“We are satisfied that we’re finally able to bring the case to a close with a settlement that makes it possible for us to continue our activities in the US, including dealer partnerships, at the same level as prior to the investigation,” says Coloplast’s CEO Lars Rasmussen.

Coloplast was not required to admit to any wrongdoing as part of the settlement. The decision to settle is driven solely by business considerations.

“Under the circumstances, we are convinced that a settlement is the right thing to do to bring the case to a close. We avoid spending more time and money on a tiring and lengthy legal process,” says Lars Rasmussen.

Coloplast previously announced that it had reached an agreement in principle to settle the matter. Coloplast has now entered into a definitive settlement agreement.

Recognizing the government’s responsibility to ensure the appropriateness of industry marketing practices, Coloplast cooperated fully with the Department of Justice inquiry by providing relevant documents and by participating in interviews. The company continues to work hard to sustain a culture of compliance throughout its operations.

Coloplast was not required to enter into a corporate integrity agreement as part of the settlement.

“We’ve closed a difficult and challenging year with a good Q4 performance and, overall, satisfactory full-year results. The 7% organic growth we delivered is consistent with the revised guidance we announced earlier in the year,” said Coloplast CEO Lars Rasmussen.

Sales growth by business area was as follows: Ostomy Care 6%, Continence Care 8%, Urology Care 5% and Wound & Skin Care 9%. Revenue increased by 5% in Europe, by 6% in other established markets and by 21% in Emerging markets.

Positive aspects in a difficult year  

“During the course of the year, we’ve encountered challenges in our two largest markets, the UK and the USA, that led to several guidance downgrades. Obviously, that is unsatisfactory, but it’s reassuring to know that we still have solid underlying momentum in our business, and I’m very optimistic about the upcoming financial year,” said Mr Rasmussen.

“One of the positive aspects of our full-year financial performance is our Wound & Skin Care business, which grew by 9%. We’ve also had outstanding product launches across the business, including the SenSura® Mio Convex ostomy bag and the SpeediCath® Compact Eve catheter,” said Mr Rasmussen.

For the 2015/2016 financial year, Coloplast projects revenue growth of 7-8% at constant exchange rates and of 8-9% in DKK, and an EBIT margin of 33-34%, both at constant exchange rates and in DKK. 

Click here to read the full-year earnings release.

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The Coloplast Annual Report for 2014/15 will be released later today. For more information, go to http://www.coloplast.com/Investor-Relations/Annual-reports/

Also later today, Coloplast will release its Corporate Responsibility Report for 2014/15. For more information, go to http://www.coloplast.com/About-Coloplast/Responsibility/Policies/

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Financial highlights and key ratios 2014/15

Today, Coloplast has decided to take a further provision of DKK 3bn to cover potential settlements and costs in relation to litigation in the USA involving the use of transvaginal surgical mesh products.

In May 2014, Coloplast made a DKK 1bn provision for litigation in the USA. In addition to the provision, Coloplast had a product liability insurance of DKK 500m. Todays increased provision raises the total expected costs in relation to litigation in the USA to DKK 4.5bn before tax.

”We have been ordered by the judicial system in the US to take preliminary steps towards actual litigation on 200 specific cases. This means that our costs in relation to the litigation will increase. As a consequence, we have found it necessary to increase our provision” says Coloplast President and CEO, Lars Rasmussen.  

Since 2011, Coloplast has been named as a defendant in individual lawsuits in various federal and state courts around the United States, alleging injury resulting from use of transvaginal surgical mesh products designed to treat pelvic organ prolapsed and stress urinary incontinence

”Going forward we do not wish to disclose the number of claims against Coloplast because of the confidentiality of the current settlement negotiations. But with the knowledge available to us today it is our best estimate that the DKK 4,5bn will cover the total costs of all claims”, says Lars Rasmussen.

The latest development does not change Coloplast’s commitment to the Female Pelvic Health business and Coloplast remain confident that our products are safe and effective.

As a consequence of the increased provision Coloplast lowers expectations to the  

EBIT margin for the financial year 2014/15 from around 32% at constant exchange rates and in DKK to around 10% at constant exchange rates and 11% in DKK.

Coloplast has the best reputation among the industry's 28 leading medical device companies, according to a survey by the independent British research organisation PatientView. A total of 463 patient organisations in 58 countries were surveyed about their views on 28 medical device companies.

