ConvaTec (CTEC) H2 2025 earnings summary

Executive summary

• Achieved fifth consecutive year of organic revenue growth within target range, supported by eight new product launches and strong market positions across four chronic care categories and geographies.

• Fourth consecutive year of margin expansion and second year of double-digit EPS growth, with compounding growth momentum.

• Strong cash generation enabled increased investment in CapEx, R&D, and shareholder returns, including a $300 million share buyback in 2025.

• Upgraded medium-term organic revenue growth target to 6-8% from 2027, reflecting confidence in pipeline and execution.

• Resilient business model with high recurring revenues and broad-based growth across categories and geographies.

Financial highlights

• Organic revenue growth (excluding InnovaMatrix) was 6.4% year-over-year in 2025, with broad-based contributions from all four categories.

• Operating margin expanded by 110 basis points to 22.3%, totaling 460 basis points over four years.

• Adjusted diluted EPS grew 16% year-over-year to 17.6c; net profit increased 15% with a steady 24% tax rate.

• Free cash flow to equity conversion reached 101% under the new definition, with $362 million generated.

• Dividend per share increased by 13% to 7.244c, maintaining a 40% payout ratio.

Outlook and guidance

• 2026 guidance: 5%-7% organic group revenue growth (excluding InnovaMatrix), with revenue second-half weighted and mid-single digit growth in most segments.

• Operating margin expected to reach at least 23% in 2026, with further improvements from simplification and productivity.

• Double-digit EPS growth anticipated for 2026, with strong cash generation and continued investment in growth CapEx.

• From 2027, targeting 6%-8% organic growth per annum, mid-twenties operating margin, and double-digit EPS and free cash flow to equity.

• Equity cash conversion expected around 100%.