Weak US, UK hit ConvaTec first quarter revenues

Medical products group ConvaTec on Friday said first quarter revenues fell 6% on a reported basis as a “challenging” UK market and weaker US performance hit revenues.

The company said revenue fell to $430.6m from $458.2m a year earlier. The figure included an additional one-off provision in the quarter of $8.9m, from a change of accounting methodology.

The company reiterated full-year guidance of organic revenue growth at 1% - 2.5% and adjusted earnings before interest and tax (EBIT) margin of 18% - 20%, including $50m of operational spend associated with its transformation initiative and medical device regulation.

Excluding these costs, adjusted EBIT margin would be 21% - 22.5% Convatec said.

Performance in advanced wound care in the first quarter was impacted by a weak performance from the skincare business and continuing underperformance in the US and negative channel movements in the UK, the company said.

“The combined drag on growth from our older DuoDERMTM and base AQUACELTM Hydrofiber products reduced slightly in the quarter, compared to the prior year, although our skin care business (around 6% of franchise revenue) showed continued weakness and negatively impacted franchise organic growth by around 200 basis points in the quarter,” the company said in a statement.

“In the UK despite some stocking initiated by the NHS in preparation for Brexit, we continued to see negative year on year channel inventory movements in the quarter, as outlined in our February announcement. We continue to see challenging market dynamics in the UK.”