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Convatec upgrades its medium-term organic growth target to 6-8% following strong 2025 results, margin expansion, and a clear roadmap to mid-20s% margins.
This article covers information on Convatec Group PLC.
LON:CTECConvatec has delivered another solid year. Reported revenue rose 6.5% to $2,439m, or 5.0% at constant currency, with organic growth of 6.4% when you exclude InnovaMatrix (the US wound biologic facing reimbursement changes). Adjusted operating margin expanded by around 110 bps to 22.3%, and adjusted diluted EPS climbed 16.0% to 17.6 cents. Reported EPS dipped to 8.6 cents after a $72m non-cash impairment related to InnovaMatrix.
Cash generation stayed strong: free cash flow to equity was $362m (up 0.1%). Management put that to work with $185m of capex, a $300m buyback and a 13% dividend increase to 7.244 cents per share. Net debt ended at $1,330m, equivalent to 2.0x adjusted EBITDA, helped by new $500m 10-year notes at a 5.3% coupon and investment grade ratings with all three major agencies.
Jargon buster: organic growth strips out currency, acquisitions and disposals; adjusted EPS and margins exclude items management deems non-core; bps means basis points (100 bps = 1 percentage point).
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Revenue | $2,439m | $2,289m | +6.5% |
| Organic growth (ex-InnovaMatrix) | 6.4% | 6.8% | – |
| Adjusted operating margin | 22.3% | 21.2% | +c.110 bps |
| Adjusted diluted EPS | 17.6 cents | 15.2 cents | +16.0% |
| Free cash flow to equity | $362m | $361m | +0.1% |
| Dividend per share | 7.244 cents | 6.416 cents | +13% |
| Share buyback | $300m | n/a | Completed |
| Net debt | $1,330m | $1,058m | 2.0x adj. EBITDA |
Infusion Care revenue grew 15.1% reported and 12.5% organic to $473m. Diabetes sets grew high single-digit on adoption of automated insulin delivery systems, while non-diabetes therapies surged to c.15% of IC revenue (from c.10% in 2024), led by Neria Guard in Parkinson’s and immunology. The long-term AbbVie contract was significantly extended. Post year end, an FDA Warning Letter was issued to Unomedical (quality system reporting procedures) with no product safety concerns or operating restrictions. Management still guides high single-digit IC growth in 2026.
Continence Care rose 7.1% reported and 6.6% organic to $537m, driven by US volume growth and excellent customer service. Convatec-manufactured products increased to c.59% of revenues, lifting mix. GentleCath Air for Women is taking share, with further compact formats due in 2026-27.
Ostomy Care grew 6.6% reported and 4.5% organic to $676m. Esteem Body performed ahead of plan. Importantly, Convatec secured its first US ostomy GPO win in over five years with Captis Vizient in November 2025, and a further GPO win with Premier in February 2026. An upgraded Flexi-Seal Air launches in H1 2026.
AWC revenue was $753m, up 1.4% reported but down 0.4% organic due to InnovaMatrix. Excluding InnovaMatrix, organic growth was 4.1%, with standout momentum in ConvaFoam and continued progress in Aquacel Ag+ Extra. ConvaNiox, the nitric-oxide powered dressing, gained EU/UK approval with revenue expected to scale from 2027; Aquacel ConvaFiber (EU/US approved) launches H1 2026 and ConvaVac (single-use NPWT) in H2 2026.
Management is sticking to another year of double-digit adjusted EPS growth. Organic revenue ex-InnovaMatrix is guided at 5-7% (unchanged), H2-weighted as launches build. InnovaMatrix revenue is expected to be c.$20m, a c.2% Group headwind in 2026 and c.3% in H1 2026 following the CMS pricing decision at $127.28 per sq cm.
This is the big strategic call-out. From 2027, Convatec now targets 6-8% annual organic revenue growth (up from 5-7%), powered by an unusually rich launch slate, step-up in growth capex, and improving commercial execution. Adjusted operating margin is targeted at mid-20s% (24-26%) by 2027, with sustainable double-digit adjusted EPS growth and a double-digit free cash flow to equity CAGR. Given the multi-year 460 bps adjusted margin uplift since 2021 and diversified category mix, the upgrade reads credible.
Convatec is doing the right things in the right order: grow organically across categories, expand margins through simplification and pricing discipline, reinvest heavily where demand is strongest, and return surplus cash. The 2026 outlook acknowledges near-term InnovaMatrix pressure yet still points to ≥23% margins and double-digit adjusted EPS growth. The upgrade to 6-8% organic growth from 2027 is the statement of intent. For retail investors, this reads as a well-managed FTSE 100 medtech with a strengthening pipeline, rising operating leverage and a growing dividend, balanced by US reimbursement and regulatory execution risk.
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