ConvaTec Group Plc

Convatec reported first-half 2026 organic revenue growth of 5% excluding InnovaMatrix. Operating margin was 21.2%, down 10 basis points year over year but up 50 basis points at constant currency, and EPS grew 6% in the half. InnovaMatrix sales fell $37 million year over year to $2.5 million, and the company booked a $69 million noncash impairment; it now expects full-year InnovaMatrix revenue of $5 million to $10 million, implying about a 2.5% headwind to group revenue for FY26 and about a 2% headwind in H2. Management confirmed full-year guidance for at least 23% operating margin, around 100% free cash flow to equity conversion, and said H2 organic revenue growth should be 6% to 8%, driven especially by Infusion Care; it also announced a $200 million share buyback and expects year-end leverage of about 2x EBITDA.

Jonathan Mason framed the quarter as evidence that Convatec is executing its Accelerate strategy and is “on track” for the medium-term plan. He emphasized large recurring-revenue chronic care markets, broad-based growth, and a pipeline of new products across all 4 categories that should lift growth to 6% to 8% from the second half onward. His tone was confident and upbeat, with repeated emphasis on visibility, capacity expansion, and the idea that 2026 is a stepping stone toward faster growth and mid-20s margins in 2027.

Fiona Ryder highlighted a solid first half with 5% organic revenue growth ex-InnovaMatrix, 21.2% operating margin, and 6% EPS growth. She said margin was held back by a 140 bps InnovaMatrix drag, partly offset by 130 bps from simplification and productivity initiatives, while OpEx fell to 38.2% of revenue and FX was a 60 bps headwind expected to moderate to 40 bps for the full year. She also noted free cash flow to equity was lower due to working-capital timing and H1-weighted CapEx, but the company still expects around 100% cash conversion, about 2x leverage at year-end including the $200 million buyback, and operational CapEx of about 2.5% of revenue. She added that growth CapEx is about $90 million, largely for Infusion Care capacity, and that the legacy Bristol-Myers Squibb amortization charge of over $95 million annually ended in July.

Analysts focused on the softer wound-care growth, the ramp and execution risk in Infusion Care capacity, and the underperformance of InnovaMatrix amid skin-substitute market disruption. Management said wound care was softer in 2026 than 2025 but still expects mid-single-digit growth for the year, with ConvaFoam doing more of the work in H2; it also said Infusion Care has purchase-order visibility and enough existing capacity to deliver double-digit H2 growth, with most new capacity coming from 2027 onward. On InnovaMatrix, management said the market is being reset by CMS pricing and audits, with some competitors exiting, but the product was underperforming because the market has been “frozen”; they expect H2 to be better, though still small, and said about $10 million of sales is needed to break even. Questions also touched on FDA observations, where management said the review is constructive but unlikely to be resolved quickly and could run through 2027, though it is not affecting manufacturing or product safety.