TIDMCTEC
RNS Number : 6483Q
ConvaTec Group PLC
29 October 2021
29 October 2021
ConvaTec Group Plc
Trading update for the three months ended 30 September 2021
Q3 performance in line with expectations
& continued strategic progress
Key Points:
-- Q3 Group reported revenue of $511 million was 3.7% higher
year on year; up 2.7%(1) in constant currency and 2.2%(2) on an
organic basis.
o Continued momentum in Advanced Wound Care, modest growth in
Ostomy Care and Continence Care, with declines, as expected, in
Infusion Care and Critical Care against tough prior year
comparatives.
-- Group revenue for the 9 months to 30 September 2021 was up
5.4% on an organic and constant currency basis.
-- Further good progress on our FISBE (Focus, Innovate,
Simplify, Build, Execute) strategy to pivot to sustainable and
profitable growth:
o In Continence Care we improved the quality of our HSG business
by disposing of the non-core incontinence activities while also
signing an agreement to acquire a quality US service provider
focused on existing catheter users.
o To further advance our new product pipeline we have rolled out
a consistent new product development and launch process across all
business units. We have conducted investment, development, and
scale-up gate reviews for new products such as MioAdvance Extended
Wear Infusion Sets and the GentleCath(TM) Air male catheters
launching in 2022.
o We have continued to improve our regulatory processes
including optimising the phasing of MDR implementation over an
extended timetable.
o Continuing to make progress and planning further investments
in key initiatives such as digital interactions with healthcare
professionals and consumers. We are also progressing plans to
expand our Global Business Services centre beyond finance to
include HR and IT.
-- Strengthened the balance sheet with the successful issuance
of $500 million 2029 senior unsecured notes - diversifying Group
debt and extending its maturity profile.
-- 2021 full year guidance - We now expect organic(2) revenue
growth to be towards the upper end of our 3.5-5.0% guidance range
with a constant currency adjusted EBIT margin of 18.0-19.0%. Based
on current FX this equates to guidance of 17.4-18.4% for the
published adjusted EBIT margin.
Karim Bitar, Chief Executive Officer, commented:
"During Q3, we continued to drive good momentum in the business
and made further strategic progress implementing key transformation
initiatives and improving execution. As expected, the growth in the
third quarter slowed from Q2 given the relatively tougher
comparatives. Notwithstanding the continuing uncertainties in the
market, particularly around logistics and raw material inflation,
for the full year we expect to be towards the upper end of our
organic revenue guidance and to meet our EBIT margin guidance.
"We remain focused on pivoting to sustainable and profitable
growth and are making good progress - I am confident in ConvaTec's
long-term growth prospects."
Revenue summary
Q3 2021 Q3 2020 Reported CC growth(1) Organic 9 months
growth % growth(2) CC growth(1)
%
Reported Reported % %
$'m $'m
----------------------- ---------- ---------- --------- ----------- --------------
Advanced Wound
Care 152 149 2.1 0.6 5.3 6.9
Ostomy Care 136 132 2.9 1.6 1.6 3.0
Continence & Critical
Care 136 124 9.7 9.2 1.7 7.7
Infusion Care 87 88 (1.2) (1.4) (1.4) 3.7
Total revenue 511 493 3.7 2.7 2.2 5.4
---------
Organic growth(2) Q1 2021 Q2 2021 Q3 2021 9 months
% 2021
----------------------- -------- -------- --------
Advanced Wound Care 9.4 23.8 5.3 12.1
Ostomy Care 3.0 4.4 1.6 3.0
Continence & Critical
Care 4.5 1.5 1.7 2.6
Infusion Care 11.7 1.2 (1.4) 3.7
Group 6.7 8.0 2.2 5.4
Advanced Wound Care r evenue of $152 million increased 2.1% on a
reported basis and 0.6%(1) in constant currency. Adjusting for the
disposal of the US Skincare products, which contributed $6.7
million of revenue in Q3'20, organic growth was 5.3%. As expected,
there was a slow-down in growth from Q2 given relatively tougher
comparatives in Q3; however, the business achieved continued strong
growth in the Global Emerging Markets, and improved commercial
execution in the US and Europe.
Ostomy Care revenue of $136 million increased 2.9% on a reported
basis and 1.6%(1) on organic and constant currency bases. The
business saw continued strong growth in Global Emerging Markets
partially offset by the impact of product rationalization and
pressure in some established markets.
Continence & Critical Care revenue of $136 million increased
9.7% on a reported basis and 9.2%(1) in constant currency.
Adjusting for the Cure Medical acquisition and the disposal of
HSG's non-core incontinence business revenues rose 1.7% on an
organic basis. Modest organic growth in Continence was partially
offset by an anticipated reduction in demand for Critical Care
products in all regions except the Global Emerging Markets. Our
GentleCath and Cure Medical brands continued to achieve strong
growth.
