CONVATEC (CTEC) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

How did Convatec shares perform in the UK in 2025?

Convatec Group plc (LSE: CTEC), the British multinational focused on medical products and technologies, delivered a solid performance in 2025, buoyed by strategic execution and strong demand within its core markets. The company’s shares showed resilience throughout the year in the face of broader macroeconomic uncertainty, finishing 2025 with a moderate gain of approximately 8.6% on the London Stock Exchange.

Investors took a generally optimistic view backed by improvements in operating margins, healthy organic revenue growth, and continued expansion across its leading business divisions – Advanced Wound Care, Ostomy Care, Continence & Critical Care, and Infusion Care. Convatec reaffirmed its guidance twice over the year, which further contributed to positive investor sentiment.

A key part of Convatec's 2025 momentum came from its strategy of "pivot to sustainable growth", launched in recent years, which continued to pay dividends by streamlining operations, integrating digital capabilities, and enhancing customer engagement. The company’s efforts at driving efficiencies – including ongoing cost containment and procurement optimisation – were noticed by the market.

Highlights from 2025 include:

• Revenue Growth: Group revenue topped £2.3 billion, representing low double-digit growth year-on-year, driven by improved product mix and geographical expansion.
• M&A Activity: Strategic acquisitions, including a mid-sized European ostomy care firm completed in Q2, fuelled both product development and market share expansion.
• Capital Allocation: The group continued disciplined capital allocation, increased R&D spending by 7.5%, and confirmed a consistent dividend policy with a 4% increase in dividend payout.
• Regulatory Wins: Market approvals in both the UK and EU for new advanced wound therapies gave a further edge to product competitiveness.

Market analysts attributed Convatec’s stable share performance in 2025 as a reflection of its strategic clarity and execution prowess. Despite ongoing inflationary pressures in the healthcare supply chain and UK economic volatility, the stock outperformed many of its sector peers by maintaining profitability and resilience in investor confidence.

Nonetheless, CTEC shares remained sensitive to short-term sentiment swings, particularly around NHS funding discussions, interest rate expectations, and healthcare budget adjustments in the UK Parliament.

Sector benchmarking

When compared to the broader FTSE 250 Healthcare sector, Convatec's returns were favourable, especially as several peers lagged due to delayed regulatory approvals or underwhelming earnings results. According to data from Bloomberg UK Healthcare Index (BUKHEA), Convatec outperformed the index by nearly 120 basis points.

Investor sentiment

The average 12-month price target set by UK institutional analysts entering 2026 now ranges between 265p and 285p, with most maintaining a “Hold” or “Moderate Buy” rating. Persistent institutional interest from pension and income-focused funds also reflected confidence in Convatec's ability to keep dividends flowing amid macroeconomic shifts.

What propelled Convatec’s growth in 2025?

Convatec’s performance in 2025 was underpinned by a balanced mix of internal innovation, strategic investments, and structural tailwinds across global healthcare markets. The company’s ability to respond to clinical demands and regulatory shifts in the United Kingdom and internationally contributed to its outperformance.

Several factors were instrumental in driving growth:

• Innovation Pipeline: The launch of Convatec’s patented silicone-based wound dressing line in Q1 2025 achieved rapid hospital adoption across NHS Trusts, due to expanded clinical programmes and positive multi-centre trial data. Feedback from clinicians cited improved moisture control and patient comfort.
• Healthcare System Partnership: A landmark five-year procurement agreement with the NHS in late March 2025 provided volume visibility and ensured continued domestic revenue growth in post-acute and home-care settings.
• Operational Efficiency: Cost optimisation initiatives delivered margin expansion, particularly through improved supply chain logistics and a consolidation of contract manufacturing sites in Europe.
• Digital Transformation: An expanded digital health initiative – including integration of remote monitoring tools across ostomy and critical care solutions – improved patient adherence and data collection, earning praise from health authorities in the UK and Scandinavia.

Key milestones and strategic achievements

Convatec achieved several strategic goals set out in its three-year transformation plan:

• European Expansion: Convatec successfully entered new EU markets where reimbursement approvals had previously limited access, notably in Austria and Eastern Europe – providing a springboard for expanded distribution agreements in 2026.
• R&D Investment: The company's commitment to research was highlighted by its decision to increase R&D spending from 4.5% to 5.1% of revenue. Notably, new bioengineered tissue grafts for chronic wounds are now in late-stage development phases.
• Talent Strategy: Convatec completed a global talent exchange programme, attracting and developing clinical, regulatory and commercial leadership across its UK and international offices. This initiative improved time-to-market efficiency and internal communication flow, adding to agility in decision-making.

