Coloplast: A Durable Choice for Long-Term Investors

Coloplast is a global leader in intimate healthcare, with a strong presence in chronic care categories such as Ostomy Care and Continence Care. Its products are used daily by patients who often remain with the same brand for decades, creating a deeply loyal and highly durable customer base. With innovation across its Chronic Care, Advanced Wound Care, and Voice and Respiratory Care segments, and expanding opportunities in key markets worldwide, Coloplast is positioning itself for continued growth in a healthcare landscape shaped by aging populations and rising clinical needs. The question is: Does this long-established medical device company deserve a place in your portfolio?

This is not a financial advice. I am not a financial advisor and I only do these post in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me. 

For full disclosure, I should mention that I do not own any shares in Coloplast at the time of writing this analysis. If you would like to copy or view my portfolio, you can find instructions on how to do so here. If you want to purchase shares or fractional shares of Coloplast, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Coloplast is a Danish multinational company that develops intimate healthcare products designed to make life easier for people living with chronic or sensitive medical conditions. The company’s origins date back to 1954, when nurse Elise Sørensen created the first adhesive ostomy bag for her sister after stoma surgery. This early focus on understanding users’ real needs still defines the company today. Coloplast builds products by working closely with patients, caregivers, and healthcare professionals, ensuring that its innovations address practical challenges and improve quality of life. Over the decades, the company has expanded to more than 40 countries, operating across five core areas: Ostomy Care, Continence Care, Voice and Respiratory Care, Advanced Wound Care and biologics, and Interventional Urology. The business is structured into two distinct units. Chronic Care is the largest and includes Ostomy Care, Continence Care, and Voice and Respiratory Care. These products are typically used daily and often for the rest of a user’s life. A person’s journey with Coloplast often begins in a hospital or rehabilitation setting, where healthcare professionals introduce the products and teach users how to manage their condition. Clinical preference is crucial here because once a product becomes the standard choice in a hospital, it establishes a steady flow of new users who continue with the same products after discharge. More than 90% of chronic care sales come from the community setting, where users rely on Coloplast every day. To support them, the company has built extensive patient engagement programs such as Coloplast Care and Atos Care across more than 30 markets, offering personalized support and helping users maintain routines that work for them. In Ostomy Care, Coloplast serves people with permanent or temporary stomas, offering ostomy bags and supporting products under brands such as SenSura Mio, Alterna, Assura, and Brava. In Continence Care, the company helps people manage urinary retention, incontinence, and bowel dysfunction, with solutions ranging from hydrophilic catheters like SpeediCath and Luja to collecting devices under the Conveen brand and bowel irrigation systems such as Peristeen. In Voice and Respiratory Care, the focus is on people who have undergone laryngectomy or require tracheostomy support. Products such as Provox Life voice prostheses and heat and moisture exchangers help users breathe and speak after major surgeries. Acute Care includes Wound and Tissue Repair and Interventional Urology. These products are predominantly used in hospitals, where clinical outcomes and technological differentiation matter most. In Wound and Tissue Repair, Coloplast offers advanced dressings and a biologics portfolio led by Kerecis, whose patented fish-skin graft technology is highly differentiated, clinically supported, and cost-efficient. The technology closely mimics human skin, is easy to store, supported by a growing body of more than 50 clinical studies. In Interventional Urology, the company provides surgical and implantable solutions across men’s health, women’s health, and kidney and bladder disorders. Penile implants such as Titan Touch, pelvic floor systems like Altis and Restorelle, capital equipment for kidney stone treatment, and single-use devices form the backbone of this segment. Coloplast’s competitive moat is built on high switching costs, strong clinical preference, robust reimbursement coverage, continuous innovation, and long-lasting patient relationships. Many of its users depend on daily-use products that need to feel comfortable, fit securely, and integrate into their lives with as little disruption as possible, and once they find a solution that works, switching costs become extremely high in both practical and emotional terms. This leads to customer relationships that often last for many years or even decades. Clinical preference reinforces this advantage because most users are introduced to Coloplast’s products by healthcare professionals during hospital stays, creating a steady flow of new patients who often stay with the same products after discharge. With a broad product range and highly personalized solutions, Coloplast is able to meet a wide variety of needs, making it unlikely that patients will look elsewhere once they have found a routine that works for them. Innovation is another important part of Coloplast’s advantage. The company regularly develops technologies that improve comfort, safety, and outcomes for users, whether through better adhesives, smoother hydrophilic catheter coatings, digital tools that warn users about leakage, or fish-skin grafts that aid wound healing. These products are backed by patents and strong clinical data, which makes them difficult for competitors to copy. Reimbursement coverage strengthens the position further. Since more than 90 % of chronic care revenue is reimbursed, demand remains stable, less affected by economic downturns, and harder for new entrants to access if they do not already understand complex reimbursement systems. Coloplast’s operational setup also supports its moat. The company benefits from efficient, large-scale manufacturing and global distribution. Lastly, Coloplast’s direct relationships with users deepen loyalty and differentiate it from competitors. Through its support programs and direct-to-consumer channels in multiple markets, the company remains closely connected to users long after they leave the hospital. This sustained engagement helps users adapt, builds trust, and reduces the likelihood of switching to alternative products.

