ConvaTec Group Plc

First-half 2026 organic revenue growth, excluding InnovaMatrix, was 5%. Operating margin was 21.2%, down 10 basis points year over year but up 50 basis points at constant currency. EPS increased 6%. Free cash flow to equity was lower than last year due to working capital and CapEx timing, but management still expects around 100% cash conversion for FY26. The interim dividend increased 15%, the payout ratio target remains 35% to 45% of adjusted net profit, and the company announced a $200 million share buyback. InnovaMatrix sales declined $37 million year over year to $2.5 million in H1, and management now expects full-year 2026 revenue of $5 million to $10 million from that product, implying about a 2.5% full-year headwind to group revenue. Management reaffirmed FY26 guidance for at least 23% operating margin, around 100% cash conversion, and said H2 revenue growth should be between 6% and 8%.

Jonathan Mason emphasized that Convatec is executing its long-term strategy: operating in large, growing chronic care markets, scaling a recurring revenue model, and launching new products across all 4 categories. He said H1 delivery was strong strategically and operationally, but growth would step up in H2, especially in Infusion Care, where purchase orders provide good visibility. His tone was upbeat and confident, repeatedly saying the company is on track for its 2026 targets and for the medium-term goal of 6% to 8% organic growth with double-digit EPS from 2027 onward.

Fiona Ryder highlighted a solid first half with 5% organic revenue growth ex-InnovaMatrix, 21.2% operating margin, and 6% EPS growth. She attributed the margin movement to operating leverage, productivity initiatives, and mix, while noting a 140 bps margin drag from InnovaMatrix, a 130 bps benefit from simplification/productivity, and a 60 bps FX headwind in H1 expected to moderate to 40 bps for the full year. She also cited higher CapEx and working capital as reasons free cash flow was lower in H1, but reiterated around 100% free cash flow to equity conversion for FY26, leverage of 2.3x at the half, and around 2x by year-end inclusive of the buyback. She said growth CapEx is about $90 million, operational CapEx should be about 2.5% of revenue, and the legacy Bristol-Myers Squibb amortization charge of over $95 million annually ended in July.

Analysts pressed on the softness in Wound Care, execution risk in Infusion Care capacity, OpEx flexibility, and the outlook for InnovaMatrix amid a weak skin-substitute market. Management said Wound Care markets were about a point softer globally, but ConvaFoam should strengthen H2 and full-year Wound Care should still reach mid-single-digit growth. On Infusion Care, management said H2 double-digit growth is backed by purchase orders and existing capacity, with most new capacity coming from 2027 onward; they also said execution is the main risk but projects are on track and on budget. On InnovaMatrix, management blamed CMS pricing changes, legal challenges, and audit activity for slowing physician activity, said H2 should be better but not relied upon, and noted the product should be close to breakeven in H2 with about $10 million of sales needed to break even longer term.