Coloplast's Balancing Act: Growth Persists Amidst Regulatory Hurdles

HUMLEBAEK, Denmark – February 06, 2026 – Danish medical device maker Coloplast A/S reported a resilient first quarter for its 2025/26 fiscal year, delivering 6% organic growth despite significant external pressures that flattened its reported revenue growth to zero. The company is navigating a complex landscape marked by major U.S. reimbursement policy changes that have disrupted its wound care business, a product recall in China, and strong currency headwinds, all while making a strategic move to expand its urology division through a new acquisition.

The results paint a picture of a company performing a delicate balancing act: leveraging strong performance in its Continence Care and Interventional Urology segments to offset significant challenges in its Wound & Tissue Repair division. While the company maintained its full-year guidance, it significantly downgraded growth expectations for its high-profile Kerecis wound care unit, signaling a year of adaptation and uncertainty ahead.

Wound Care Woes: US Policy and China Recall Hit Hard

The most significant challenge for Coloplast this quarter stemmed from its Wound & Tissue Repair business, which was hit by a perfect storm of regulatory and market-specific issues. The segment’s Kerecis unit, known for its innovative fish-skin technology for wound healing, saw its growth slow dramatically to 10% organically, a stark contrast to previous expectations.

The slowdown is a direct result of sweeping reimbursement changes implemented by the U.S. Centers for Medicare & Medicaid Services (CMS) that took effect in January 2026. The new policy overhauled the payment model for skin substitutes in outpatient settings, shifting from a system based on Average Sales Price (ASP) to a standardized flat rate. This change was driven by CMS concerns over what it called "dramatic" increases in spending and potential "profiteering" in the skin substitutes market. The new fixed-rate model is expected to slash Medicare spending in this category by nearly 90%, creating massive disruption for manufacturers.

Coloplast confirmed the policy shift caused "significant sales disruption from Medicare reimbursement changes in the outpatient setting," leading to negative growth for Kerecis in that specific channel. In response, the company has revised its full-year growth forecast for Kerecis down to around 10%, a steep drop from the previously anticipated 25%. The company expects market uncertainty to continue throughout the year as it adapts its go-to-market model under the new reimbursement landscape.

Compounding the pressure on the division, Coloplast’s Advanced Wound Dressings business declined by 3%. This was driven by the voluntary product return of all Biatain® Adhesive dressings in China, a move that negatively impacted Q1 revenue by approximately DKK 25 million. The recall not only affects the bottom line but also raises concerns about market trust and potential increased regulatory scrutiny in the critical Chinese market.

Bright Spots in Urology and Chronic Care Drive Momentum

While wound care faced headwinds, Coloplast’s other divisions demonstrated robust health. The Interventional Urology segment was a standout performer, delivering strong 8% organic growth. This was fueled by a solid performance in its U.S. Men’s Health business and a successful recovery in Kidney & Bladder Health following a voluntary product recall initiated in the prior fiscal year.

Underscoring its commitment to this growth area, Coloplast announced that its U.S. subsidiary has agreed to acquire Uromedica, a private medical technology firm specializing in treatments for stress urinary incontinence (SUI). Uromedica’s portfolio, which includes adjustable, minimally invasive systems for both male and female SUI, is seen as a highly strategic fit. The acquisition, expected to close in February 2026, will significantly strengthen Coloplast's offerings in the urology space, allowing it to provide a more comprehensive suite of solutions for patients with intimate healthcare needs.

Meanwhile, the company’s core Chronic Care business showed continued strength. The Continence Care division grew by a solid 7%, largely driven by the continued strong uptake of Luja™, its innovative catheter for both male and female users. The Ostomy Care business also delivered 4% growth, which the company described as a soft start driven by a high baseline in the U.S. and negative growth in China, but with an expectation for momentum to pick up through the rest of the year.

Navigating a Complex Global Landscape

Beyond segment-specific challenges, Coloplast contended with broader macroeconomic forces. A 4-percentage-point negative impact from currency fluctuations completely erased the company's organic growth in its reported Danish Krone (DKK) figures. This headwind, likely driven by a strong DKK against key currencies like the U.S. dollar, highlights the vulnerability of global companies to foreign exchange volatility.

The company’s performance in China also signals regional difficulties extending beyond the wound dressing recall. The press release noted that the soft start in Ostomy Care was partly driven by "negative growth in China." This points to wider market pressures in the region, which may include intensified local competition and the impact of China's volume-based procurement policies, which are designed to drive down the prices of medical devices.

Despite the mixed results and clear challenges, Coloplast's leadership reaffirmed its full-year financial guidance, projecting around 7% organic revenue growth and 7% EBIT growth in constant currencies. This confidence hinges on the continued strong performance of its chronic care and urology businesses offsetting the revised, lower expectations for Kerecis.

"We deliver a soft start to the year with 6% organic growth, EBIT growth in constant currencies of 3%, and an EBIT margin of 26% in Q1, reflecting a lower quarter in Kerecis due to significant sales disruption from reimbursement changes in the outpatient setting," said Lars Rasmussen, interim CEO of Coloplast. "Long-term, we continue to believe Kerecis is well-positioned to win in the skin substitutes market based on its unique technology... In Chronic Care, our businesses continue to deliver solid underlying growth across all regions except China, which reported negative growth. I am also pleased to see a solid start to the year in Interventional Urology, driven by strong growth in our US Men’s Health business and recovery in Kidney & Bladder Health."