Medical products maker Convatec rises after robust 2026 outlook on growing demand

(Reuters) -Britain's Convatec on Thursday forecast double-digit percentage growth in 2026 profit, boosting its shares as much as 8%, as the company banks on launches of products such as wound dressings and rising demand to bolster sales in key markets.

Healthcare firms are preparing for U.S. tariffs and pricing pressures alongside national security probes into imports of medical equipment, but Convatec has been streamlining operations to boost margins and ramping up investments to cater to demand.

The company, which also makes catheters and drug delivery systems, forecast adjusted earnings per share to grow at a double-digit rate next year after it said it would deliver on its targets for the current year. It tightened its 2025 organic revenue growth forecast to 6% to 6.5% excluding skin graft InnovaMatrix, from 5.5% to 7% previously.

"We're making good progress with our new product launches," CEO Jonny Mason said on an investor call.

"It's taken a while, but sales are building very nicely now in the U.S., and we expect that success to follow in Europe as well," he added.

COMPANY CAUTIOUS ABOUT U.S. LOWERING REIMBURSEMENT COSTS

North America and Europe are the company's two biggest markets, with more than half of its sales from North America. 

Convatec expects 5% to 7% growth in organic sales in 2026, but that forecast excludes InnovaMatrix, as the company exercises caution around a U.S. decision this year to lower reimbursement prices in government programs to cut costs.

The company said it faces challenges if the policy changes are implemented in their current form, but Mason told Reuters the U.S. would "remain a very strong and important market" for Convatec despite the pressures.

"Supportive colour around FY26 should provide some relief that underlying performance remains intact," J.P. Morgan analysts said in a note.

Convatec shares were up 5.8% at 1453 GMT and were among the top gainers on the blue-chip FTSE 100 index, which was down 0.8%.

(Reporting by Unnamalai L in Bengaluru; Writing by Pushkala Aripaka; Editing by Mrigank Dhaniwala, Eileen Soreng, Rod Nickel)