Aug 4, 2026 earnings call — Revenue outlook cut, margin and savings focus
Company now expects underlying revenue growth of around 4% for 2026, while keeping profit, free cash flow and ROIC guidance unchanged.
Revenue $3.1B (est $1.6B) · EPS $0.95 (est $0.94)
Key quotes
"In U.S. Orthopaedics, knees remain weak, reflecting similar dynamics to Q1, although we saw a sequential improvement as expected."
"As I said, turning now to efficiency savings, we've delivered around $133 million in the first half, well ahead of expectations."
"In Bioactives, revenue declined 12.7% for the quarter, driven by the reimbursement change in skin substitutes and the soft quarter for SANTYL."
Analyst Q&A 4
Trauma and Extremities growth
Q (Veronika Dubajova · Citi): She asked about dynamics in Trauma versus Extremities and what could lift growth back to mid-to-high single digits. She also asked why management still guides 6% to 7% growth over the midterm and whether they can exceed the low end.
A: Management said Trauma is well positioned with EVOS and new IM nails, but competitor launches in plating are causing quarterly variation. Extremities is a small, early-stage opportunity driven by AETOS shoulder and CORI planning; material impact is expected in 2027–2028. For the midterm guide, they said 2026 has headwinds (U.S. knees gap, SANTYL prior authorization) but expect normalization, product ramps, CORI execution, and new wound products to support 6% to 7% growth.
"So core trauma category, nicely positioned in terms of our products, but there is competitor launches, particularly in plating." — Deepak Nath (CEO)
Cost cuts vs growth investment
Q (Kane Slutzkin · Deutsche): He asked if recent and planned savings risk hurting future growth and whether cuts go too far. He also asked Deepak about the U.S. orthopaedics market and if procedure growth is reverting to pre-COVID levels.
A: Management said they are deliberately reinvesting savings into growth and not cutting growth capability; they showed a bridge separating savings and a $33 million growth investment. They noted headcount was reduced in manufacturing but increased mainly in Sports and Wound, with most new hires on the front line. On the U.S. market, Deepak said data are limited, there is some market slowdown, and multiple factors (reimbursement, site-of-care shifts, mix, ACA changes) make revenue/volume assessment complex.
"So I can be absolutely clear that we are recycling resource." — John Rogers (CFO)
Skin substitutes recovery
Q (Caitlin Cronin · Canaccord): She asked how management expects Skin Subs to recover, whether weakness could continue into 2027, and what actions they are taking to help market adoption.
A: Management said reimbursement changes hit the mobile setting hardest, and physician office billing shifts added friction; hospital users were less impacted. They noted new entrants lack clinical data while their OASIS line is growing and said administrative friction should settle in 2027, where they expect to be well positioned at the $127 per square centimeter reimbursement. They reiterated their $20 million to $40 million impact range and said they are navigating toward the upper end but remain within that corridor, with sequential improvement from Q1 to Q2.
"So it's really about navigating this year, that's been a challenge." — Deepak Nath (CEO)
Tariffs and refunds impact
Q (David Adlington · JPMorgan): He asked about the gross and net tariff amounts in H1, how the refunds played out, expectations for H2, and how the impact is spread across the three businesses.
A: Management said the tariff impact is slightly concentrated in Orthopaedics, a bit more in Sports, and least in Wound, but not dramatically different across businesses. They reported a net benefit in the first half between tariffs and refunds of $5 million or so, expect about $1 million net benefit in the second half, and project a net tariff cost for the full year of about $10 million versus $15 million last year. Overall, they described the refunds as largely offsetting the tariff headwind year-on-year.
"We saw a net benefit in the first half between tariffs and the refunds of $5 million or so." — John Rogers (CFO)