Coloplast's new fiscal year is a test of what its growth is worth

Coloplast has spent most of the past decade selling shareholders a simple promise: durable demand for its ostomy and continence products, steady price increases and a share price that behaved accordingly. For a blue-chip Danish medical-device firm, the formula worked, and the stock traded at a fat premium to the market. That premium disappeared almost overnight in April, when the company cut its growth forecast and wrote off DKK 3.0 billion of goodwill. The shares have not recovered their poise, and Coloplast's case now turns on a single test for the fiscal year that begins on 1 October: whether the setback was a one-off bite by an American payer or a repricing of what the company's growth is actually worth.

The basics still deserve respect. Coloplast is the world's leading maker of ostomy bags and continence-care catheters, products so unglamorous that competition is effectively an oligopoly among a handful of European and American firms. Demand is recurrent rather than discretionary: patients need these consumables for life, insurers keep paying, and demographic ageing does the marketing. Chronic care accounts for over three-quarters of sales and grew at a double-digit rate in America this year. Gross margins run near 67%. This is about as close to a rent as medical devices offer — a recurring-revenue franchise with genuine pricing power, which is precisely the economic profile that historically justified a premium multiple.

The trouble is that Coloplast wanted more of it. In 2022/23 it spent heavily on Kerecis, an Icelandic firm making biological skin substitutes for wound healing, betting that a growth market in regenerative medicine would slot into its distribution machine. For a while it did. Then, in 2025, Medicare changed how it reimburses such products in the outpatient setting, forcing more of the cost onto providers and sharpening competition on price. Kerecis's growth collapsed, Coloplast slashed expectations for the business in April and cut group organic-growth guidance for its 2025/26 fiscal year from roughly 7% to 5–6%, taking the non-cash hit of a DKK 3.0 billion impairment on the acquisition.

Set the two halves of the business side by side and the shape of the failure is instructive. The durable chronic-care franchises carried on: in the quarter to the end of June, organic growth was 6%, ahead of expectations, powered by double-digit American growth in catheters and ostomy care. The wound and tissue-repair unit, by contrast, shrank, with the biologics arm down 6% and its margin negative before write-offs. The moat held where the rent lives; it did not hold where the growth had been bought. That is the difference the market is now pricing. The new chief executive, Gavin Wood, who took over in May, calls America the biggest opportunity and points out that Coloplast holds only 15–20% of the American ostomy market and about 30% of the continence market — well below its global dominance.

What, then, does the market expect of fiscal 2026/27, the year beginning on 1 October? Coloplast announces fresh guidance in the early part of the fiscal year, and analysts have already pencilled in a return to the old algorithm: consensus revenue of about DKK 30.8 billion, top-line growth near 6.7% and earnings-per-share growth above 20%. Two assumptions carry those numbers. The first is that Kerecis, which lost money this year, returns to profitable growth around the second quarter of 2026/27, with resources shifted from the disrupted outpatient setting to the steadier inpatient one. The second is that the American chronic-care momentum holds while margins recover from a trough that fell to 26% in the June quarter, hit by currency and the Kerecis drag. Chief executives usually promise such inflections; this one has already slipped once.

Which explains the discount. Adjusted for the one-off impairment, the shares trade at around 19 times trailing earnings, and barely 17 times forward — roughly half the premium the market used to grant Coloplast. Yet the sell-side is not calling a bargain: the mean analyst target is only a few percent above the share price, and of the houses that rate the stock, two say buy, eight say hold and two say sell. The market has concluded, sensibly enough, that the multiple will not return until the growth actually does.

The judgment therefore reduces to which half of Coloplast's story is real. The chronic-care franchise — recurring revenue, an ageing population, an effective oligopoly — is a genuine rent, and it is intact. The growth bet was a different animal: a market whose economics an American payer could rewrite overnight, which is a reminder that in healthcare the rent belongs to whoever decides the price, not merely to whoever sells the product. A forward multiple of 17 does not reprice the moat; it prices a return to compounding. For the shares to re-rate, Kerecis must hit its second-quarter inflection without slipping again. If it does, the cheapness is real. If payer behaviour keeps pushing, the low multiple is not a discount to quality but an accurate price for a company that has lost one of its two growth engines. Watch the November guidance, and the Kerecis number in it, more than the share price.