Management

Lars Rasmussen currently serves as the interim CEO of Coloplast, a position he assumed to support the company during its leadership transition. Lars Rasmussen is a long-standing figure within the Danish corporate landscape and brings deep experience in global healthcare, strategy execution, and organizational leadership. Prior to stepping into the interim CEO role, Lars Rasmussen spent more than a decade as the Chief Executive Officer of Coloplast, where he guided the company through a period of strong international expansion, operational transformation, and consistent financial performance. Under his leadership, Coloplast strengthened its position as a global leader in intimate healthcare products and built many of the commercial and operational foundations that continue to support the company today. After retiring from his CEO position, Lars Rasmussen remained closely connected to Coloplast through board roles and advisory functions, giving him a comprehensive understanding of the company’s long-term strategy, culture, and business model. In his current role as interim CEO, Lars Rasmussen’s mandate is to ensure stability, continuity, and disciplined execution while the board completes its search for a permanent CEO. During the latest earnings call, Lars Rasmussen explained that the CEO search is progressing through a structured and careful process. He described it as a funnel that begins with a broad set of candidates and narrows as the most qualified individuals are evaluated. He confirmed that Coloplast has identified a number of strong candidates, although no contracts have yet been signed. Once an agreement is reached, the appointment will be announced immediately, with the start date dependent on the incoming leader’s contractual obligations, including potential garden leave requirements. Until that transition takes place, Lars Rasmussen emphasised that the company will continue to be run by the senior leadership team already in place, working closely with him to maintain momentum across both the Chronic Care and Acute Care business units. Lars Rasmussen’s extensive knowledge of the company, calm leadership style, and steady presence make him well suited to guide Coloplast through this interim period. His role is not to redefine the company’s direction but to safeguard its strategy, uphold its culture, and ensure a smooth handover once the new CEO is appointed.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. Coloplast has historically delivered exceptionally high ROIC because its core business is both highly profitable and requires relatively little capital to operate. Most of its revenue comes from chronic care products that users rely on every day, often for the rest of their lives. These products have high switching costs, strong reimbursement coverage, and stable demand, which together create predictable cash flows and strong margins. At the same time, Coloplast runs efficient, centralized manufacturing operations that do not require large ongoing investments. The combination of high profitability and a small capital base allowed ROIC to reach unusually high levels for many years. The decline in ROIC over the past few years does not reflect a weakening of the business but rather a deliberate shift in strategy. Coloplast has invested heavily in new manufacturing capacity, automation, digital infrastructure, and the expansion of its product portfolio. The largest driver is the acquisition of Kerecis, the biologics company known for its fish-skin graft technology. This acquisition added significant invested capital to the balance sheet, while the full earnings contribution will take time to materialize. Coloplast has also increased its investment in interventional urology, an area with attractive long-term potential but higher upfront capital needs. As a result, invested capital has grown faster than operating profit in the short term, causing ROIC to decline from its previously very elevated levels. This drop is therefore not viewed as a structural concern. It reflects Coloplast’s transition from a smaller, highly concentrated, capital-light business into a broader healthcare company with multiple growth engines. The underlying chronic care business continues to generate strong cash flows, and the newer segments are expected to produce higher returns as they