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ConvaTec Group PLC said on Thursday it delivered solid revenue growth in the first four months of 2022 and has decided to exit its hospital care operations.
The firm said its ‘low margin’ hospital care activities and related industrial sales generated revenue of $101 million in 2021. Going forward, the company said it will be almost entirely focused on higher-growth chronic care markets with improved margins and higher levels of recurring revenue.
It expects reported revenue in 2022 to be around $20 million to $30 million lower than 2021, and adjusted earnings before interest and tax are expected to reduce by $3 million to $5 million.
Turning to recent trading, the Reading, England-based medical products and technologies company's revenue increased by 4.1% the four months that ended on April 30 on a reported basis, or 6.0% on an organic basis.
ConvaTec is a medical technology company that operates across four categories: Ostomy Care, Continence & Critical Care, Advanced Wound Care and Infusion Care.
In Advanced Wound Care, the company achieved mid-single digit organic revenue growth overall. In Ostomy Care, organic revenue growth was low-single digit. Its Continence & Critical Care category achieved low-single digit organic revenue growth. Infusion Care continued to deliver strong double-digit organic revenue growth.
ConvaTec continues to expect full-year organic revenue growth of between 4.0% and 5.5% and a constant currency Ebit margin of at least 18%.
‘Our expectations for inflation have increased, with COGS inflation now estimated at approximately 8-9% (previously expected 5%). However, we are managing these cost challenges by driving our simplification and efficiency agenda, leveraging our pricing center of excellence and proactively managing our mix. Consequently, our full year 2022 guidance is unchanged,’ the company said.
ConvaTec shares were up 0.6% at 206.20 pence each on Thursday morning in London.
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