Convatec raised medium-term revenue growth target to 6-8% from 5-7%, driving 8% share increase
Company took $72 million impairment on InnovaMatrix due to U.S. Medicare reimbursement cuts
Infusion Care division emerged as strongest performer with 12.5% organic revenue growth
Convatec targets 23% operating margin and double-digit EPS growth for 2026
📖 Full Retelling
British medical devices maker Convatec Group Plc (LON:CTEC) saw its shares surge more than 8% on Tuesday after raising its medium-term organic revenue growth target to 6-8% from 5-7%, despite a $72 million impairment on its InnovaMatrix wound care asset following U.S. Medicare slashing reimbursement rates for skin substitutes. The FTSE 100 company reported that the Centers for Medicare and Medicaid Services reduced payment rates for skin substitutes to $127.28 per square centimeter from January 2026, which triggered the writedown on intangible assets from its 2022 acquisition of Triad Life Sciences for $125 million. The carrying value of the asset now stands at $40 million, and Morgan Stanley analysts noted that the pricing environment likely makes InnovaMatrix 'a meaningfully smaller driver of group growth over the midterm.' This impairment pushed reported operating profit down 2.7% to $316 million for 2025, though adjusted operating profit rose 12.1% to $544 million when stripping out the impairment and acquisition-related charges. Despite these challenges, Convatec demonstrated strong overall performance with group revenue rising 6.5% to $2.439 billion on a reported basis, with organic growth of 6.4% excluding InnovaMatrix, at the top of its previous target range.
A medical device is any device intended to be used for medical purposes. Significant potential for hazards are inherent when using a device for medical purposes and thus medical devices must be proved safe and effective with reasonable assurance before regulating governments allow marketing of the d...
Convatec Group plc, trading as Convatec, is a medical products and technologies company based in London, England, offering products and services in the areas of advanced wound care, ostomy care, continence care and infusion care. It is listed on the London Stock Exchange and is a constituent of the ...
Convatec's strong stock performance despite a significant writedown signals investor confidence in the company's revised growth strategy and underlying business health. The raised revenue target reflects successful diversification and innovation in medical device markets, particularly in non-diabetes therapies. This demonstrates resilience in navigating regulatory challenges like Medicare reimbursement cuts.
Context & Background
Convatec is a FTSE 100 medical devices company specializing in wound care, ostomy care, and infusion products
The company wrote down $72 million on its InnovaMatrix wound care asset due to U.S. Medicare reimbursement rate cuts
Organic revenue growth excluding InnovaMatrix was 6.4% in FY25, at the top of the previous target range
What Happens Next
Convatec will hold a capital markets day on April 9 in London to detail its growth strategy. The company targets 5-7% organic revenue growth in 2026 excluding InnovaMatrix, with double-digit adjusted EPS growth. Infusion Care is expected to grow at a high single-digit rate despite an FDA warning letter.
Frequently Asked Questions
Why did Convatec shares jump 8% despite the writedown?
Investors focused on the raised medium-term organic revenue growth target to 6-8% and strong performance in other business divisions.
What caused the $72 million writedown?
U.S. Medicare cuts to skin substitute payment rates triggered an impairment on the InnovaMatrix wound care asset.
What is Convatec's revenue guidance for 2026?
The company guides 5-7% organic revenue growth excluding InnovaMatrix, weighted to the second half.
Original Source
try{ var _=i o; . if(!_||_&&typeof _==="object"&&_.expiry Asia stocks rise as China reopens on a strong note; Hong Kong hit by tech losses Wall Street slides on Trump tariff turmoil, AI disruption research report Dystopian AI report sinks payment and software stocks Exclusive-China’s DeepSeek trained AI model on Nvidia’s best chip despite US ban, official says (South Africa Philippines Nigeria) Convatec FY25 shares jump 8% on growth target raise despite $72 mln writedown By Navamya Acharya Author Navamya Acharya Earnings Published 02/24/2026, 03:20 AM Convatec FY25 shares jump 8% on growth target raise despite $72 mln writedown 0 CTEC 8.24% Investing.com -- Convatec Group Plc (LON:CTEC) shares surged more than 8% on Tuesday after the British medical devices maker raised its medium-term organic revenue growth target to 6-8% from 5-7%, overshadowing a $72 million impairment on its InnovaMatrix wound care asset after U.S. Medicare slashed reimbursement rates and pushed reported operating profit down 2.7% to $316 million for 2025. Stay ahead with live news, stock impact insights, and Wall Street analysis - save up to 50% The FTSE 100 company said the Centers for Medicare and Medicaid Services cut payment rates for skin substitutes to $127.28 per square centimetre from January 2026, triggering the writedown on intangible assets from its 2022 acquisition of Triad Life Sciences for $125 million. The carrying value of the asset now stands at $40 million, and analysts at Morgan Stanley said in a note the pricing environment likely makes InnovaMatrix "a meaningfully smaller driver of group growth over the midterm." InnovaMatrix revenue is expected to fall to approximately $20 million in 2026 from $69 million in 2025, a decline of roughly 71%, representing a headwind of approximately 2% of group revenue. Reported diluted earnings per share fell 7.1% to 8.6 cents. Adjusted diluted EPS, which strips out the impairment and acquisition-related charges, rose 16% to 17.6 cents on ad...
