Financial Data and Key Metrics Changes - Total sales for Q1 2025 were $321.3 million, representing a year-over-year increase of 2.9% as reported and 3.8% in constant currency, slightly better than guidance [7] - Adjusted net income for Q1 was $29.6 million, an increase of 19.6% year-over-year, with adjusted diluted net earnings per share of $0.95, up 20.1% year-over-year [21] - Adjusted gross margin for Q1 was 56.4%, which is 80 basis points higher than the prior year quarter [18] Business Line Data and Key Metrics Changes - Constant currency sales growth in orthopedics was 3.9%, with double-digit growth in foot and ankle products [7] - General surgery sales saw constant currency growth of 3.8%, driven by strong demand for AirSeal and smoke evacuation products [9] - U.S. orthopedic sales decreased by 2.1%, while international orthopedic sales increased by 7.9% [16] Market Data and Key Metrics Changes - U.S. general surgery sales grew by 6.9%, while international general surgery sales decreased by 3.3% due to declines in energy and critical care product lines [16] - The company noted strong demand for its products, particularly in minimally invasive surgery and areas of laparoscopy and arthroscopy [12] Company Strategy and Development Direction - The company is focused on improving supply chain operations and expects to see significant savings from these initiatives, with a target of at least $20 million in annual savings [18] - Management emphasized the importance of clinical differentiation in products like BioBrace and AirSeal, which are expected to drive future growth [8][12] - The company is working on enhancing its supply chain stability and continuity to support future growth [45] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainties in the macroeconomic environment but noted strong demand for their products [11] - The company remains optimistic about its growth drivers and is focused on operational improvements to enhance performance [27] - Management expects revenue growth for the year to be between 4% and 6% in constant currency, with an improved outlook due to currency effects [23][30] Other Important Information - The company received FDA clearance for a new delivery device for rotator cuff repair, which is expected to enhance surgical procedures [8] - Cash flow from operations for Q1 was $41.5 million, compared to $29.1 million in the same quarter of the previous year [22] Q&A Session Summary Question: Guidance and hospital budgets - Management indicated no concerns about softness in hospital budgets and maintained guidance for the year [30] Question: CEO's perspective on surprises - The CEO noted no negative surprises but was positively surprised by the commitment of the ConMed team and customer embrace of their technology [34] Question: Tariff impact and mitigation efforts - Management discussed the impact of tariffs, particularly from China, and outlined mitigation strategies including logistics adjustments and potential price changes [40][42] Question: Supply chain improvement initiatives - Management provided updates on supply chain improvements, focusing on procurement, planning, and production, with positive progress noted in key portfolios [45][49] Question: Growth potential post-supply chain issues - Management expressed confidence in achieving higher growth rates once supply chain issues are resolved, targeting a balanced mix of growth drivers [72][74]

Financial Data and Key Metrics Changes - Total sales for Q1 2025 were $321.3 million, representing a year-over-year increase of 2.9% as reported and 3.8% in constant currency, slightly better than guidance [7] - Adjusted net income for Q1 was $29.6 million, an increase of 19.6% year-over-year, with adjusted diluted net earnings per share of $0.95, up 20.1% year-over-year [22] - Adjusted gross margin for Q1 was 56.4%, which is 80 basis points higher than the prior year quarter [19] Business Line Data and Key Metrics Changes - Constant currency sales growth in orthopedics was 3.9%, with double-digit growth in foot and ankle products [7] - General surgery sales saw constant currency growth of 3.8%, driven by strong demand for AirSeal and smoke evacuation products [10] - U.S. orthopedic sales decreased by 2.1%, while international orthopedic sales increased by 7.9% [16] Market Data and Key Metrics Changes - U.S. general surgery sales grew by 6.9%, while international general surgery sales decreased by 3.3% due to declines in energy and critical care product lines [18] - Total worldwide orthopedic sales grew by 3.9% in Q1 [16] Company Strategy and Development Direction - The company is focused on improving supply chain operations and expects to see significant savings from these initiatives, with a target of at least $20 million in annual savings [19] - The management is optimistic about the long-term future, emphasizing strong growth drivers in minimally invasive surgery and the potential of products like BioBrace and AirSeal [12][14] - The company is working on enhancing its product portfolio and has received FDA clearance for a new delivery device for rotator cuff repair [9] Management's Comments on Operating Environment and Future Outlook - Management noted that demand for products remains strong despite macroeconomic uncertainties, with hospital systems prioritizing key areas of business [12] - The company expects to maintain its revenue guidance for the year, projecting constant currency growth between 4% and 6% [31] - Management expressed confidence in the growth potential of its four key platforms, which are expected to drive double-digit growth [56] Other Important Information - The company has made progress in reducing backordered SKUs, although it acknowledges that there is still work to be done [11] - Cash flow from operations in Q1 was $41.5 million, compared to $29.1 million in the same quarter of the previous year [23] Q&A Session Summary Question: Guidance and hospital budgets - Management indicated no concerns about softness in hospital budgets and maintained a constant currency growth guidance of 4% to 6% for the year [31] Question: CEO's perspective on surprises - The CEO noted no negative surprises but was positively surprised by the commitment of the ConMed team and customer enthusiasm for their technology [34] Question: Tariff impact reconciliation - Management clarified that the majority of previous tariff estimates were related to Mexico, which is now exempt, leaving China as the primary concern [40] Question: Supply chain improvement initiatives - The company is focusing on procurement, production planning, and production processes to enhance supply chain stability and continuity [47] Question: Capital trends and AirSeal utilization - Management reported no significant change in customer appetite for capital expenditures and noted continued adoption of AirSeal in complex procedures [61] Question: Growth potential post-supply chain issues - Management believes that once supply chain issues are resolved, the company could achieve higher growth rates, potentially in the 7% to 9% range [75]

Financial Performance - CONMED Corporation reported first quarter 2025 sales of $321.3 million, an increase of 2.9% year-over-year and 3.8% in constant currency[7]. - Domestic revenue grew by 4.2% year-over-year, while international revenue increased by 1.2% as reported and 3.4% in constant currency[7]. - Full-year reported revenue is now expected to be between $1.350 billion and $1.378 billion, compared to the prior guidance of $1.344 billion to $1.372 billion[4]. - Net income for the three months ended March 31, 2025, was $6.036 million, a decrease of 69.4% compared to $19.709 million in the same period of 2024[20]. - Adjusted EBITDA increased to $61.302 million, up 8.9% from $56.301 million year-over-year[20]. Earnings and Margins - Adjusted diluted net earnings per share for 2025 are expected to be in the range of $4.45 to $4.60, up from the previous range of $4.25 to $4.40[5]. - Diluted net earnings per share (GAAP) were $0.19, down from $0.63 in the first quarter of 2024[7]. - The company's gross profit margin for the first quarter was 55.3%, slightly up from 55.1% in the same quarter of 2024[11]. - EBITDA margin for the three months ended March 31, 2025, was 10.6%, down from 17.0% in the same period of 2024[20]. Expenses and Costs - Research and development expenses for the first quarter were $12.9 million, compared to $13.6 million in the first quarter of 2024[11]. - The company incurred executive transition costs of $12.165 million during the quarter, which were not present in the previous year[20]. - Interest expense decreased to $8.286 million from $9.594 million, reflecting a reduction of 13.7%[20]. - Provision for income taxes was $1.636 million, down from $5.710 million, indicating a decrease of 71.3%[20]. Currency and Tariff Impact - The company anticipates a negative impact of approximately $0.14 on EPS in the second half of 2025 due to recent tariff announcements[5]. - The company expects revenue currency headwinds of approximately 50 to 70 basis points, an improvement from the previous estimate of 100 to 120 basis points[4]. - The company analyzes net sales on a constant currency basis to measure comparability between periods, excluding the impact of foreign currency exchange rates[24]. Investor Engagement - The company will host a conference call to discuss the first quarter results, indicating ongoing engagement with investors[8]. - Forward-looking statements indicate potential risks and uncertainties that could affect future performance, as detailed in the company's Annual Report[22]. Other Financial Metrics - The company reported a gain on the sale of a product line amounting to $(354) thousand, with no comparable figure in the previous year[20]. - The company emphasizes the importance of non-GAAP measures, such as adjusted net income and adjusted diluted EPS, for understanding financial results[23].

