Dive Brief:

• Smith & Nephew reported annual revenues exceeding $5 billion this week, sparking a 7% rise in its stock in the first quarter under the leadership of Roland Diggelmann.

• The ex-CEO of Roche Diagnostics presented the results on Thursday, the same day as NuVasive, a rumored takeover target for Smith & Nephew about a year ago, and fellow spinal device player Globus Medical posted their financials.

• NuVasive, which pre-reported earnings last month, revealed it expects sales to grow between 4% and 6% in 2020, in line with analyst expectations. Globus Medical reported 8% revenue growth, another quarter of above-market performance for its spine business.

Dive Insight:

Diggelmann took over a company on the rise. Smith & Nephew raised its revenue outlook in the three quarters preceding his appointment as CEO. In the fourth quarter, Smith & Nephew's revenue growth neared the upper end of its target range, driving the company to full-year sales of more than $5 billion.

Once again, Smith & Nephew’s sports medicine joint repair unit underpinned the growth, posting its fourth quarter of double-digit growth in 2019. The unit drove the broader sports medicine and ENT business to roughly 10% growth, while the orthopaedics franchise, Smith & Nephew’s largest, grew about 5%.

Smith & Nephew expects 2020 growth to be in the same ballpark as the 4.4% achieved last year. The outlook assumes the coronavirus outbreak normalizes in the second quarter. China accounted for 7% of Smith & Nephew’s sales last year. 

One year ago, reports emerged that Smith & Nephew planned to accelerate its growth by acquiring NuVasive. As a spine specialist, NuVasive operates in a market adjacent to Smith & Nephew’s core orthopaedics business. Since then, Smith & Nephew has changed CEO.

NuVasive continued to show why it could be attractive takeover target in 2019, delivering results that beat its original guidance and growing faster than Smith & Nephew. In 2020, NuVasive expects more of the same, with forecast revenue growth of 4% to 6% hewing closely to the 3.5% to 5.5% guidance it predicted going into last year.

The forecast reflects a belief that NuVasive will continue to take share in key markets, CFO Matt Harbaugh told investors on a quarterly results conference call. However, NuVasive will also have to hold off competition from rivals keen to eat away at its share of the market. 

Globus, which spent years in a legal battle with NuVasive, is one of the companies hoping to claim a bigger piece of the spine market in 2020. In the fourth quarter, Globus claimed its organic growth rate in spine was the highest among the six biggest companies in the space. Globus’ full-year sales grew 10%, marking its third year of double-digit growth in succession.

That run may come to an end in 2020. Globus is forecasting full-year sales of $850 million, up around 8% on its revenues in 2019. However, Globus has a track record of beating expectations, having gone into the two previous years predicting sales growth of 8%.