Annual results for the year ended 31 December 2024

Operational and strategic delivery drives double-digit adjusted EPS and cashflow growth

Confidence in FY25 outlook & medium-term guidance

London, UK, 26 February 2025 – Convatec, a leading medical products and technologies company, announces its annual results for the twelve months ended 31 December 2024

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FY24 highlights: we have pivoted to broad-based, sustainable and profitable growth

• Our FISBE strategy continued to deliver strongly, with organic revenue growth of 7.7%¹ (6.9% reported). This was our sixth consecutive year of accelerating, broad-based organic growth
• Adjusted operating margin² increased to 21.2% (+160 bps YoY in constant currency to 21.8%; +350 bps since 2021) driven by strong execution of our FISBE strategy and improved productivity 
• 14% adjusted EPS² growth, 32% free cash flow to equity⁵ growth and 97% equity cash conversion

Broad-based growth in all four chronic care categories

• AWC⁴: 7.4%¹ driven by Aquacel Ag+ Extra^TM and InnovaMatrix^®, plus a growing contribution from ConvaFoam^TM
• OC⁴: 5.3%¹ driven by Convatec ostomy products, including a strong contribution from the Esteem Body^TM launch
• CC⁴: 8.3%¹ driven by US volume and share growth, excellent customer service and accelerating international sales
• IC⁴: 11.2%¹ driven by customers leveraging our innovative infusion sets in new products, plus sales to new customers
• Group organic growth excluding InnovaMatrix^{® 3} was 6.8% (note: in FY24 this represented 96% of Group revenues)

Successful product launches and our strongest-ever new product pipeline

• We are actively targeting the fastest growing segments by developing innovative new products. These include:
• In AWC, positive clinician feedback and high success rate in new customer product evaluations in ConvaFoam^TM  
• Also in AWC, On-track to obtain EU regulatory approval for ConvaNiox^TM, our highly innovative advanced wound dressing powered by nitric oxide, in H1 25 
• In OC, excellent customer response to Esteem Body^TM and in CC GentleCath Air^TM for Women 
• In IC, broadening customers and applications including partnerships with AbbVie (Parkinson’s disease), plus Beta Bionics and Ypsomed (Diabetes). Continued growth with Medtronic and Tandem in Diabetes

Confidence in FY25 outlook: reiterating guidance for double-digit adjusted EPS growth

• We continue to expect 5-7% organic growth in non-InnovaMatrix^{® 3} revenues (FY24: 96% of Group revenue), based on our broadening product portfolio, strongest-ever innovation pipeline and focused commercial execution
• InnovaMatrix^® was 4% of Group revenues in 2024 ($99m). Based on implementation of the LCDs³ in April 2025, we expect a reduction in revenue of approximately $50m, approximately 2% of Group revenue
• Irrespective of the LCD, we expect adjusted operating profit margin² of 22.0-22.5%, underpinned by detailed productivity improvement programmes across operations, commercial and G&A
• Another year of double-digit growth in adjusted EPS², and strong operating cash conversion (>80%)

On-track to deliver our medium-term guidance

We are well positioned to deliver sustainable 5-7% p.a. organic revenue growth, underpinned by our broadening new product pipeline and enhanced commercial execution. We are also on-track to reach mid-20’s% adjusted operating profit margin² by 2026 or 2027, supported by further productivity improvements and operating leverage

Karim Bitar, Chief Executive Officer, commented:

“Our FY24 results demonstrate that Convatec has successfully pivoted to broad-based, sustainable and profitable growth. Our FISBE strategy is delivering strongly, evidenced by our sixth year of accelerating revenue growth, further operating profit margin expansion, double digit growth in adjusted EPS and strong cash conversion.

“We expect FY25 to be another year of strong strategic progress. This will be driven by our strongest-ever innovative, new product pipeline and further simplification and productivity improvements. We are on-track to deliver our medium-term guidance of 5-7% annual organic revenue growth, mid-20’s operating margin by 2026 or 2027 and double-digit compound annual growth in adjusted EPS and free cash flow to equity⁽⁵⁾. This is underpinned by our leading positions in structurally growing chronic care markets, our specific targeting of the fastest growing market segments and a clear focus on execution excellence by our dedicated team of over 10,000 colleagues worldwide.”

