ConvaTec Group H1 Earnings Call Highlights

ConvaTec maintained its 2026 targets after delivering 5% first-half organic revenue growth excluding InnovaMatrix, 6% adjusted EPS growth and a 21.2% operating margin.

Management expects stronger second-half growth, particularly in Infusion Care, and reaffirmed double-digit full-year EPS growth.

InnovaMatrix remains a significant headwind: first-half sales dropped to £2.5 million, prompting a £69 million non-cash impairment charge and reducing full-year revenue expectations to £5 million–£10 million.

The company expects the product to approach breakeven in the second half as U.S. market conditions stabilize.

Shareholder returns and future investment increased: ConvaTec raised its interim dividend by 15% and launched a £200 million share buyback, while investing about $90 million in 2026 growth capital—primarily to expand Infusion Care capacity and support its product pipeline.

ConvaTec Group LON: CTEC said it remained on track to meet its 2026 financial targets after reporting 5% organic revenue growth in the first half, excluding the impact of its InnovaMatrix skin-substitute product.

The company said revenue growth was broad-based across its four chronic-care categories, while it continued to invest in manufacturing capacity, new-product launches, simplification programs and technology.

Management reiterated its expectation that growth will accelerate in the second half, led principally by Infusion Care.

First-half operating margin was 21.2%, down 10 basis points from a year earlier but up 50 basis points at constant currency.

Adjusted earnings per share rose 6%, with the company maintaining its expectation for double-digit EPS growth for the full year.

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Chief Financial Officer Fiona Ryder said ConvaTec expects around 100% free-cash-flow-to-equity conversion for 2026 despite lower first-half cash flow, which reflected working-capital timing and growth capital expenditures.

The company increased its interim dividend by 15% and announced a £200 million share buyback program to be completed by year-end.

InnovaMatrix Creates Revenue and Margin Headwind

InnovaMatrix sales fell £37 million year over year to £2.5 million in the first half, creating a little more than a 3% headwind to group revenue growth.

ConvaTec now expects InnovaMatrix revenue of £5 million to £10 million for the full year, compared with previous expectations, representing an estimated 2.5% headwind to annual group revenue growth.

The company took a £69 million non-cash impairment charge related to the product.

Ryder said the reduction in expected InnovaMatrix revenue would not have a material negative impact on results beyond 2026.

Management attributed the weak performance to uncertainty in the U.S. skin-substitutes market, including lower prices set by the Centers for Medicare & Medicaid Services, litigation challenging those actions and audit activity that has reduced physician activity.

The company said InnovaMatrix sales began to improve in May and June versus earlier in the year, though the recovery has been slower than expected.

Management said InnovaMatrix did not make money in the first half, but it expects the business to be close to breakeven in the second half.

The company said roughly $10 million in sales would be required for the product to reach breakeven on an ongoing basis.

All Four Care Categories Contributed to Growth

Advanced Wound Care: Revenue rose 3.4% excluding InnovaMatrix.

Management said wound-care markets were somewhat softer than in 2025, while May and June were affected by order phasing for Aquacel.

It still expects mid-single-digit growth for the category in 2026, supported by the continued rollout of ConvaFoam.

Ostomy Care: Organic growth was 4.3%.

Esteem Body, the company’s ...