On Tuesday, Coloplast (OTC:CLPBY) discussed second-quarter financial results during its earnings call. The full transcript is provided below.
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View the webcast at https://getvisualtv.net/stream/register/?coloplast-evjwx4pp4s
Summary
Coloplast reported strong financial performance in Q2 2526, with organic growth in OstomyCare, Continence Care, and interventional urology showing robust figures.
The company revised its full-year guidance for organic revenue growth to 5-6% and anticipates continued momentum in the second half, despite challenges in the wound and tissue repair segments.
New CEO Gavin Wood emphasized a focus on innovation, leadership development, and commercial execution as key strategic priorities, aligning with the Impact 4 strategy to drive long-term growth.
Operational highlights included strong performance in the US market, particularly in men’s health and catheter products, while challenges persisted in China and the European wound care market.
Management expressed confidence in the company’s strategic direction but acknowledged the need for further assessment and adaptation to maintain competitiveness and address market challenges.
Full Transcript
OPERATOR
Ladies and gentlemen, welcome to the Coloplast Interim Financial Statement for H1 2025/26 conference call. I am Lorenzo, the Chorus Call Operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. You can register for question at any time by pressing STAR and 1 on your telephone. For operator assistance, please press STAR and 0. The conference must not be recorded for publication or broadcast at this time. It’s my pleasure to hand over to Andres Lonning Skopgaard, Executive Vice President and CFO. Please go ahead sir.
Anders Launnings Gogo (CFO)
Our Q2 2025/26 conference call. I am Anders Lonning Skopgaard, CFO of Coloplast and I’m very happy to introduce our new President and CEO Gavin Wood, who joined the company on May 1st. Please turn to slide number three.
Gavin Wood (President and CEO)
Thank you Anders and good morning everyone. As Anders mentioned, I joined Coloplast on May 1st and this is my first opportunity to speak with many of you. So let me briefly introduce myself and share what excites me about joining Coloplast for this next chapter. I’ve spent more than two decades in global medtech, leading commercial organizations and multi billion dollar businesses across different regions and therapeutic areas. Most recently I served as Company Group Chair of Johnson and Johnson Med Tech EMEA with an organization of more than 7,000 employees and ownership across surgery, orthopedics and cardiovascular solutions. Prior to this, I was the Worldwide President of Ethicon’s Wound Closure and Healing business and before that the Executive Vice President of Global Commercial at Munlica. I started my med tech career as a sales rep at Ethicon Endosurgery, followed by a series of traditional roles across sales and sales management. It was there that I first saw the impact a medical device can have when it’s used by a physician on a patient or a customer, and that experience is what really attracted me to the medtech industry and has motivated me to stay A bit of context on me personally. I’m Canadian by birth, currently living in Switzerland and relocating to Denmark. My career has come across multiple geographies and is shaped by a global mindset and a strong appreciation for different cultures and ways of working. As I begin this new chapter, I want to put a few words to why Coloplast and why now? First, the deep sense of purpose. Coloplast was born because a nurse saw her sister suffering and refused to accept it, and an engineer committed to bringing her idea to life. It was about solving a human problem. Second, the people, the people behind the business. Every conversation I’ve had has confirmed that Coloplast is full of great talent, passion and commitment. And I can feel that. And as in any company, it’s the quality of the people that ultimately determines what’s possible. Third, the ambition. Coloplast wants to write its next chapter to become even more impactful towards users, customers and communities, helping 4 million people long term, about twice as many as we serve today. Our 2030 strategy, Impact 4 is designed to build that future by setting the standard of care at scale, anchored in deep customer centricity, and that resonates with me deeply. I’m a builder at heart and I see something meaningful that we can achieve together. The company has a strong legacy built over many years, and as I approach this role with curiosity and genuine respect for that history at this stage, for me it’s all about building a perspective, forming a clear view of where the future growth opportunities may lie and where the organization may need to challenge itself as we look ahead. At its core, this is about continuing what Coloplast has done well for many years, converting investment, focus and execution into strong and sustainable returns over time. The way I lead is grounded in a few simple beliefs. I believe value is created when ambition is translated into a number of clear priorities, when decisions are made as close to the customers as possible, and when teams are empowered with accountability for outcomes. That’s how consistency and momentum are built over time. And ultimately, I believe focus drives results. And this all starts with people. I place a strong emphasis on developing leaders and creating the environment where teams can perform at their best. Because the culture, people and strength of an organization ultimately determines what’s possible and what we can deliver together. As I start my new role, I will be spending time close to the business, engaging across the organization in our key markets, deepening my understanding of the Impact four and focusing on strong commercial execution from day one. This is about seeing how Coloplast operates in practice, how decisions are made, and how our teams deliver for impact for our customers each and every day. My focus is building best in class talent to drive performance and results and I’m looking forward to meeting many of you on the road in the coming months. Coloplast was built by listening closely to our users and our customers and I’m excited to keep learning, listening and building the next chapter of this company together with the people who make it possible. With that, I’ll hand back to Anders, who will take us through the financial results for the quarter. Please turn to slide number four.
