Shares of Coloplast experienced a sharp decline following a disappointing first quarter. The medical device maker's organic revenue growth hit 6%, below expectations. This downturn was primarily fueled by reimbursement changes impacting its Kerecis biologics business within the U.S. outpatient setting, leading to significant sales disruptions and a hit to profitability.

Despite the challenges, Coloplast demonstrated resilience in other areas. The company's Interventional Urology segment showed strong growth, and Chronic Care delivered steady results. While EBIT before special items dipped, net profit increased, helped by lower financial expenses and the absence of a one-off tax hit. Free cash flow remained robust.

Interim CEO Lars Rasmussen expressed confidence in Kerecis's long-term potential, citing its unique fish-skin technology. Despite the Q1 setback, Coloplast maintained its full-year guidance, projecting around 7% organic revenue growth. Investors will be watching for how effectively Coloplast navigates the reimbursement hurdles and sustains growth.

This situation underscores the sensitivity of medical device companies to regulatory changes. The shift in reimbursement policies can immediately affect sales, as seen with Kerecis. Furthermore, the market will assess if the company can maintain its projected growth trajectory amid these challenges, and if Kerecis will recover quickly.