Three major investors in Smith+Nephew have encouraged the company to consider breaking up parts of its business and spinning off its orthopedics division, according to a Nov. 15 report from Mass Device.
The shareholders, who are among the company's top 20 investors, believe the company should divest its orthopedics unit if it fails to show significant improvement.
They suggested that a private equity buyer could be interested in the division, according to the report.
Smith+Nephew's orthopedics division is the largest revenue generator among its three business segments.
Shares in the company have declined 13% since mid-October. The company revised its growth forecast for the year downward, citing declining sales in China. However, China sales only account for 5% of the company's 2023 sales.
Shares in the company have dropped by more than 40% in the past five years. CEO Deepak Nath, who took the role in April 2022, launched a 12-point plan to improve Smith+Nephew’s performance by 2025. His plan includes strengthening the company’s supply chain and introducing new orthopedic technologies to reclaim market share.
An anonymous investor characterized the orthopedics division as "the problem child," within the company, suggesting it may perform better under different ownership, according to the report.