ConvaTec Regulatory News (CTEC)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

28 January 2022

Entry into the attractive wound biologics segment through

the acquisition of Triad Life Sciences Inc

· Strengthens ConvaTec's Advanced Wound Care business in the US - highly complementary product portfolios and commercial expertise

· Secures access to innovative and differentiated technology and an exciting pipeline

· Future growth supported by CTEC's expertise and global reach

· Initial consideration of $125m with potential $50m for short-term milestones. Additional earnout potential dependent on financial performance in first two years. Return on invested capital is expected to be greater than WACC in year 3

ConvaTec Group Plc (CTEC.LN), a global medical solutions company focused on the management of chronic conditions, is pleased to announce that it has entered into a definitive agreement to acquire Triad Life Sciences Inc(1) ('Triad'), a US-focused medical device company that develops biologically-derived innovative products to address unmet clinical needs in surgical wounds, chronic wounds and burns. The transaction, which is subject to regulatory approvals and other customary conditions, is expected to close during Q1 2022.

For ConvaTec this represents an entry into the large and rapidly growing wound biologics segment(2). This segment is currently estimated to be worth c.$1.8 billion per annum globally with a projected growth of high single digit percentage per annum. Regenerative medicine and biologically-derived therapies are frequently used to treat hard-to-heal wounds which, in the US alone, affect 3.7 million patients each year.

This proposed acquisition is consistent with ConvaTec's FISBE strategy (Focus-Innovate-Simplify-Build-Execute). It strengthens Convatec's Advanced Wound Care position in the US (Focus) and secures access to a complementary and innovative technology platform (Innovation) that enhances advanced wound management and patient outcomes.

This technology, know-how and a pipeline of innovative products based on porcine placental tissue offer attractive characteristics in the treatment of hard-to-heal wounds. Triad's latest offerings, InnovaMatrixAC and InnovaBurn, are the first 510k cleared porcine placenta‐derived extracellular matrix products in the US(3). Sales of these products commenced in 2021. In addition, Triad has an attractive pipeline of new products for advanced wound care and also a technology platform with the potential to enter the regenerative medicine segment.

Founded in 2017, Triad Life Sciences is based in Memphis, Tennessee and currently has over 50 employees. The company develops, manufactures and commercializes their product portfolio. These products are highly complementary to ConvaTec's existing portfolio and will enable the Group to meet a wider range of needs of both patients and health care practitioners. This transaction will also be commercially complementary. Triad will bring expertise in this novel and rapidly growing segment, whilst benefitting from ConvaTec's global commercial, quality & operations, and R&D capabilities.

The initial consideration is $125 million with two potential additional payments of $25 million each relating to short-term milestones. There are also two earnout payments conditional on performance during year 1 and year 2 post completion, with the maximum earnout of $275 million based on stretching financial performance over the period.

This is an exciting opportunity for ConvaTec, with powerful strategic logic, a strong contribution to future growth and an attractive financial profile. The transaction is expected to be immediately accretive to sales growth and the return on invested capital is expected to exceed the Group's cost of capital in year three. The consideration will be satisfied from existing cash balances and debt facilities.

Karim Bitar, CEO, ConvaTec Group said: "Today's announcement marks another successful step in our strategic intent of pivoting to sustainable and profitable growth. This transaction will strengthen our Wound Care business and enable ConvaTec to enter the rapidly growing wound biologics segment. Triad Life Sciences has innovative and differentiated products and an exciting pipeline which is consistent with our vision - Pioneering trusted medical solutions to improve the lives we touch. We are delighted that Russ and the team have decided to join ConvaTec."

Russell Olsen(4), President and CEO, Triad Life Sciences Inc said: "ConvaTec has an impressive reputation and unique capabilities in Advanced Wound Care, based on decades of innovation. We are excited to be joining ConvaTec and look forward to accelerating the growth of our innovative technology platform."

***

Analysts and Investors

Kate Postans, VP, Investor Relations & Corporate Communications +44 (0) 7826 447807

Media

Buchanan: Charles Ryland / Chris Lane / Vicky Hayns +44 (0)207 466 5000

Notes

(1) The vendor is Triad Life Sciences, Inc.

(2) SmartTRAK estimate for 'WorldWide Wound Biologics' revenues (e.g. skin substitutes, active collagen dressings and topical drug delivery) in 2021 with 5-year CAGR.

(3) The business, which is focused solely in the US, generated annual revenues of $8.4 million in 2020 and a loss before tax of $2.8 million. Revenues for 2021 are estimated to be approximately $19 million. The gross assets of Triad Life Sciences were $23 million at 30 June 2021.

(4) Russell Olsen, the Founder and CEO of Triad Life Sciences, will be the General Manager of the business, reporting directly into David Shepherd, President and Chief Operating Officer of Global Advanced Wound Care. Russ has over 35 years of experience in the MedTech industry. He has held roles at Bristol-Myers Squibb and Smith & Nephew and served as Global President for Derma Sciences and Chief Executive Officer of BioD, LLC.

This acquisition constitutes a class 2 transaction for the purposes of the UK Financial Conduct Authority's Listing Rules. The person responsible for this announcement on behalf of ConvaTec Group Plc is Susan Marsden, Deputy Company Secretary.

ConvaTec Group Plc

ConvaTec is a FTSE 250 global medical products and technologies company focused on solutions for the management of chronic conditions, with leading positions in advanced wound care, ostomy care, continence and critical care, and infusion care. We have more than 10,000 colleagues and operations in over 100 countries. Our vision is pioneering trusted medical solutions to improve the lives we touch. Our products provide a range of clinical and economic benefits including infection prevention, protection of at-risk skin, improved patient outcomes and reduced total cost of care. Group revenues in 2020 were over $1.894 billion. To learn more about ConvaTec, please visit http://www.convatecgroup.com