Financial Performance - CONMED's Q1 2025 worldwide revenue reached $321.3 million[22] - The company's GAAP EPS was $0.19, a decrease of 69.3% year-over-year[22, 25] - Adjusted EPS was $0.95, an increase of 20.1% year-over-year[22, 25] - Single-use products accounted for 86% of worldwide revenue[24] - The company anticipates approximately 4% to 6% constant currency revenue growth for the full year 2025, projecting reported revenue between $1350 million and $1378 million[26] Segment Performance - Orthopedic surgery revenue was $138.3 million with 3.9% constant currency growth[22] - General surgery revenue was $183.0 million with 3.8% constant currency growth[22] - Domestic revenue accounted for 57% and international revenue accounted for 43% of the total revenue[22] - Domestic revenue grew 3.4% and international revenue grew 5.4% (3.8% in constant currency)[22] Market and Strategy - The orthopedics market is estimated to be between $5.1 billion and $5.3 billion[10] - The US capital equipment market within orthopedics represents 38% of the total, while international accounts for 62%[10] - The general surgery market includes segments like access ($1.5 to $1.7 billion), energy ($3.1 to $3.3 billion), and endoscopic technologies ($3.1 to $3.3 billion)[11] - The company aims to achieve above-market revenue and profitability growth over the long term[9]

Financial Performance - Consolidated net sales for 2024 reached $1,307,015 thousand, a 5% increase from $1,244,744 thousand in 2023[22] - Annual royalty expenses for licensed product net sales were approximately $6.8 million in 2024, compared to $5.3 million in 2023[36] - Stock-based compensation expense recognized was $25.6 million for the year ended December 31, 2024, compared to $24.3 million in 2023 and $21.7 million in 2022[199] Product Revenue Breakdown - Orthopedic surgery products accounted for 42% of net sales in 2024, while general surgery products made up 58%[22] - Approximately 77% of orthopedic surgery revenue in 2024 came from single-use products expected to be recurring[23] - In 2024, approximately 91% of general surgery revenue was derived from single-use products anticipated to be recurring[27] Research and Development - Research and development expenditures were approximately $54.4 million in 2024, up from $52.6 million in 2023[37] - The company maintains a focus on developing new products and enhancing existing ones to drive organic growth[21] Strategic Acquisitions - The company completed strategic acquisitions of In2Bones Global, Inc. and Biorez, Inc. in June and August 2022, respectively[21] International Sales - International sales represented approximately 32% of consolidated net sales in 2024, with products sold in over 100 countries[28] Workforce and Employee Engagement - As of December 31, 2024, CONMED had approximately 3,900 full-time employees, with around 2,400 in operations[46] - CONMED's global workforce engagement score increased year-over-year, with 98% participation in the Gallup Q12 Employee Engagement Survey in May 2024[56] - The company is committed to pay equity, conducting annual reviews globally by role, location, and gender[50] - CONMED's talent management practices involve annual reviews by the Board of Directors to support business strategy and succession planning[48] Compliance and Regulations - CONMED's operations are subject to various environmental health and safety laws, and the company believes its practices comply with applicable regulations[45] - The EU Medical Device Regulation (EU MDR) imposes stricter requirements for marketing medical devices, effective May 2021[43] - The company maintains quality system certifications through EU recognized Notified Bodies to authorize the CE Mark for product distribution[43] Intellectual Property - The company has rights to a wide range of patents with expiration dates from 2025 to 2043, which are crucial for its competitive position[38] Financial Obligations - Total contractual obligations amount to $1,197,487, with long-term debt at $914,588 and contingent consideration payments of $72,217[198] Diversity and Inclusion - The company emphasizes diversity and inclusion as vital to its success, believing that diverse teams enhance innovation and understanding of customer needs[52]

