Coloplast Introduces Next-Generation Catheter

Narrow-moat Coloplast COLO B kicked off its new fiscal year in strong fashion, despite diminishing ripple effects from the pandemic, and we’re leaving our fair value estimate unchanged. Quarterly organic revenue growth of 7% year over year was closer to what we’d consider typical for the firm. In particular, ostomy and continence care were up 8% and 7%, respectively. The last lingering effects of COVID-19 showed up in softness in China as the country navigated the rise of the omicron variant and shortages of input materials, especially for silicone products, which have hindered the continence care and wound care business. We expect these two dynamics will be ironed out over the next quarter or two.

Importantly, Coloplast has continued to make progress with ostomy, including securing a renewed contract with group purchasing organization Premier. Getting its foot in the door with several large GPOs is a key factor that will help Coloplast make faster inroads into the United States. With the addition of the newly acquired voice and respiratory care business, Coloplast once again sees an opportunity to expand its U.S. presence in this niche with its differentiated products.

Coloplast’s rollout of its new Luja male intermittent catheter is another example of why we’re so enthusiastic about the firm’s ability to differentiate its products through meaningful innovation. The Luja catheter (and its unconventional design) does a better job of fully draining the bladder, which reduces the likelihood of the urinary tract infections that can dog these patients. At best, the infections may be a nuisance; at worst, they can lead to kidney infections. Despite all the attention paid to the expiring patent on Coloplast’s hydrophilic catheter in 2017, the firm has handily defended its continence care franchise by developing new products that deliver relevant benefits, such as Luja.