scale. Management reiterated on the latest earnings call that ROIC is stabilizing and beginning to improve again. Adjusted ROIC was about 15% last year, is expected to rise to around 16% in the coming year, and the company has a clear long-term target of achieving above 20% by the 2029 to 2030 financial year. In other words, the decline in ROIC is a temporary consequence of strategic investments rather than a sign of deteriorating performance. As these investments begin contributing more meaningfully to earnings, ROIC is expected to trend upward again, although it will likely settle below the unusually high levels seen a decade ago when the business was smaller and required far less capital to grow.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. Coloplast’s equity increased steadily for many years because the company consistently generated strong earnings and operated a highly profitable, capital-efficient business. As long as earnings grew and the balance sheet remained stable, equity naturally moved higher each year. This pattern changed in 2023, when equity suddenly increased by an unusually large amount. That sharp jump was driven by Coloplast issuing new shares to finance the purchase of Kerecis. The equity raise significantly expanded the company’s capital base, which is why 2023 stands out so dramatically compared to prior years. The decline in equity in fiscal year 2025 is not a sign that Coloplast’s business is weakening. It mainly reflects the financial changes that follow both a major acquisition and a divestment. After buying Kerecis, Coloplast had to update the value of the assets it added to the balance sheet, and those updates naturally affect equity. At the same time, the company sold its Skin Care portfolio, which removed a set of assets from the balance sheet. When you combine the effects of integrating Kerecis with the impact of selling the Skin Care business, equity ends up lower on paper. These are normal accounting consequences of buying and selling businesses and do not reflect any deterioration in Coloplast’s underlying performance. The long-term growth, profitability, and outlook remain intact, and management continues to guide toward solid organic growth, expanding earnings, and a higher ROIC over time.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins provide a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. Coloplast generated its highest free cash flow ever in fiscal year 2025. The increase mainly reflects a year where the business ran smoothly, costs were under control, and more of Coloplast’s profit was able to turn into cash. The company also kept its investment levels stable, which helped lift the free cash flow margin to 19% from 15% the year before. Management expects free cash flow to improve further in the coming years. They aim to bring the free cash flow margin back to around 20%, which is close to where it was historically. Investment levels should stay at about 5% of sales, and the company expects to run its operations a bit more efficiently next year, which will also help cash generation. As the biologics business grows and the new Portugal site starts running at full capacity, a larger share of Coloplast’s earnings is expected to turn into cash. Coloplast uses its free cash flow mainly to return money to shareholders and reinvest in the business. For many years, the company paid out almost all of its net profit as dividends, with payout ratios close to 100%. That level is no longer the plan. Management now targets a payout ratio between 60% and 80%, which gives the company more room to fund growth projects and strengthen the balance sheet after the Kerecis acquisition. In the coming years, Coloplast also expects to restart its share buyback program, returning to the capital allocation approach it followed for much of the past decade. Overall, the record free cash flow in 2025 is a sign that Coloplast is moving past its most investment-heavy period. With stable investment levels, improving efficiency, and clearer financial targets, the company is positioned to keep generating strong and growing free cash flow in the years ahead. The free cash flow yield suggests that while the shares are not cheap, they are trading at their most attractive valuations in more than a decade. We will return to valuation later in the analysis.

