ASCs. We've got quite a bit of focus on teaching institutions, and we've got great traction over the last couple of years in terms of the adoption of CORI and teaching institutions. So it's important to keep in mind that CORI isn't just a handheld. It's a robotic system that happens to be handheld, right? And it has resonance across a range of settings. So therefore, in terms of competition, we feel very, very good about what CORI is, the features and benefits that it's got. It's one platform that can do Knees, Hips and Shoulders. And the type of kind of features and benefits we've brought on board over the last 3 years is absolutely impressive in terms of how quickly we've done it. So that's the short answer to this. It's a robotic platform that happens to be handheld rather than us competing in one segment. In terms of J&J, look, we've got a very good set of priorities we're executing towards. We feel very good about how competitive we've been in Hips and how we've gone from basically lagging the market to when we've got a product, we've launched. We've launched it in a very disciplined way. And now you see the benefits of that flowing through, not only in terms of growth, but the leverage that we're coming through with that. Pharma, that whole process started earlier on supply improving and us executing…