- Organic revenue up 6.5% in Q1
- Advanced wound care outlook cut
- Full-year outlook maintained
Shares in Convatec (CTEC) fell 4% to 255.7p after the medical products maker flagged short-term uncertainty in Advanced Wound Care leading to a softer outlook for the division.
The news took the shine off a strong start to the year with first-quarter organic revenue up 6.5% which was slightly ahead of market forecasts.
SHORT-TERM UNCERTAINTY
Convatec reduced the growth outlook for Advanced Wound Care to mid to high single digit from high single digit following a proposed draft local insurance coverage determination in the US released on 25 April.
Convatec said while its chronic wound care products trading under the InnovaMatrix brand technically met the requirements of the draft proposal, its recent entry to the market and timeline needed to publish clinical evidence meant InnovaMatrix was not currently on the draft proposed covered list.
Launched in early 2022, InnovaMatrix products generated revenue of $74 million in 2023 equating to just over 3% of group revenue.
The company is actively engaging with all relevant parties as part of the 45-day consulting process currently underway.
‘We are seeking an outcome that preserves choice for clinicians treating chronic wounds, ensures access to innovative, effective products which are in the best interest of patients and maintains the benefits of the well-proven 510(k) pathway for fostering innovation of new products for the benefit of patients.’
GUIDANCE MAINTAINED
First-quarter growth was broad-based across the company’s four divisions including a better-than-expected contribution from Continence Care where revenue growth was in the high single digits.
The company said it remained confident of delivering on its full year-guidance which calls for organic revenue growth of 5% to 7%, an adjusted operating margin of at least 21% and double-digit growth in adjusted earnings per share.
The group's medium-term guidance was also unchanged - the company is targeting 5% to 7% organic revenue growth and an expansion in adjusted operating margin to a mid-twenty’s percentage by 2026 or 2027, with double-digit compound annual growth in adjusted earnings per share.
Despite today’s setback the shares are up 16% over the last 12-months compared with a gain of 9% for the FTSE 100 index.