Anders Launnings Gogo (CFO)
Thank you, thank you Gavin and once again a warm welcome to Coloplast. On April 23rd we revised our guidance for full year 2526 and pre announced our results for the first half of 2526. We delivered a very strong second quarter excluding wound and tissue repair with solid underlying performance across the majority of the group. Now let’s take a closer look at today’s results. Please turn to slide number five. In Ostomy Care, organic growth was 5% for the first six months and growth in Danish Kroner was 1%. In Q2 organic growth was 7% with growth in Danish Kroner of 3%. Following a soft start in Q1, we saw the anticipated pick up in momentum in Q2 and we expect this good momentum and continued market share gains to continue into the second half of the year. From a product perspective, our Sensu Emiyu portfolio continues to be the main growth driver followed by the Brawa supporting products. From a geographical perspective, growth in the quarter was broad based across regions with solid contribution from Europe led by the UK and Germany. I would also like to call out the US which delivered double digit growth and continues to deliver strong underlying momentum from Q1. Our US business is in a great shape in H1, both Vizient and Premier. The two largest GPOs in the US renewed Colopast’s national group purchasing agreements for Ostomy Care and we are seeing good uptake of our latest SenSura Mio launches, the Black Bags and the new two piece offering which has been well received in the market. Our main challenge in Ostomycare remains China which saw another quarter with subdued growth due to the continued weak consumer sentiment and competitive pressures from domestic players in the Community channel For the full year. We now expect sales in China to decline slightly year over year. Outside China, the rest of our emerging markets contributed nicely to growth. In Continence care, organic growth was 7% for the first six months and growth in Danish Kroner was 3%. In Q2, organic growth was 8% and growth in Danish Kroner was 4%. Growth in the quarter was driven by the Luja Catheter portfolio which performed strongly across key European markets and the us. The male catheter continued to perform well while the female catheter saw a strong uptake in in the quarter driven by Europe. Lugia is our most important innovation in Conscience Care in a decade and it’s encouraging to see how Lugia continues to pick up momentum becoming an increasingly larger share of our growth contribution within intermittent catheters. It’s a great example of how customer centric innovation backed by compelling clinical evidence is setting a new standard of care in the market. Our bowel care business also continued its good momentum and made a strong contribution to growth in the quarter driven by the Peristein portfolio. In Europe, voice and respiratory care posted 8% organic growth for the first six months with growth in Danish kroner of 5%. In Q2, organic growth was also 8% and growth in Danish corner was also 5%. Growth in laryngectomy in Q2 was high single digit and driven by an increase in the number of patients served in existing and new markets as well as increase in patient value driven by the Provox Live portfolio. Growth in tracheostomy in Q2 was mid single digit driven by continued solid underlying demand partly offset by phasing in distributor markets. For From a geographical perspective, all regions contributed to growth driven by Europe and the US in wound and tissue repair, organic growth was 1% for the first six months and growth in Danish kroner was minus 7 with 3 percentage points negative impact from the skin care divestment in December 24th. In Q2 organic growth was minus 2% and growth in Danish kroner WAS minus 6. Q2 revenue from biologics amounted to 283 million Danish krona for with 0% organic growth and 0% operating profit margin excluding the PPA amortization. As also mentioned on the extraordinary conference call three weeks ago, we continue to see a healthy inpatient business with growth that remains at a healthy double digit level despite a slight easing of momentum in Q2. On the other hand, our outpatient business is challenged with significant sales decline in line with the rest of the market. In advanced wound dressings, sales declined 2% in Q2 and 3% in the first half of the year. China detracted from growth due to the product return initiated in Q3 last year with a negative revenue impact of around 25 million in the quarter similar to the impact in Q1 outside China, Europe had a soft quarter across markets. In interventional urology, organic growth was 8% for the first six months and growth in Danish Corner was 3%. In Q2 organic growth was 8% and reported growth in Danish Corner was 2%. Growth in Q2 was mainly driven by continued strong momentum in the US men’s health business driven by the Titan Penile Implants. From a geographical