Infusion Care revenue of $87 million decreased 1.2% on a
reported basis or 1.4%(1) on organic and constant bases. This
performance, which was slightly better than anticipated, reflects
the order phasing against a tough Q3'20 comparative when the
category grew by 27%.
Strategic progress
Good progress with the implementation of our FISBE strategy has
continued. During the period we disposed of HSG's non-core
incontinence activities and also signed an agreement to acquire
Patient Care Medical for $30 million, expected to complete in
December. The business is a quality service provider based in
Austin, Texas .
Our focus on innovation has continued and we have introduced a
common product development and launch process to further advance
our new product pipeline. We have conducted investment,
development, and scale-up gate reviews for new products such as
MioAdvance Extended Wear Infusion Sets and the GentleCath(TM) Air
male catheters launching in 2022.
We have also continued to improve our regulatory processes
including optimising the phasing of MDR implementation over an
extended timetable thereby enhancing the efficiency and
effectiveness of the roll out.
We continued to make progress planning further investments in
key initiatives such as digital interactions with healthcare
professionals and consumers. We are progressing plans to expand our
Global Business Services centre beyond finance to include HR and
IT.
During the period we successfully issued $500 million of senior
unsecured 3.875% notes due October 2029. The full proceeds from the
issuance were used to prepay a portion of the existing bank debt.
This has further strengthened our balance sheet, diversified Group
debt and extends the weighted average maturity profile by c.2 years
to 4.3 years. The impact will be an extra c.$5 million of finance
expense in 2021, including the write-off of unamortised bank debt
fees, and c.$10 million of additional finance expense in 2022.
2021 Full Year Guidance
We now expect to be towards the upper end of our organic revenue
growth of guidance of 3.5-5.0% for the full year. We continue to
expect our constant currency adjusted EBIT margin to be between
18.0-19.0% and based on current FX this equates to guidance of
17.4-18.4% for the published adjusted EBIT margin.
Footnotes
(1) Constant currency growth is calculated by applying the
applicable prior period average exchange rates to the Group's
actual performance in the respective period.
(2) Organic growth presents period over period growth at
constant currency, excluding M&A activities.
Foreign exchange rates
Q3 2021 Average Q3 2020 Average
--------- ---------------- ----------------
USD/GBP 1.38 1.31
USD/EUR 1.18 1.18
****
Investor and analyst audio webcast
There will be an audio webcast hosted by CFO, Frank Schulkes,
for investors and analysts at 8:30am BST, details of which can be
found below and on the ConvaTec website,
www.convatecgroup.com/investors/reports.
Dial-in details:
United Kingdom - 020 3936 2999
United States - 1 646 664 1960
All other locations - +44 20 3936 2999
Access code - 439387
Enquiries:
Analysts and Investors
Kate Postans, Vice President, Investor Relations +44 (0)7826 447
807
ir@convatec.com
Media
Buchanan: Charles Ryland / Chris Lane / Hannah Ratcliff
+44 (0)207 466 5000
About ConvaTec
ConvaTec is a global medical products and technologies company
focused on therapies for the management of chronic conditions, with
leading market positions in advanced wound care, ostomy care,
continence and critical care, and infusion care. Our vision, which
encompasses our purpose, is: Pioneering trusted medical solutions
to improve the lives we touch. Our products provide a range of
clinical and economic benefits including infection prevention,
protection of at-risk skin, improved patient outcomes and reduced
total cost of care. To learn more about ConvaTec, please visit
www.convatecgroup.com
Forward Looking Statements
This document includes statements that are, or may be deemed to
be, "forward looking statements". These forward-looking statements
involve known and unknown risks and uncertainties, many of which
are beyond the Group's control. "Forward-looking statements" are
sometimes identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "aims" "anticipates",
"expects", "intends", "plans", "predicts", "may", "will", "could",
"shall", "risk", "targets", forecasts", "should", "guidance",
"continues", "assumes" or "positioned" or, in each case, their
negative or other variations or comparable terminology. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places and include,
but are not limited to, statements regarding the Group's
intentions, beliefs or current expectations concerning, amongst
other things, results of operations, financial condition,
liquidity, prospects, growth, strategies and dividend policy of the
Group and the industry in which it operates.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. These
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. As such, no assurance
can be given that such future results, including guidance provided
by the Group, will be achieved; actual events or results may differ
materially as a result of risks and uncertainties facing the Group.
Such risks and uncertainties could cause actual results to vary
materially from the future results indicated, expressed, or implied
in such forward-looking statements. Forward-looking statements are
not guarantees of future performance and the actual results of
operations, financial condition and liquidity, and the development
of the industry in which the Group operates, may differ materially
from those made in or suggested by the forward-looking statements
set out in this Presentation. Past performance of the Group cannot
be relied on as a guide to future performance. Forward-looking
statements speak only as at the date of this document and the
Company and its directors, officers, employees, agents, affiliates
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release any update of, or revisions to, any forward-looking
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