Medical products manufacturer Convatec, which specialises in wound dressings and colostomy bags, saw its share price plummet by almost 11 per cent in morning trading as the company announced a drop in profits.
The firm also announced that chief financial officer Nigel Clerkin would step down, as Convatec decided that the position should be located in the Reading head office. Clerkin was unwilling to relocate from Dublin.
Frank Schulkes has been named as his successor, and will take full responsibility for the role at the end of October. Schulkes was formerly chief financial officer of German industrial company Wittur Group, and previously held the same role at General Electric subsidiary GE Healthcare.
Although Convatec's revenues grew by 0.3 per cent during the first half of 2017, or 2.1 per cent on a constant exchange rate basis, adjusted operating profit fell by $15.5m to $193.5m.
Nevertheless, gross margin was up from 58.8 per cent to 60.3 per cent, and earnings per share grew from 0.04 cents to 0.06 cents.
Advanced wound care product revenues increased organically by 3.4 per cent over the first half, although this figure was impacted by supply issues. Convatec said it has taken measures to address these problems and expects growth in the second half. Revenue from ostomy care products was also on the up, driven by new product launches.
However revenue decreases came from the continence and critical care branch, due to planned product rationalisation, and the infusion device niche, where the timing of a major customer's product launch shifted revenues into the second half.
Why it's interesting
Convatec has not yet been through its first year as a public company, since it was listed by its private equity owners Nordic Capital and Avista just last October at a £4.4bn market cap.
It constituted the largest European initial public offering (IPO) of 2016, and was the largest European healthcare listing in history.
Since the IPO, the share price has been on a general climb. Nordic Capital and Avista have sold down part of their stake, but still hold around 7.34 per cent and 2.98 per cent of the company respectively.
With the share price having recovered a little since this morning but still down 6.47 per cent at the time of writing, they might be wishing they had sold up more while the going was good.
What Convatec said
"These results show the continued progress we are making across the business, as we deliver on our strategy to drive growth, innovation and efficiency," said chief executive Paul Moraviec.
"Building on our solid start to the year, with our balanced portfolio across products and geographies and structurally growing addressable markets, we are confident for the future and delivering our full year guidance, with accelerating growth in the second half underpinned by a growing contribution from new products and the unwinding of first half timing impacts."