ConvaTec Group PLC shares rose over 9% to 248.2p after the colostomy and wound-care specialist upgraded its medium-term growth target after delivering mid-teens profit growth in 2025.
Revenue increased 6.5% to $2.4 billion in 2025, while organic revenue rose 6.4%, excluding its InnovaMatrix wound care product, which was hit by a change in US Medicare and Medicaid reimbursement.
Adjusted operating profit rose 12.1% to $544 million, with the margin up about 110 basis points to 22.3%.
Reported operating profit fell 2.7% to $316 million, including a $72 million impairment linked to InnovaMatrix.
The group generated $362 million of free cash flow, funding $185 million of capital expenditure, a $140 million dividend and a $300 million share buyback. Net debt rose to $1.3 billion from $1.06 billion.
Chief executive Jonny Mason hailed the "resilient growth" in 2025. "We delivered broad-based organic revenue growth across all categories, supported by new product launches, operating margin expansion, mid-teens growth in adjusted earnings per share and strong cash conversion."
For 2026, he and the board expect 5-7% organic revenue growth, excluding InnovaMatrix, and double-digit adjusted EPS growth with a target for adjusted operating margins of at least 23%.
From 2027, Convatec now expects annual organic revenue growth of 6-8%, up from 5-7% previously, and a mid-20s adjusted operating margin.
Analysts at Stifel said the results were at the top end of guidance and expectations, with all divisions performing as expected, with a 2% beat in Infusion Care. "We do not expect significant changes to current FY26 numbers. We see perceived headwinds as overdone and reiterate our Buy rating, on a stock trading below its 3- and 5-year historical averages."
Those at UBS said the positive reaction to the print was because "the net of it is that consensus estimates should move up slightly for 2026 and more materially for 2027.
"Against a multiple that is pretty much the lowest since 2019 and pricing-in concerns on the ability to even meet existing consensus forecasts, should mean the print is well received."
** UPDATE: Broker comments added **