TIDMCTEC
RNS Number : 9851W
ConvaTec Group PLC
29 April 2021
LEI: 213800LS272L4FIDOH92
29 April 2021
ConvaTec Group Plc
Trading update for the three months ended 31 March 2021
Strong Q1 performance - guidance unchanged
Key Points:
-- Q1 Group reported revenue of $500 million was 8.7% higher
year on year; up 6.7%(1) on an organic basis or 5.4%(2) in constant
currency.
o Strong organic growth in Advanced Wound Care and Infusion
Care, modest growth in Ostomy Care and Continence Care and
continued strength in Critical Care.
-- Good progress with our FISBE (Focus, Innovate, Simplify,
Build, Execute) strategy as we pivot to sustainable and profitable
growth:
o Acquired Cure Medical LLC in March for an upfront
consideration of $85m to strengthen Continence Care.
o Continued to build our sales and marketing capabilities.
o Execution is improving with particularly strong growth in the
Global Emerging Markets.
-- 2021 full year outlook is unchanged given continuing macro uncertainties:
o Organic revenue growth between 3-4.5%
o Constant currency(2) adjusted EBIT margin of 18-19.5%.
Currency headwind is currently c.80bps.
Karim Bitar, Chief Executive Officer, commented:
"We have made a good start to the year, continuing to deliver
for our customers and patients. In addition, we effectively
executed on our strategy, notably with the acquisition of Cure
Medical which strengthens our position as a leading developer and
manufacturer of continence care products in the large and growing
US market place."
"We are making good progress and remain focused on executing on
the significant number of strategic initiatives underway as we
continue on our journey to pivot to sustainable and profitable
growth. Despite the near term uncertainties, I remain confident in
ConvaTec's growth prospects."
Q1 2021 Q1 2020 Reported Constant currency Organic
Revenue Summary Reported Reported growth % growth(1) growth(2)
$'m $'m % %
----------------------- ---------- ---------- ---------- ------------------ -----------
Advanced Wound Care 143 132 8.8 3.8 9.4
Ostomy Care 136 127 6.7 3.0 3.0
Continence & Critical
Care 128 119 7.4 5.6 4.5
Infusion Care 93 82 13.9 11.7 11.7
----------------------- ---------- ---------- ---------- ------------------ -----------
Total revenue 500 460 8.7 5.4 6.7
----------------------- ---------- ---------- ---------- ------------------ -----------
Advanced Wound Care r evenue of $143 million increased 8.8% on a
reported basis and 3.8% in constant currency. The business
experienced a 5.0% currency tailwind given the proportion of
non-dollar sales and the relative movements in FX. Adjusting for
the disposal of the US Skincare products, which contributed $6.8m
of revenue in Q1'20, organic growth was 9.4%. We saw particularly
strong growth in Global Emerging Markets as we strengthen our
commercial execution across Asia and Latin America. There was
strong growth in Europe helped by some beneficial phasing and
enhanced by a relatively soft Q1 2020 comparative. In North America
we experienced some continued softness, in part a function of the
ongoing COVID-19 pandemic coupled with a tougher comparative given
the inventory building we saw in Q1 2020.
Ostomy Care revenue of $136 million increased 6.7% on a reported
basis and 3.0% on constant currency and organic bases. We achieved
strong growth in Global Emerging Markets. There was modest growth
in North America, with favorable phasing and growth in HSG Ostomy
helping to offset the relatively strong comparatives. These
positive performances were partially offset by a decline in Europe
given continued rationalisation and the inventory build-up we saw
in Q1 2020.
Continence & Critical Care revenue of $128 million increased
7.4% on a reported basis and 5.6% in constant currency. After
adjusting for the Cure Medical acquisition, which contributed $1.3
million of incremental revenue during the period, revenues rose
4.5% on an organic basis. Despite lower new patient starts across
the segment in 2020, Continence Care achieved moderate growth.
Demand for Critical Care products remained strong, up 7.5% in
constant currency during the quarter, although the performance
turned negative during the period as expected given strong COVID-19
related sales in 2020.
Infusion Care revenue of $93 million increased 13.9% on a
reported basis or 11.7% on constant currency and organic bases.
This was primarily driven by continued strong demand from diabetes
customers for our innovative infusion sets supported by growth in
non-diabetes, albeit off a small base. In April Medtronic announced
the launch, in selected European markets, of our new and
proprietary extended wear infusion set.
Strategic Transformation
We have continued to make progress implementing our FISBE
strategy, most notably with the acquisition of Cure Medical
LLC.
On 15(th) March we acquired the business (on a cash free/debt
free basis) for $85 million(3) . B ased in California the business
develops, manufactures and distributes intermittent catheters.
Bringing together Cure Medical and ConvaTec's Continence Care
business allows us to better serve continence customers in the US,
which accounts for the largest demand for such products in the
world. The two portfolios are complementary; together we will offer
a more comprehensive range of continence products and services for
patients and our partners to better serve their broad range of
needs. Had ConvaTec owned Cure Medical for the whole of 2020 it
would have contributed an incremental c.$32 million of revenue.
Outlook
Given the continuing macro uncertainties at this early point in
the year and relatively tougher comparatives in the second half,
our guidance remains unchanged with organic(1) revenue growth of
3-4.5% and a constant currency(2) adjusted EBIT margin of
18-19.5%.
Footnotes
(1) Organic growth is calculated by applying the applicable
prior period average exchange rates to the Group's actual
performance in the respective period and excluding M&A
activities.
(2) Constant currency growth is calculated by applying the
applicable prior period average exchange rates to the Group's
actual performance in the respective period.
(3) Subject to over-performance over the course of 2021 through
to 2023 there is a potential earn out of up to $10 million payable
no later than 20 April 2023.
Foreign exchange rates
Q1 2021 Average Q1 2020 Average
--------- ---------------- ----------------
USD/GBP 1.38 1.28
USD/EUR 1.21 1.10
Investor and analyst audio webcast
There will be an audio webcast hosted by Frank Schulkes, CFO for
investors and analysts at 8am 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 - +44 203 936 2999
Access code - 641140
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 document. 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 Group
and its directors, officers, employees, agents, affiliates and
advisers expressly disclaim any obligations or undertaking to
release any update of, or revisions to, any forward-looking
statements in this document.
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END
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April 29, 2021 02:00 ET (06:00 GMT)
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