Coloplast emerged as the overall winner for the fourth straight year and takes top spot in four of six indicators. Coloplast was ranked ahead of competitors like Medtronic (3rd place), St. Jude Medical (4th) and Convatec (5th).

The survey measures the reputation of the medical device industry overall, and respondent patient groups were asked to rate each company in terms of six indicators: 

• Does the company have an effective patient-centred strategy?
• Does the company provide high-quality information for patients?
• The company's record on patient safety
• Are the products useful to patients?
• The company's record of transparency with external stakeholders
• Does the company act with integrity?

Recognition by the users 

“We're proud and very excited to be given this recognition by the users of our products for the fourth straight year,” said Kristian Villumsen, Coloplast's Executive Vice President of Chronic Care. “Historically, users have always been at the centre of what we do at Coloplast, and it is very gratifying to know that our efforts in this field are being noticed.”

Mr Villumsen continued: “We have a strong ambition to create notable improvements in the quality of life of the people who use our products. Basically, we want to make the everyday lives of our users easier by delivering innovative, discreet products and services that truly make a difference. We can only do that by listening to their needs and involving them in our product innovation”. 

3M Healthcare, Abbott Laboratories, Alcon, Bausch + Lomb, Baxter International, B. Braun Melsungen AG, Becton Dickinson and Company, Biotronik International, Boston Scientific, Coloplast A/S, ConvaTec, Fresenius Medical Care, GE Health6care, Hartmann Group, Johnson & Johnson, Kimberly-Clark, Medtronic Inc, Mölnlycke Health Care, Novo Nordisk A/S, Olympus Medical Business, Ortho Clinical Diagnostics Inc, Philips Healthcare, Roche Diagnostics, Sanofi, Siemens Healthcare, Smith & Nephew, St Jude Medical, and Toshiba Medical Systems Corporation.

The 463 respondent patient groups cover a wide range of specialisations, including neurology, cancer, diabetes and mental health. The largest contingent (10.2%) were from Germany, 9.5% were from Spain while 9.3% were from the UK. The survey was conducted in the period from March to June 2015.

The survey measures the reputation of the medical device industry among the respondent patient groups, who were asked to rate each company in terms of six indicators:

Does the company have an effective patient-centred strategy?

• Does the company provide high-quality information for patients?
• The company's record on patient safety
• Are the products useful to patients?
• The company's record of transparency with external stakeholders
• Does the company act with integrity? 

EBIT before special items was up by 8% to DKK 3,286 million, with the EBIT margin before special items at 32%, versus 33% in 9M 2013/14.

Coloplast continues to deliver growth in all business areas and in all markets. Organic sales growth rates by business area in the 9M period were as follows: Ostomy Care 6%, Continence Care 7%, Urology Care 5% and Wound & Skin Care 9%. In the reporting period, Coloplast grew its European business by 5%, Other Developed Markets by 5% and Emerging Markets by 20%.

 “We're presenting a financial performance in line with the revised guidance we announced in June. Organic growth at 7% both for the third quarter and for the nine-month period is a satisfactory performance,” said Coloplast CEO Lars Rasmussen.

“We're continuing our string of growth in line with or ahead of the market in all four business areas, and we've maintained solid momentum across our overall business. Our Wound & Skin Care business continues to deliver solid growth rates, and in the important European region, a major market like France is performing strongly,” said Mr Rasmussen, and he continued: “Also, new products like SenSura Mio and Biatain Silicone have become significant drivers of our growth.”

Based on the Q3 interim report, Coloplast continues to expect FY 2014/15 organic revenue growth of about 7% and of about 12% in DKK. The EBIT margin forecast remains at about 32%, both at constant exchange rates and in DKK.

For further information, click here to read the 9M Interim Report.

Revenue expectations for the full-year are revised from an organic revenue growth of 8-9% to an organic revenue growth of 7%. In DKK this equals a revision from 13-14% to12%.The expected EBIT margin for 2014/15 is lowered from around 34% at both constant exchange rates and in DKK to around 32%, both at constant exchange rates and in DKK.

“It has taken longer than first expected to get our business in the UK back on track. We are seeing progress, but not at the level that we had expected. Also, we are experiencing reduced campaign activity in our US market as a consequence of the ongoing Department of Justice investigation – and that has impacted our sales negatively. With two big markets like the UK and the US lacking momentum, we have to lower our financials expectations for the year”, says CEO of Coloplast, Lars Rasmussen.