Core Insights - CONMED Corporation (CNMD) reported fourth-quarter 2024 adjusted earnings per share (EPS) of $1.34, exceeding the Zacks Consensus Estimate of $1.20 by 11.7% and showing a 26.4% improvement year-over-year [1] - The company's revenues for the fourth quarter totaled $345.9 million, reflecting a 5.8% year-over-year increase and surpassing the Zacks Consensus Estimate by 1.4% [2] - For the full year 2024, CNMD's revenues reached $1.31 billion, up 5% year-over-year, with adjusted EPS of $4.17, marking a 20.9% increase compared to 2023 [3] Revenue Breakdown - The Orthopedic Surgery segment generated revenues of $139 million, a 1.8% increase year-over-year, with U.S. sales improving by 5.2% [4] - The General Surgery segment reported revenues of $206.9 million, up 8.6% year-over-year, with U.S. sales increasing by 7.4% and international sales rising by 11.9% [5] - Total sales in the United States were $203.3 million, up 6.8% year-over-year, while international sales amounted to $142.6 million, reflecting a 4.4% increase [6] Margin and Expenses - CNMD's gross profit improved by 8.9% year-over-year to $198.3 million, with a gross margin of 57.3%, an increase of 160 basis points [7] - Selling and administrative expenses rose by 12.5% year-over-year to $132.7 million, while research and development expenses decreased by 6.1% to $13.2 million [7] - The operating income for the quarter was $52.5 million, compared to $50.2 million in the prior-year quarter, with an operating margin of 15.2% [7] Financial Position - CNMD ended the fourth quarter with a cash balance of $24.5 million, down from $38.5 million in the previous quarter [8] - Cash flow from operations in the reported quarter was $43.3 million, compared to $56.4 million in the fourth quarter of 2023 [9] Future Guidance - For 2025, CNMD expects revenues between $1.34 billion and $1.37 billion, indicating a constant-currency growth of approximately 4% to 6% [10] - The company anticipates adjusted EPS for 2025 to be in the range of $4.25 to $4.40, with the Zacks Consensus Estimate at $4.41 [10] - CNMD also provided first-quarter 2025 revenue guidance, expecting reported sales between $310 million and $316 million [11] Market Reaction - Following the earnings report, CNMD's shares fell by 9.5% in after-market trading, likely due to revenue and EPS guidance for 2025 being below estimates [14] - Despite this, CNMD's shares have increased by 13.1% over the past six months, outperforming the industry growth of 5.2% and the S&P 500 Index's gain of 16.6% [14]

Financial Data and Key Metrics Changes - Total sales for Q4 2024 were $345.9 million, a year-over-year increase of 5.8% as reported and 6% in constant currency [8] - GAAP net income for Q4 was $33.8 million, compared to $33.1 million in the prior year, while adjusted net income increased 26.2% year-over-year to $41.8 million [9][12] - For the full year, sales reached $1.307 billion, representing a 5% year-over-year growth as reported and 5.3% in constant currency [10] Business Line Data and Key Metrics Changes - Orthopedic business sales increased 2.4% in Q4 and 2.5% for the full year on a constant currency basis [10][21] - General Surgery business saw constant currency growth of 8.7% in Q4 and 7.5% for the full year [10][22] - AirSeal achieved strong double-digit growth, with record capital and disposable sales despite market dynamics [11] Market Data and Key Metrics Changes - U.S. sales increased 6.8% in Q4, while international sales grew 5.0% [19] - Total worldwide Orthopedic sales grew 2.4% in Q4, with U.S. Orthopedic sales growing 5.2% and international sales increasing 0.6% [20] - Total worldwide General Surgery sales increased 8.7% in Q4, with U.S. sales growing 7.4% and international sales increasing 12.0% [20] Company Strategy and Development Direction - The company is focused on resolving supply challenges in the Orthopedic business and maximizing growth drivers like AirSeal, Buffalo Filter, BioBrace, and Foot & Ankle portfolio [13][16] - A consulting firm has been engaged to expedite operational improvements and strengthen the Orthopedic business [14] - The company aims to enhance its portfolio's durability, growth, and profitability over the next decade [16][84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of AirSeal, driven by strong demand for improved patient outcomes [15] - The company is cautious