- Organic Revenue Growth Achieved 6.4% growth in 2025, with guidance for 5-7% in 2026, excluding InnovaMatrix.
- Margin Expansion Operating margin increased 110 bps to 22.3% in 2025, targeting 23% in 2026 and mid-20s by 2027.
- EPS Growth Delivered 16% EPS growth in 2025, with double-digit growth expected in 2026 and 2027.
- Free Cash Flow Generated 101% free cash flow to equity conversion in 2025, targeting ~100% in 2026 for shareholder returns.
- InnovaMatrix Rebound Guided $20M sales in 2026, with volume growth expected from expanded geographic reach and new indications.
Segment Performance
The company's growth is driven by its four chronic care categories, which are structurally independent of the economic cycle. In 2026, ConvaTec expects mid-single-digit growth in Wound Care, Ostomy Care, and Continence Care, driven by new product launches, including ConvaNiox, ConvaFiber, and ConvaVac in Wound Care, and Esteem Body in Ostomy Care. Infusion Care is expected to grow at a high single-digit rate, driven by strong demand and the ability to service all types of pump technologies.
Guidance and Outlook
ConvaTec has increased its target growth rate to 6% to 8% per annum from 2027, driven by the successful launch of new products and a broadening pipeline. The company expects operating margin to reach at least 23% in 2026, with further progress in the second half. EPS growth is expected to be double-digit, driven by accelerating top-line growth. The company's guidance for InnovaMatrix sales is $20 million in 2026, driven by volume growth and a wider geographic scope.
Valuation
ConvaTec's current valuation metrics indicate a P/E Ratio of 31.37, EV/EBITDA of 13.48, and a Dividend Yield of 2.06%. The company's ROE is 12.38%, and ROIC is 8.3%. These metrics suggest that the market is pricing in a certain level of growth, but the company's accelerating top-line growth and expanding margins could potentially drive further upside.
Key Drivers and Risks
The key drivers of ConvaTec's growth include the successful launch of new products, a broadening pipeline, and a strong track record of delivery. Risks include the uncertainty surrounding InnovaMatrix sales, potential competition, and regulatory risks, including the FDA warning letter. However, the company is working to address these risks, and its clear capital allocation priorities and focus on investing organically should support its growth trajectory.