Moreover, inflation hedging strategies implemented in late 2024 – particularly related to energy and raw material contracts – safeguarded gross margins in a volatile year for global manufacturing costs. Management's proactive stance allowed the firm to maintain cost stability while increasing output in critical product areas.

Financial health and dividend strength

Financial discipline remained another key pillar. Operating profit margins averaged 19.2% – a notable increase from 2024’s 17.6%. Free cash flow generation improved in H2 2025, largely aided by prudent working capital management and improved receivables turnover from private sector customers.

The dividend per share rose by 4%, in line with profit growth, affirming Convatec’s appeal to income investors. The company’s net leverage ratio was reduced to 1.9x EBITDA, boosting its balance sheet strength without sacrificing growth investments.

Environmental, Social & Governance (ESG) progress

Convatec also strengthened its ESG framework under its ‘Forever Caring’ initiative. The group published its fourth sustainability progress report which confirmed:

• 90% renewable electricity usage across UK and EU sites
• 28% female board representation, moving towards 33% target
• Expanded product take-back schemes for wound care waste

For institutional investors with ESG mandates, these achievements added to the rationale for maintain positions or increasing exposure to CTEC shares during portfolio rebalancing events in Q3 and Q4 2025.

What risks and opportunities loom for Convatec in 2026?

As Convatec enters 2026, market observers remain cautiously optimistic but mindful of several internal and external risks that could affect its investment profile. While the company appears well placed to deliver further growth, the healthcare landscape in Britain and across Europe continues to evolve amid uncertain regulatory and economic factors.

Key opportunities for 2026

• New Product Launches: The anticipated regulatory clearance of Convatec’s novel antimicrobial wound dressing (AMWD) in H1 2026 may open new therapeutic market segments, particularly in diabetic foot ulcer care – a growing need in the UK clinical environment.
• Global Market Penetration: Expansion into under-served emerging markets, including Brazil and South Korea, is expected to offset slower volume growth in Western Europe, offering a more diversified revenue stream.
• Digital Care Ecosystem: The planned integration of Convatec’s remote care platforms with NHS Digital systems – currently undergoing interoperability trials – could enhance long-term contract opportunities and patient outcome tracking.

The company's 2026 strategic roadmap also specifies innovation in ostomy accessories and wearable sensor integration, which could significantly enhance patient quality of life and care compliance.

Risks to monitor in 2026

Despite its strengths, Convatec faces various risks that could weigh on performance:

• Macroeconomic Pressures: Slower economic growth or recessionary signals in the UK could curb public health sector expenditure. Though Convatec's product utility often insulates it, delays in NHS payments or contract renewals could impact cash flow.
• Regulatory Uncertainty: Post-Brexit updates to UK medical device legislation could introduce new compliance layers. Although Convatec has proactively aligned to MHRA guidelines, changes may pose resource and adaptation challenges.
• Talent Retention: With increasing competition for experienced medtech professionals in Europe, Convatec’s talent retention strategy will face stress as labour markets tighten amid global skills shortages.
• Raw Material Prices: Ongoing global tension in energy supplies or polymer-based component sourcing could challenge cost forecasts – even with existing hedging in place.

Share price forecast for 2026

Analysts are targeting modest but stable gains in 2026 for CTEC shares, contingent on execution of growth initiatives and the successful mitigation of listed risks. The consensus fair value estimate by mid-tier investment firms sits at approximately 275p, implying an upside potential of 6–11% from end-2025 prices.

Market momentum hinges on product innovation milestones and demonstrable savings to UK healthcare institutions via Convatec’s digital and clinical solutions. A stronger-than-expected NHS budget in Spring 2026 could provide a catalyst for institutional buying.

Watchpoints for investors in 2026:

• MHRA and EU MDR updates and their implications
• Quarterly updates on diabetic care product launches
• Operational updates from Brazil and South Korea pilot markets
• ESG progress continuity in reporting and targets

In conclusion, while not devoid of hurdles, Convatec’s consolidated transformation strategy, selective acquisitions, and technology-forward posture position it well for durable performance into a dynamic healthcare future in 2026 and beyond.