Convatec shares slump on wound care uncertainty
By Benjamin Chiou
Date: Thursday 16 May 2024
(Sharecast News) - Shares in medtech group Convatec slumped on Thursday despite the company keeping its top-level guidance for 2024, though growth forecasts in the Advanced Wound Care division have been reduced due to "short-term uncertainty".
The company said it is still on track to deliver organic group revenue growth of between 5% and 7% in 2024.
Growth forecasts for Ostomy Care and Infusion Care remain unchanged, while Continence Care expectations have increased to mid to high single-digit percentage growth (from mid single-digit guidance in March) due to a more positive performance in the first quarter.
However, Advanced Wound Care revenues are now expected to grow by mid to high-single digits (down from high single-digit guidance previously), which it ascribes to uncertainty arising from draft proposed local coverage determinations (LCDs) which could affect its InnovaMatrix product, which generated $74m in sales last year.
InnovaMatrix launched in the US in early 2022 as the first porcine placental-derived extra cellular matrix device, to manage wounds like diabetic foot ulcers, venuous leg ulcers and trauma wounds.
However, draft proposed LCDs published by seven Medicare Administrative Contractors in April relating to the use of products to treat diabetic foot ulcers and venous leg ulcers did not include InnovaMatrix on the covered list, despite it meeting technical requirements and being approved for use by the FDA. This, Convatec says, was due to its recent entry to the market and the timeline necessary to generate and to publish clinical evidence.
"We are actively engaging with all relevant parties during the 45-day consultation window, which may lead to different outcomes than the current draft proposal. Convatec firmly believes that InnovaMatrix® delivers strong clinical outcomes for patients and choice for health care practitioners," the company said on Thursday.
Shares were down 4.2% at 255p by 0850 BST.
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