Convatec interim results 2026: growth holds up as $200 million buyback is launched

Convatec Group PLC has delivered a solid first half beneath some rather messy reported numbers.

Revenue increased by 4.4% to $1,232 million, while organic revenue growth excluding the troubled InnovaMatrix product reached 5.0%. Adjusted operating profit rose by 3.9% to $262 million and adjusted diluted earnings per share increased by 6.3% to 8.5 cents.

The medical products group also maintained its key full-year targets and announced a fresh $200 million share buyback, due to complete by the end of 2026.

The less comfortable parts are a sharp fall in reported profit, weaker first-half cash generation and higher net debt. Investors therefore need to look past the headline growth rate and decide whether management can deliver the promised second-half acceleration.

The full figures are available in the original company announcement.

Convatec's key first-half figures

Metric	H1 2026	H1 2025	Change
Revenue	$1,232 million	$1,180 million	4.4%
Organic revenue growth excluding InnovaMatrix	5.0%	6.8%	Lower
Adjusted operating profit	$262 million	$252 million	3.9%
Adjusted operating margin	21.2%	21.3%	Down 0.1 percentage points
Reported operating profit	$115 million	$179 million	Down 36.1%
Adjusted diluted EPS	8.5 cents	8.0 cents	6.3%
Reported diluted EPS	2.7 cents	5.1 cents	Down 47.8%
Free cash flow to equity	$22 million	$98 million	Down 78.0%
Net debt	$1,534 million	$1,165 million	Higher

Organic growth strips out currency movements and acquisitions or disposals, providing a clearer view of underlying trading.

On that basis, the 5.0% increase excluding InnovaMatrix looks respectable. More than half of the organic growth came from products launched during the past three years, suggesting Convatec's product development spending is making a meaningful contribution.

InnovaMatrix leaves a sizeable scar

The main disruption came from InnovaMatrix, Convatec's skin substitute product.

US reimbursement changes cut the relevant payment rate by more than 85%, while market volumes also declined. InnovaMatrix revenue consequently fell by 94% to approximately $2.5 million during the half.

Management now expects full-year InnovaMatrix revenue of $5 million to $10 million, down from its previous estimate of around $20 million. The decline is expected to reduce full-year Group revenue growth by approximately 2.5 percentage points.

Convatec recognised a $69 million non-cash impairment relating to InnovaMatrix assets. This was a major reason reported operating profit fell by 36.1% to $115 million, even though adjusted operating profit increased.

That gap matters. The impairment is non-cash, and management's adjusted figures arguably offer a better view of current trading. Even so, shareholders should not ignore that a previously valuable product has been badly affected by a reimbursement decision.

Growth was spread across the core categories

Excluding InnovaMatrix, all four care categories grew organically.

Category	H1 revenue	Organic growth
Advanced Wound Care excluding InnovaMatrix	$354 million	3.4%
Ostomy Care	$353 million	4.3%
Continence Care	$277 million	5.9%
Infusion Care	$246 million	7.4%

Infusion Care was the strongest performer, supported by demand across diabetes and non-diabetes therapies. Convatec expects this division to accelerate during the second half because it has visibility over customer order phasing.

Continence Care also performed well. Revenue from GentleCath Air for Women more than doubled, adding over one percentage point to category growth, while Convatec-manufactured products now represent more than 60% of Continence Care revenue.

In Ostomy Care, Esteem Body continued to gain share and reached annualised revenue of approximately $60 million. Its segment market share is now around 15%.

Advanced Wound Care was slower, although ConvaFoam continued to gain share. The category's overall performance was dominated by the InnovaMatrix decline.

Why management expects a stronger second half

Convatec has narrowed its 2026 organic revenue growth guidance excluding InnovaMatrix from 5% to 7% to a range of 5.5% to 6.5%. That is a tighter range rather than a material downgrade, although the midpoint remains unchanged.

Management expects second-half organic growth excluding InnovaMatrix of 6% to 8%, led by Infusion Care.

The adjusted operating margin target remains at least 23.0%, despite the first-half margin coming in at 21.2%. Convatec expects a materially stronger second-half margin for four reasons:

• Revenue is normally weighted towards the second half, producing operating leverage.
• Faster Infusion Care growth should improve the sales mix.
• The year-on-year InnovaMatrix drag should reduce.
• Simplification, automation and productivity savings should contribute more strongly.

The company estimates that normal second-half revenue weighting could add around 200 basis points to the margin compared with the first half. Infusion Care mix, lower InnovaMatrix pressure and productivity measures are expected to provide further support.

Full-year guidance also continues to call for double-digit adjusted EPS growth and approximately 100% equity cash conversion.

Cash flow and debt need watching

Cash generation was the weakest part of the announcement.

Free cash flow to equity fell from $98 million to $22 million. Convatec recorded a $146 million adjusted working capital outflow, reflecting higher inventory, increased receivables and lower payables.

Management expects the inventory and payables movements to reverse in the second half. That reversal is important if Convatec is to hit its full-year cash conversion target.

Capital expenditure also increased sharply to $128 million from $69 million. Of this, $90 million was growth investment intended to expand manufacturing capacity and support new products.

This investment may underpin future revenue growth, but it places additional pressure on near-term cash flow. Net debt rose to $1,534 million, equivalent to 2.3 times adjusted EBITDA, compared with 2.0 times at the end of 2025. Management expects leverage to return to around 2.0 times by year-end.

Shareholders receive a buyback and higher dividend

Convatec announced a $200 million share buyback for completion by 31 December 2026. Combined with the $300 million programme completed last year, cumulative buybacks across 2025 and 2026 will reach $500 million.

The Board also increased the interim dividend by 15.4%. The detailed financial review states a dividend of 2.166 cents per share, although the headline highlights table gives 2.116 cents. Investors may want to confirm the final payable amount through the company's dividend documentation.

The buyback demonstrates confidence, but it comes while leverage is above the company's 2.0 times target and first-half cash conversion is subdued. Successful second-half delivery therefore carries extra weight.

What matters next for Convatec investors

This was a credible underlying performance, helped by broad category growth, new product momentum and continued cost efficiencies. Maintaining the margin and EPS guidance is encouraging, as is the expected acceleration in Infusion Care.

However, Convatec has loaded a lot into the second half. Revenue growth must accelerate, margins must rise materially, working capital must unwind and leverage must move back towards target.

The InnovaMatrix setback also demonstrates how reimbursement changes can rapidly affect healthcare product economics. While the impairment has now recognised much of the accounting damage, the product will remain a significant drag on 2026 growth.

The investment case from these results rests less on the reported first-half profit figure and more on whether Convatec can turn its capacity spending, new launches and visible Infusion Care orders into stronger profit and cash generation before year-end. The next scheduled update, covering the ten months to 31 October 2026, is due on 18 November 2026.