Convatec plans USD200 million share buyback as adjusted profit stable
Convatec Group PLC on Tuesday said adjusted operating profit rose thanks to higher revenue, prompting an interim dividend hike and plans for a share buyback.
Convatec shares were up 0.4% to 226.20 pence each late Tuesday morning in London.
The London-based medical products and technologies provider said revenue rose 4.4% to USD1.23 billion in the first half of 2026 from USD1.18 billion a year ago.
Pretax profit fell 51% to USD67 million from USD137 million.
Adjusted pretax profit remained stable at USD217 million, while adjusted operating profit climbed 3.9% to USD262 million from USD252 million.
The adjusted figures exclude a USD69 million non-cash impairment of InnovaMatrix assets. InnovaMatrix is a placental-derived extracellular matrix device for wound management.
InnovaMatrix has been hit by uncertainty regarding US Medicare reimbursement coverage for specific, high-volume wound treatments. Revenue from InnovaMatrix dropped 94% in the first half of 2026, to just USD2.5 million from USD39 million a year before.
A revised Centers for Medicare Services payment rate of USD127.28 per square centimetre for skin substitutes came into effect from the start of 2026. This new payment rate represented a more than 85% reduction for skin substitute products, including Convatec's InnovaMatrix product, the company said. Market volumes also are down, it said.
Convatec declared an interim dividend of 2.17 US cents per share, up 15% from 1.88 cents.
The company also announced a USD200 million share buyback, to complete by the end of 2026. It is somewhat smaller than Convatec's USD300 million share buyback programme a year ago.
Convatec confirmed its 2026 guidance for 5.5% to 6.5% organic revenue growth excluding InnovaMatrix.
Further, it said it is on track to achieve its medium-term targets, including a mid-20s operating margin by 2027. The adjusted operating margin was 21.2% in the first half of 2026, down mildly from 21.3% a year prior.
Chief Executive Officer Jonny Mason said: "Convatec delivered further broad-based and resilient growth across our chronic care categories. We are on track for another year of margin expansion and double-digit EPS growth. We expect to accelerate growth in H2, supported by new product launches, improving execution and our great team of Convatec colleagues who bring our promise of forever caring to life daily for the millions of people who rely on our trusted medical solutions.
"Our 'accelerate' strategy, announced in April, represents the next exciting chapter of our growth story, which will see increases in capacity and further improvements in execution to deliver innovative chronic care solutions to more people around the world. We will deliver sustainable 6-8% annual revenue growth, starting from 2027, and double-digit annual earnings per share growth."
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