Wound care group raises organic growth forecasts in latest update

Organic growth forecasts for the year have been raised at Convatec Group, the Deeside-based medical products business.

Its adjusted operating profit margin is also expected to expand to at least 20.5%, on a constant currency basis.

In a trading update for the 10 months ended October 31, 2023, today, the group said strong sales growth continued, with margin expansion on track.

During the period, revenue increased by 6.7% on an organic basis, while on a constant currency basis revenue increased by 2.6%.

In Advanced Wound Care (AWC), organic growth was high single digit, consistent with the performance in the first half of the year, with a strong performance in global emerging markets, good growth in Europe and North America enhanced by the contribution of InnovaMatrix, the group’s next-generation placental extracellular matrix product.

In Ostomy Care (OC) organic growth was mid-single digit. Sales growth from Convatec’s Ostomy products performed in line with the first half, with strong growth in global emerging markets, good growth in North America and key European markets.

As expected, the negative impact of Flexi-Seal moderated to a mid-single digit decline for the year to date, as the tough COVID comparatives normalised and as the business became sole supplier to the HealthTrust Performance Group, a major GPO, in the US.

In Continence Care (CC), organic growth was mid to high single digit with continued strong performance on customer satisfaction, retention and pricing in the US.

The lower rate of growth than the first half was phasing, as expected, and in line with guidance of mid to high single digit growth for the year.

In Infusion Care (IC), organic growth was high single digit, building on the first half performance. Underlying demand for Convatec’s infusion sets remained strong with the market responding positively to recent new insulin pump launches, and as the business continued to expand outside of diabetes.

The group reported strategic progress over the past four months.

• In AWC, our new product portfolio continued launching successfully and drove our organic growth as expected.
• In OC, the development of our new one-piece convex pouching system, Esteem Body, is on track to start launching in early 2024 in the US and Europe.
• In CC, in France we began the launch of our new compact catheter, GentleCath Air for Women with FeelClean Technology. This technology is designed for urethral protection and to reduce the risk of UTIs.
• In IC, we continued to diversify, supporting several new launches. BetaBionics’s iLet pump and Medtronic’s 780G pump are progressing well, while Tandem’s Mobi pump began rolling out in the US in Q3. AbbVie’s Parkinson’s disease therapy launched in Japan and regulatory approvals for other key global markets are in process.
• In quality and operations, our plant network optimisation is progressing well, with the migration from the EuroTec facility, in the Netherlands, to Slovakia and a restructuring of activities in Switzerland.
• Two acquisitions were completed in the period, for a combined consideration of $28m, to further strengthen our Home Services Group in the US.
• To accelerate our simplification and productivity agenda, in our Global Business Services, we opened a new facility in Kuala Lumpur to provide 24-7 support to the group, started the migration of HR services and created a new IT centre of excellence.

Convatec said it now expect organic revenue growth for 2023 to be between 6.75% and 7.5% – previously 6%-7.5%. Adjusted operating profit margin is expected to expand to at least 20.5%, on a constant currency basis.

Chief executive, Karim Bitar, said: “We are pleased with the execution of our FISBE strategy this year. Convatec has pivoted to a higher level of organic sales growth over recent years.

“We are on track to deliver a mid-20s adjusted operating margin in 2026 or 2027, and double-digit compound growth in EPS and free cash flow, from 2024 onwards.”