Debt

Another important aspect to consider is debt. A useful way to judge whether a company’s debt is manageable is to compare its long-term debt with its earnings and see if it can be repaid within around three years. For Coloplast, the current figure is 5,33 years of earnings in debt, which is slightly above that threshold. However, earnings in fiscal year 2025 were unusually low because of extraordinary tax expenses linked to the transfer of Kerecis’ intellectual property from Iceland to Denmark. Using adjusted earnings gives a more realistic picture, and on that basis Coloplast has about 3,75 years of earnings in debt. Debt is also higher than usual because of the acquisitions made in recent years. For that reason, I do not view the current level as a concern. It reflects a temporary increase following strategic investments rather than any structural weakness in the balance sheet.

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Risks

Dependence on subsidized healthcare markets is a risk for Coloplast. A large share of the company’s revenue comes from products that are reimbursed by public healthcare systems, which means pricing and market access are heavily influenced by political decisions, government budgets, and healthcare reforms. When governments try to reduce healthcare spending, reimbursement levels can be lowered, price caps tightened, or new cost-cutting rules introduced. These changes directly affect the prices Coloplast can charge, even when demand for its products remains stable. This dynamic is especially visible in biologics. In the United States, Coloplast has faced increased volatility because the final Local Coverage Determination policy for biologics was postponed. This delay has already slowed momentum for Kerecis in the second half of the year. During the earnings call, analysts even asked what would happen if the LCD never gets implemented, highlighting the uncertainty Coloplast faces in a market where reimbursement decisions can significantly influence growth. Without the right reimbursement status, certain products may see slower adoption or be excluded from coverage altogether, reducing their commercial potential. Beyond the LCD issue, Coloplast must constantly provide strong clinical evidence to justify the value of its products. If healthcare authorities believe the evidence does not support current reimbursement levels, payments can be reduced or removed. Some countries can even introduce clawback or repayment schemes that apply retroactively. In the United States, competitive bidding creates additional pressure, as large contracts can be won or lost largely on price. Wholesalers and distributors also have significant bargaining power in many reimbursed markets, which can put further strain on margins. All of this means that Coloplast’s financial performance is partly shaped by policy decisions it cannot control. When reimbursement rules shift, the company’s pricing power, growth rates, and even market access can be affected. This dependence makes political and regulatory changes a meaningful risk, particularly as Coloplast expands into areas like biologics, where the reimbursement environment can be especially sensitive and unpredictable.

Product quality and safety risks are a significant concern for Coloplast because the company operates in a tightly regulated industry where even small errors can have major consequences. Coloplast’s products are used by people with chronic and often vulnerable health conditions, which means reliability and safety are absolutely critical. Every product must meet strict medical device regulations across all the markets where Coloplast operates, including requirements from the US Food and Drug Administration and the EU Medical Device Regulation. These rules apply to every stage of a product’s life, from early design and material selection to manufacturing, distribution, and the monitoring of real-world product performance. If Coloplast fails to meet these standards, the impact can be severe. Non-compliance can lead to authorities suspending or revoking the company’s license to sell or manufacture certain products. That would directly affect revenue and could disrupt access to entire markets. Quality problems such as design flaws, manufacturing defects, or safety issues can also trigger legal claims related to user injuries, and supply chain interruptions. These situations are expensive to manage and can take years to fully resolve. Beyond the immediate financial impact, quality and safety issues can damage trust among users and healthcare professionals. Coloplast’s products are deeply personal and often used daily, sometimes for life. If a recall or safety incident raises concerns about reliability, the company risks losing the confidence of clinicians who recommend the products and of patients who rely on them. Such reputational damage can have long-lasting effects on market share. As more digital tools and connected solutions enter the product portfolio, data protection adds another layer of risk. Any failure to comply with data privacy laws or a breach of personal health data could lead to fines, regulatory action, and further harm to the company’s reputation.

Product recalls are a real risk for Coloplast because even a single recall can disrupt sales, damage momentum in key markets, and temporarily weaken the performance of an entire business unit. This was evident recently in both Interventional Urology and Advanced Wound Dressings, where recalls had a significant negative impact on results. The urology recall affected growth until the end of the calendar year, while the recall in China for wound dressings is expected to hurt performance across three consecutive quarters, with an estimated impact of roughly DKK 25 million per quarter. These events show how sensitive certain parts of the business can be when products are withdrawn, even temporarily. Coloplast produces billions of units every year, which makes occasional recalls unavoidable in such a large-scale operation. However, not all recalls have the same cause or severity. Management emphasized that the dressing recall in China had nothing to do with product failures or complaints but stemmed from an unusual external issue they had never experienced before. Meanwhile, the Interventional Urology recall was more significant and largely driven by internal factors, which the company admits could have been prevented. Both types of recalls illustrate why this risk matters: unexpected disruptions can hit revenue, slow market share gains, and require substantial resources to fix. Recalls also carry broader consequences beyond the immediate financial hit. They can interrupt the supply chain, delay hospital orders, create uncertainty for distributors, and temporarily weaken customer confidence. In regulated markets, recalls may trigger additional scrutiny from authorities, which can slow down product approvals or add compliance burdens. For a company whose reputation is built on safety, reliability, and trust among clinicians and patients, maintaining flawless execution is essential. Management noted that they do not maintain a financial buffer for very large recalls because such events are rare and difficult to anticipate. Minor issues are built into their expectations, but the larger recalls seen recently were not planned for.