 

FY24 financial summary & dividend

• Adjusted operating profit margin² of 21.2% (21.8% in constant currency). Expansion of 100 bps (160 bps at constant currency) driven by our FISBE strategy and productivity improvements
• Adjusted operating profit² up 12% to $485m. Reported operating profit of $325m (2023: $263m)
• Adjusted EPS² increased 14% to 15.2 cents. Reported EPS increased 46% to 9.3 cents
•  Free cash flow to equity⁵ up 32% to $302 (2023: $228m). Equity cash conversion⁵ of 97% (2023: 83%)
• Net debt to adjusted EBITDA ratio of 1.8x (FY23: 2.1x). This was after investing $122m in capex, c.$23m in transformation and $90m in M&A
•  As a sign of confidence in our outlook and strategy, the Board recommends a final dividend of 4.594 cents, resulting in a full year dividend of 6.416 cents, an increase of 3%. The payout ratio of 42% (2023: 46%) of adjusted net profit is within our target range of 35-45%
• Our capital allocation priorities are: 1) organic investment to drive future revenue growth and innovation, 2) annual dividend consistent with 35-45% payout ratio 3) focused M&A to strengthen our competitive position 4) any surplus capital would be available for return to shareholders

Additional FY25 modelling and guidance

We expect the following organic revenue growth for each category:

• AWC⁴: mid-single digit growth excluding InnovaMatrix^{® 3}
• OC⁴: mid-single digit growth
• CC⁴ mid-to-high single digit growth
• IC⁴: high single digit growth

We expect adjusted net finance expense for 2025 will be $70-75m (2024: $78m), assuming no material changes in US interest rates. Our adjusted book tax rate is expected to be c.24%, with the cash tax rate again materially lower. Reflecting our ongoing investments in innovation and efficiency programmes, we expect capex of $130-150m, opex R&D spend of c.$100-110m and transformation costs of c.$20m.

Investor and analyst presentation

The results presentation will be held at 09:00hrs (UK time) today. The event will be simultaneously webcast and the link can be found here. The full text of this announcement and the presentation for the analyst and investors meeting can be found on the ‘Results, Reports & Presentations’ page of the Convatec website www.convatecgroup.com/investors/reports.

Contact
Investor Relations: IR@convatec.com   
Media: MediaRelations@convatec.com

Scheduled events

AGM & trading update for the 4 months ending 30 April 2025:	22 May 2025
Interim results for the 6 months ended 30 June 2025:	29 July 2025

 

Dividend calendar

Ex-dividend	17 April 2025	Payment date	29 May 2025
Record date	22 April 2025

About Convatec

Pioneering trusted medical solutions to improve the lives we touch: Convatec is a global medical products and technologies company, focused on solutions for the management of chronic conditions, with leading positions in Advanced Wound Care, Ostomy Care, Continence Care, and Infusion Care. With more than 10,000 colleagues, we provide our products and services in around 90 countries, united by a promise to be forever caring. Our solutions provide a range of benefits, from infection prevention and protection of at-risk skin, to improved patient outcomes and reduced care costs. Convatec’s revenues in 2024 were over $2 billion. The company is a constituent of the FTSE 100 Index (LSE:CTEC). To learn more please visit http://www.convatecgroup.com

 

(1) Organic growth of 7.7% is calculated by applying the applicable prior period average exchange rates to the Group's actual performance in the respective period and excluding acquired and disposed/discontinued businesses. Acquisitions and disposals added 10 bps to organic growth in FY24, shown on page 3.

(2) Consistent with prior years, management present adjustments to the reported figures, to produce more meaningful measures in monitoring the underlying performance of the business. These are set out in the table on page 12

(3) In November 2024, Medicare Administrative Contractors published Local Coverage Determinations (LCDs) for Skin Substitute Grafts/Cellular and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers (DFU) and Venous Leg Ulcers (VLU). Convatec’s InnovaMatrix® was not covered by Medicare for DFU/VLU treatments in the LCDs. As stated in our regulatory news announcement of 14 November 2024, we believe this reduces patient and practitioner choice and availability of effective medical solutions in the near-term. We continue to build our clinical evidence portfolio in DFU/VLU including through real-world evidence and have already initiated randomised controlled trials which we expect to report in 2026. See page 4 of this statement for further InnovaMatrix® guidance.

(4) AWC is Advanced Wound Care; OC is Ostomy Care; CC is Continence Care and IC is Infusion Care.

(5) Certain financial measures in this document, including adjusted results, are not prepared in accordance with International Financial Reporting Standards (IFRS). All adjusted measures are reconciled to the most directly comparable measure prepared in accordance with IFRS in the Non-IFRS