perspective, the US continued to be the main contributor followed by Europe on 2-18-26. Culp has completed the acquisition of all shares and voting rights of Euromedica, a commercial stage medical technology company specializing in the treatment of stress urinary incontinence with a solution highly complementary to our existing men’s health business. The integration of Uramedica is progressing well and the acquisition has been well received by our existing men’s health customers. Before turning to the H1 financials, let me make one final remark on organic growth. While performance in the wound tissue repair franchise remains below our expectations, this reflects a set of external headwinds that we are actively addressing. Importantly, more than 80% of our business continues to perform well with solid growth and market share gains. Now with this, let’s look at our H1 financials. Please turn to Slide 6. Reported revenue for the first six months increased by 171 million Danish krona, or 1% compared to last year. Organic growth contributed 789 million Danish krona, or around 6% to reported revenue. Inorganic revenue, mostly related to the divestment of the skin care business in December 24 reduced reported revenue by 70 million Danish krona, or around 50 basis points. Foreign exchange rates had a negative impact of 548 million Danish krona or 4 percentage points on reported revenue, mainly related to the depreciation of the US Dollar, the British pound and a basket of emerging markets currencies against the Danish koner. Please turn to Slide 7. Gross profit for the first six months amounted to 9.5 billion Danish krona, corresponding to a gross margin of 67% compared to 68% last year. The gross margin was negatively impacted by Currencies of around 60 basis points, mostly related to the depreciation of the US dollar, the British sterling and the basket of emerging markets currencies against the Danish kroner and appreciation of the Hungarian forint against the Danish kroner. Ramp up costs in Costa Rica and Portugal also impacted the gross margin negatively. The negative impact was partly offset by lower inflation on freight compared to last year. Operating expenses for the first six months amounted to 5.8 billion Danish kronor, a 2% increase from last year. The distribution to sales ratio for the first six months was 33% on par with last year. The growth in distribution costs were flat year over year, reflecting one off logistics cost in the US last year and lower sales costs in China this year, partly offset by Keras one off cost this year. The development in distribution costs were also positively impacted by the depreciation of the US Dollar against the Danish krona. The admin to sales ratio for the first six months was 5% compared to 4% last year and includes around 15 million Danish krona in one off advisory costs incurred by Kiosis in Q1 in connection with the recent CMS regulatory changes in the US outpatient setting. The RD to sales ratio for the first six months was 4% of sales compared to 3% last year. The increase was driven by high activity levels in chronic care and biologics. Overall, this resulted in an operating profit before special items of 3.7 billion Danish kroner in the first six months or a 3% decrease compared to last year. The EBIT margin before special items in the period was 26% compared with 27% last year, reflecting around 70 basis points negative impact from currencies and around 40 basis points negative impact from chaos in constant currencies. EBIT grew 5% compared to last year. Coloplast incurred special Items expenses of 3.1 billion Danish krona in the first half of the year, of which 3 billion Danish kroner relates to the chaos’s impairment loss. Financial Items in the first six months were a net expense of 63 million Danish krona compared to a net expense of 385 million Danish krona last year, driven mostly by interest expenses related to the financing of the Atzos medical acquisition, which were largely offset by gains on exchange rate adjustments mostly related to the US Dollar, Hungarian for rent and the Costa Rican colon. The tax expense in the first six months was 121 million Danish corner compared to an ordinary tax expense of 717 million Danish krona last year. The tax rate was 22% on par with the ordinary tax rate last year. Net profit before special items in the first six months was 2.8 billion Danish krona or a 6% increase from last year when adjusted for the non recurring tax expenses last year. Adjusted diluted earnings per share before Special items increased by 5%. Please turn to slide number 8. Operating cash flow for the first six months was an inflow of 3.7 billion Danish krona compared to an inflow of 2.7 billion Danish krona last year. The positive development in cash flows from operating activities was mostly driven by favorable development in working capital. …
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