Reasons to invest

Chronic Care is a reason to invest in Coloplast because it represents the most stable, resilient, and long-term part of the company’s business. Users in Ostomy Care and Continence Care depend on Coloplast’s products every single day, often for decades. Ostomy users typically remain with their product setup for around 10 years, and Continence Care users can stay in the category for 30 years or more. This creates an unusually loyal customer base and a predictable stream of recurring revenue. Since more than 90% of Chronic Care sales are reimbursed, demand remains steady even when economic conditions are challenging. Growth in Chronic Care comes from steady product innovation, close relationships with healthcare professionals, and Coloplast’s ability to expand its key categories. Several recent launches are already making a strong impact. In Continence Care, the new Luja catheter platform has quickly become a major driver of growth. The male version performed well from the start, and the newer female version is now boosting sales in both Europe and the United States. Looking ahead, Coloplast also expects the upcoming U.S. reimbursement change for hydrophilic catheters to be helpful, although any benefits will come gradually as the new system takes time to implement. In Ostomy Care, growth is still solid and mainly driven by the SenSura Mio product range and the Brava accessories that support it. New extensions to the portfolio, like the SenSura Mio Black bags and the updated two-piece SenSura Mio system, are being well received and helping sales across different regions. Chronic Care is also benefiting from new opportunities in bowel care. Coloplast recently secured reimbursement for bowel care products in the United States, opening the door for meaningful expansion in a category with strong clinical need and attractive margins. Management is now increasing investment in the U.S. chronic business to capture this opportunity, positioning bowel care as a new contributor to growth alongside Ostomy and Continence. Chronic Care combines long user lifetimes, high switching costs, strong reimbursement coverage, and steady product innovation. It grows faster than the underlying market, has broad geographic momentum, and provides the financial backbone that supports Coloplast’s investments in newer areas like biologics and interventional urology.

Advanced Wound Care is a reason to invest in Coloplast because it is shifting from a smaller peripheral business into a meaningful growth engine with rising profitability. The transformation is being driven by two main factors: the strategic clean-up of the legacy wound dressings business and the rapid expansion of Kerecis, Coloplast’s biologics platform built on its unique fish-skin technology. First, Coloplast has taken deliberate steps to strengthen the profitability of its wound care operations. The divestment of the skin care portfolio in late 2024 simplified the business and removed lower-margin activities. Even though this created negative year-on-year comparisons in reported growth, it positions the remaining wound care operations for healthier margins going forward. The real attraction in Advanced Wound Care, however, is Kerecis. The acquisition brought Coloplast into the fast-growing biologics wound care market, where Kerecis stands out thanks to its patented fish-skin technology. The technology is clinically differentiated, supported by strong evidence such as the Odinn study, and offers clear benefits in healing full-thickness wounds. Just as importantly, the fish-skin manufacturing process is highly cost-efficient, leading to gross margins around 90% and enabling the business to scale quickly as sales grow. Kerecis is already showing strong momentum. It generated around DKK 1,3 billion in revenue during fiscal year 2025, and management expects growth of about 25% in the year ahead. Most of this strength comes from the hospital market, which makes up roughly 70% of Kerecis’ sales and continues to grow steadily. The more volatile part of the business is the outpatient market in the United States, but upcoming reimbursement changes may actually work in Kerecis’ favour. From January 2026, the fixed reimbursement price per square centimeter of graft material will increase, and the number of companies eligible for reimbursement is expected to fall. Only providers with solid clinical data and a competitive cost structure are likely to remain in the market. Kerecis meets both requirements, meaning it could benefit as the market becomes more concentrated and shifts toward higher-quality players. As Kerecis scales, its profitability naturally improves. The business no longer needs to expand its cost base at the same rate as sales, which means EBIT margins are expected to increase toward 20%. This margin uplift is driven by a more mature commercial organization, better sales-force productivity, and the benefit of very high gross margins.

