ConvaTec Group (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 broad-based gains across all categories and geographies.

• Fourth consecutive year of margin expansion and second year of double-digit EPS growth.

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

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

• Growth was broad-based across all four chronic care categories, with high recurring revenues and strong market positions.

Financial highlights

• Organic revenue growth (excluding InnovaMatrix) was 6.4% year-over-year, with all four categories contributing.

• 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%.

• Free cash flow to equity conversion reached 101% under new definition; free cash flow to equity was $362 million.

• 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 anticipated.

• Double-digit EPS growth expected in 2026; strong cash generation targeted.

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

• Growth to be weighted towards H2 as new product launches ramp up.