Provisions

Furthermore, Coloplast is taking a provision in relation to the ongoing Department of Justice investigation in the US and has increased the provision for bad debt in Southern Europe. The size of the provisions are not disclosed. Finally, Coloplast has taken a write down on the NPWT inventory purchased from Devon Medical.

”It is now our best estimate that we will incur costs associated with the closing of the Department of Justice investigation in the US. At the same time, the financial development in especially Greece makes it necessary for us to take precautions. That is why we are making the two provisions,” says Lars Rasmussen.

Coloplast’s long-term financial guidance remains to generate 7-10% sales growth per year and to improve the profit margin by 0.5-1.0 percentage point per year.

Coloplast continues to deliver stable growth in all business areas and in all markets. Organic sales growth by business area was as follows: Ostomy Care 6%, Continence Care 8%, Urology Care 5% and Wound & Skin Care 9%. Coloplast grew its European business by 5%, Other Developed Markets by 4% and Emerging Markets by 20%.

Improvements achieved in the second quarter

“While the first quarter didn't quite meet our expectations, we managed to improve our performance in the second quarter, achieving 8% organic growth. That lifts our growth rate for the half-year reporting period to 7%, which is in line with our expectations,” said Coloplast CEO Lars Rasmussen.

“We have a positive underlying business performance, and we're delivering solid results in several of our markets and business areas. In Europe, France and Italy delivered positive performances, and in our Emerging Markets, China continues to produce good results,” said Mr Rasmussen, and he continued: “I would also like to note that our latest ostomy care product, the SenSura Mio, is adding to our growth and that we've now launched our latest catheter, the SpeediCath Compact Eve, in ten different countries.”

Paying interim dividends and maintaining guidance for the 2014/2015 financial year  

The Board of Directors has resolved that the company will pay an interim dividend of DKK 4.50 per share following the release of the first-half interim report, for a total dividend pay-out of DKK 953 million.

Based on the H1 interim report, Coloplast continues to expect full-year organic revenue growth of 8-9% and of about 13-14% in DKK. Coloplast continues to expect the EBIT margin to be about 34%, both at constant exchange rates and in DKK.

For further information, click here to read the H1 Interim Report.

Since 1954, the Red Dot Award has been a global benchmark for design and innovation focusing on the user experience and aesthetics of a wide range of consumer products.  This year, a jury consisting of design experts from all over the world assessed 4,928 entries from 1,994 participants from 56 countries.

Coloplast entry of 2015, the female compact catheter SpeediCath Compact Eve, has been measured successfully against innovative design across various industries and awarded a Red Dot Award as one of the globally most outstanding designs in 2015.

SpeediCath Compact Eve, which Coloplast launched in 2014 and has since been launched in several countries across Europe, is a discreet female catheter that combines function with an aesthetic design inspired by female lifestyle products such as cosmetics.

Successful integration of design and function

“We are very proud and pleased to have won a Red Dot Award. We see it as a general acknowledgement of our Design DNA and specifically of the way we have succeeded in integrating design and function into a catheter that help defeats stigma in women’s everyday life”, says Oliver Johansen, Senior Vice President in Coloplast Global R&D.

“For us it is about creating solutions and products that has real value for real people.”, Oliver Johansen goes on. “Design, feel and look are embedded from the very beginning when we develop new products. That allows us to create a clear and recognisable Coloplast experience with each of our products. And the recognition we get from the users of our products and from awards like Red Dot tells us that we are doing something right.”

On 29 June 2015, Marc Brøndum, Head of Design and the design team behind SpeediCath Compact Eve are going to Essen to receive the award at the Red Dot Gala. 

Contact

With the award, Energiforum Danmark is recognising Coloplast's extensive work in the climate and energy field, which over the past few years has enabled the company to reduce its carbon emissions by seven per cent despite growing its annual production output by six to eight per cent at the same time.

Through a targeted and dedicated effort consisting of more than 150 energy efficiency enhancing projects at its production sites in Denmark, Hungary, the USA and China, Coloplast has successfully reduced its carbon footprint by seven per cent, equal to a 26% reduction per unit produced.“

Our projects span everything from daylight sensor control to replacing natural gas boilers, but also to finding better ways to use existing equipment. At our factory in Mørdrup, Denmark, for example, we have successfully begun connecting our cooling systems together. This means we avoid an overproduction of cooling, which optimises operations and, not least, reduces our energy consumption,” said Lone Stubberup, Coloplast’s Director for Environment, Health and Safety.

