Convatec revives itself after post-private equity slump
Karim Bitar, who passed away last month, praised for turnaround
When Karim Bitar arrived at Convatec in 2019, the FTSE 100 medical technology group was floundering. The company had issued two profit warnings in the space of a year, its share price was in the doldrums and the board was on alert for a hostile bid.
“Most people thought the business should be broken up,” says Jonny Mason, former Convatec finance chief and Bitar’s successor as chief executive. “Well, Karim disagreed with all of that.”
Over the following six years Bitar, who passed away in October after a period of medical leave, orchestrated an impressive turnaround. He brought in new leaders across the company, invested heavily and focused the business on chronic care, developing products for those with long-term medical conditions.
Now, the company’s share price has recovered to its post-initial public offering level and it is predicting double-digit earnings growth in 2026. Analysts believe it will deliver an operating margin of 16 per cent on revenues of £1.9bn this year, up from a 5 per cent margin in 2019 on revenues of £1.4bn.
“It’s a wonderful achievement”, says Mason, reflecting on his predecessor’s success.
Announcing Bitar’s passing, chair John McAdam described him as a “much admired and respected leader, with strong values, conviction, and above all else, an unshakeable focus on people relying on Convatec products, services and solutions”.
Convatec, which makes medical products such as wound dressings and colostomy bags, started life as a division of pharmaceutical group ER Squibb & Sons, before coming under private equity ownership in 2008. It went public in the biggest UK IPO of 2016 but struggled to deliver growth, with investors questioning its cluttered product portfolio, lacklustre research and development spend and slim operating margins.
By 2019, its shares had fallen to nearly half their listing price and its previous CEO had stepped down on the back of the profit warnings. The company was rudderless and there was talk of a takeover by Swedish private equity group EQT.
It was into that environment that Bitar stepped in 2019, with a plan to rejuvenate the business by narrowing its product range to a few key areas, increasing investment and rejigging the company’s organisational structure.
Convatec’s offering was trimmed to just four categories — advanced wound dressings, ostomy devices, products for those with urinary incontinence and infusion sets used to deliver drugs to the bloodstream.
A scattering of regional organisations within the company was done away with and in its place, four global presidents, each with a focus on one product category, were installed. It was a change that “ensured standardisation across the world”, says Mason. “We have a vision which everybody in the organisation knows.”
On a personal level, Bitar had “strategic clarity” and could spot talented individuals, “coaching and mentoring them”, Mason adds. “He was very personable, a real family man and he brought that caring dimension to work with him every day”, a factor that Mason says contributed to improved employee engagement.
“From an analyst perspective, what started to change was the deployment of capital,” says Miles Dixon, head of healthcare and life sciences research at UK investment bank Peel Hunt. Over the period Bitar was at the helm, R&D spending more than doubled to $111mn in 2024.
At first, all that spending ate into profit margins, frustrating some investors. But Bitar’s strategy eventually came good, with products that improved the experience of patients, and ultimately, increased revenues for the business.
One of Convatec’s latest products helps address the spasms brought on by advanced Parkinson’s disease. Patients typically take tablets that control the involuntary movements, but their effectiveness wears off between doses. Convatec addressed the problem by developing a device that delivers the medication continuously into tissue beneath the skin, where it is then absorbed into the bloodstream.
Mason recalls the “remarkable” impact it had for one early user, who was “shaking quite dramatically and unable to complete household tasks” such as making a cup of coffee, but was able to do so thanks to the device and a drug developed by biotech group AbbVie.
There remain challenges for Convatec as it moves forward, though.
While it has escaped President Donald Trump’s tariff war largely unscathed, a push to crack down on healthcare costs has hit the company in the US. Earlier this year Convatec’s share price fell sharply after US regulators indicated they wanted more evidence on the efficacy of its InnovaMatrix wound care membrane. InnovaMatrix makes up just 3 per cent of Convatec’s total revenue, but investors grew anxious because it is one of the company’s fastest growing products by sales.
Nonetheless, Peel Hunt’s Dixon says the company’s story is a rare example of a successful turnaround in the healthcare sector. “Delivering growth is incredibly hard and it’s no mean feat to do so on public markets with a company that, frankly, had lost a lot of trust with investors.”
For Mason, “the sadness of Karim passing on immediately after achieving this is very poignant”. But, he says, “it’s a fabulous legacy” that Bitar leaves behind.