Voice and Respiratory Care is becoming an attractive reason to invest in Coloplast because it combines strong growth, high entry barriers, and long-term recurring demand, very similar to the strengths that make Chronic Care so valuable. This segment was created through the acquisition of Atos Medical in 2022, which gave Coloplast a leading position in the global market for laryngectomy and tracheostomy care. Since then, it has delivered consistent growth and is emerging as a reliable contributor to the company’s overall performance. The segment continues to show strong momentum. Organic growth was 9% for the full year, supported by solid performance in both laryngectomy and tracheostomy. Laryngectomy, which makes up about two-thirds of the segment, grows at a high single-digit rate, while tracheostomy grows in the double digits. This strength is broad-based across regions and reflects both rising treatment penetration and Coloplast’s ability to reach more patients worldwide. One of the biggest advantages of this segment is its chronic use pattern. A laryngectomy patient typically relies on heat and moisture exchangers, adhesives, and related products every day for 8–10 years. This creates steady, predictable demand and strong customer loyalty, very similar to Ostomy and Continence Care. Tracheostomy currently has a larger share of hospital-based, short-term users, but Coloplast sees an opportunity to develop more long-term, chronic use among patients who continue treatment at home. By expanding direct-to-consumer offerings and improving product choice, the company aims to build a larger recurring revenue base in this category too. Reimbursement improvements add another layer of support. Recent changes in France and Poland have expanded coverage for key products such as heat and moisture exchangers, making treatment more accessible. These reimbursement wins, especially in emerging markets, help fuel broader adoption. The long-term opportunity is even larger in markets like China, where laryngectomy and tracheostomy care are still underpenetrated. Coloplast is working to raise clinical standards, improve awareness, and build the foundation for long-term growth in these regions.

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Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 22,84, which is the adjusted EPS from fiscal year 2025. I have selected a projected future EPS growth rate of 15%. Finbox expects EPS to grow by 19,3% a year in the next five years, but 15% is the highest rate I use. Additionally, I have selected a projected future P/E ratio of 30, which is twice the growth rate. This decision is based on Coloplast's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be DKK 685,20. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Coloplast at a price of DKK 342,60 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 6.644, and capital expenditures were 1.306. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 914 in our calculations. The tax provision was 2.521. We have 225,2 outstanding shares. Hence, the calculation will be as follows: (6.644 – 914 + 2.521) / 225,2 x 10 = DKK 336,39 in Ten Cap price.

The final calculation is called the Payback Time price. It is a calculation based on the free cash flow per share. With Coloplast's Free Cash Flow Per Share at DKK 23,71 and a growth rate of 15%, if you want to recoup your investment in 8 years, the Payback Time price is DKK 374028.

Conclusion

I believe Coloplast is an intriguing company, although there is some uncertainty around leadership until a new CEO is appointed. The company has built a strong moat through high switching costs, strong clinical preference, robust reimbursement coverage, continuous innovation, and long-lasting patient relationships. While ROIC has declined in recent years due to acquisitions and investment, it remains at an acceptable level and is expected to rise again. Coloplast also delivered its highest free cash flow ever in fiscal year 2025, and both free cash flow and levered free cash flow margins are expected to increase in the coming years. Dependence on subsidized healthcare markets remains a risk because pricing and market access are shaped by government budgets and policy decisions, meaning reimbursement delays or changes, such as the LCD uncertainty in the United States, can create price pressure and volatility, especially in biologics. Product quality and safety issues also pose a risk, as even small errors can lead to recalls, regulatory challenges, or loss of trust among patients and clinicians, all of which can be costly and damaging. Recalls themselves are a meaningful risk because they can disrupt sales over multiple quarters, require significant resources to address, and lead to additional scrutiny from regulators. On the positive side, Chronic Care remains a core strength, providing stable, recurring revenue from users who rely on Coloplast’s products for many years and benefit from more than 90% reimbursement coverage. Advanced Wound Care is becoming a strong growth driver thanks to the expansion of Kerecis and its clinically proven, cost-efficient fish-skin technology, supported by favorable reimbursement trends and improving profitability. Voice and Respiratory Care also contributes meaningful growth through long-term recurring use, high entry barriers, and rising access in markets such as China. Overall, I believe Coloplast is a high-quality company, and buying shares at DKK 548, which reflects a 20% discount to the intrinsic value of the Margin of Safety price, appears to be a promising long-term investment.

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