An ambitious and global energy effort

Coloplast has appointed employees dedicated to working with energy efficiency enhancing projects at each of its production sites. In addition to having a constant focus on environmental and energy-saving measures, their job is to find new ways of reducing Coloplast's carbon emissions, for example by using new technologies to cut energy consumption or explore the potential of renewable energy sources.

In one successful project, Coloplast optimised energy consumption in all of its new production machinery. By continually monitoring energy consumption and using intelligent controls, the company's engineers have developed production systems that are 30% moreenergy efficient than previous versions of the same systems.

“We're constantly looking for new ways to sharpen our environment and energy profile. For example, we have reduced our waste volumes by 10% per product and achieved a 27% recycling rate for our production waste. Obviously, we're very pleased to receive Energiforum Danmark's Energy and Environmental Award in recognition of our achievements,” said Ms Stubberup.

For over 60 years, the iF Design Award has been recognized the world over as a label of design excellence. This year, the international jury assessed some 5,000 entries in order to determine the winners in the iF Design Award 2015. Coloplast’s two entries both launched in 2014, SpeediCath Compact Eve and SenSura Mio, were successful in standing out from the crowd and have received the iF Design Award as a symbol of design excellence.

“When we design products we set an ambition to deliver products that fit into the life of real people. We are proud to receive these awards, which acknowledges the importance of a user friendly and non-stigmatizing design – also when it comes to medtech products,” says Oliver Johansen, Senior Vice President in Coloplast Global R&D.

The Coloplast Design DNA

The two Coloplast products were developed along with the company’s design DNA, which serves to create products with a clear Coloplast identity that deliver an aesthetic, reliable and consistent user experience.

“I believe the fact that we win two awards, is a great testament to our strong Design DNA. When developing a new product we embed design from the get-go in order to make it an integrated part of the product – and not just an ad-on. This was the case with both SpeediCath Compact Eve and Sensura Mio, and will continue to be the case with future products as well,” Oliver Johansen.

‘Taking female catheters to a new level’

The female catheter SpeediCath Compact Eve made it into the top list of the international expert jury and were honoured with an iF Gold Award with the words: “The woman before the product ‒ a non stigmatizing product. By listening to the emotional needs of women, Eve is taking female catheters to a new level, by combining function with an aesthetic design inspired by female lifestyle products such as cosmetics,” at the awards ceremony at BMW World in Munich.

The other winning product, the first ever ostomy bag in woven textile SenSura Mio was awarded the iF Design Award at the same awards ceremony.

On Friday Marc Brøndum, Head of Design and members of his design team went to the BMW event in Munich to receive the gold award on stage.

Organic sales growth by business area was as follows: Ostomy Care 5%, Continence Care 8%, Urology Care 8% and Wound & Skin Care 4%.

Positive underlying developments

“The 6% sales growth we delivered in the quarter fell short of our expectations, so our Q1 performance is not satisfactory,” said Coloplast CEO Lars Rasmussen.

“The underlying business performance remains positive, but we've encountered challenges in Russia and in our UK homecare business, Charter Healthcare. In Russia, the political situation will affect sales growth negatively throughout the year and in the UK, changed procedures for prescription processing have had a negative impact on our growth momentum. We expect to solve the challenges in the UK in the course of 2015, and lower our full-year sales growth guidance to 8-9% from previously 9%.”

“Most of our markets and business areas are delivering strong performances. In Europe, the major markets of Germany, France, Spain and Italy have continued their positive trends, and in the Emerging Markets, China produced good results,” said Mr Rasmussen and continued: “Also, the success of our new product launches continues, such as for the Sensura Mio in Ostomy Care, SpeediCath Compact Eve in Continence Care and Biatain Silicone in Wound Care.”

Guidance for 2014/15 lowered

Due to the financial results of the first quarter, Coloplast lowers its guidance for full-year organic growth to 8-9% from the previous guidance of 9% at constant exchange rates but to 12-13% in DKK from previously 11%. There is no change to the EBIT margin guidance, which is still for 34%, both at constant exchange rates and in DKK.

For further information, click here to read the Q1 Interim Report.