in its 2025 guidance, projecting revenue growth of 4% to 6% in constant currency, reflecting current operational challenges [38][39] - Management acknowledged the impact of currency headwinds and ongoing operational improvements on profitability [70][92] Other Important Information - Adjusted gross margin for Q4 was 57.6%, a 120 basis point improvement year-over-year [23] - The company reported a cash balance of $24.5 million at year-end, down from $38.5 million [31] - Capital expenditures for the full year were $13.1 million, compared to $19.0 million in 2023 [34] Q&A Session Summary Question: What accounts for the delta in growth rates? - Management attributed the delta to lingering supply chain challenges that have affected performance [61] Question: What is the outlook for AirSeal growth? - Management expects AirSeal to continue growing at double-digit rates due to strong clinical demand [64] Question: What factors contribute to the conservatism in guidance? - The conservatism is due to market conditions, timing of new products, and ongoing supply chain issues [66][70] Question: What is the strategy for capital allocation and M&A? - The company plans to focus on paying down debt and improving leverage, while remaining open to compelling acquisition opportunities [104] Question: How is the company addressing the impact of tariffs? - Management indicated that passing on tariff costs to hospitals may be challenging due to existing contracts [111][112]

Group 1 - Conmed reported quarterly earnings of $1.34 per share, exceeding the Zacks Consensus Estimate of $1.20 per share, and up from $1.06 per share a year ago, representing an earnings surprise of 11.67% [1][2] - The company achieved revenues of $345.94 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.36%, compared to $327.05 million in the same quarter last year [2] - Conmed has outperformed the S&P 500, with shares increasing about 6.5% since the beginning of the year, while the S&P 500 gained 2.7% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $1 on revenues of $334.22 million, and for the current fiscal year, it is $4.71 on revenues of $1.4 billion [7] - The Zacks Industry Rank indicates that the Medical - Dental Supplies sector is currently in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8]

Financial Performance - Fourth quarter 2024 sales reached $345.9 million, a year-over-year increase of 5.8% as reported and 6.0% in constant currency[6] - Full-year 2024 sales totaled $1.307 billion, reflecting a 5.0% increase year-over-year as reported and 5.3% in constant currency[6] - Adjusted diluted net earnings per share for the fourth quarter were $1.34, marking a 26.4% increase compared to the fourth quarter of 2023[6] - The company expects full-year 2025 reported revenue between $1.344 billion and $1.372 billion, indicating a year-over-year constant currency growth of approximately 4% to 6%[3] - Full-year 2025 adjusted diluted net earnings per share are projected to be in the range of $4.25 to $4.40, accounting for a currency headwind of approximately $0.15 to $0.20[4] - Domestic revenue for the fourth quarter increased by 6.8% year-over-year, while international revenue grew by 4.4% as reported[6] - The company reported net income of $33.8 million for the fourth quarter, slightly up from $33.1 million in the same period last year[11] - Total revenue for the year ended December 31, 2024, was $733.0 million, with a gross profit margin of 56.1%[19] Profitability Metrics - Gross profit margin for the fourth quarter was 57.3%, compared to 55.7% in the fourth quarter of 2023[11] - Reported gross profit for Q4 2024 was $198.3 million, representing 57.3% of sales, compared to $182.2 million (55.7% of sales) in Q4 2023[15] - Adjusted net income for Q4 2024 was $41.8 million, with diluted EPS of $1.34, up from $33.2 million and $1.06 in Q4 2023[15] - Adjusted EBITDA for Q4 2024 was $80.0 million, with an adjusted EBITDA margin of 23.1%[28] - Adjusted gross profit margin for the year ended December 31, 2024, was 24.1%[19] Expenses and Costs - Research and development expenses for the full year were $54.4 million, compared to $52.6 million in 2023[11] - The company incurred $955,000 in costs due to Hurricane Milton impacting the Largo, FL facility in 2024[16] - The company recorded lease impairment expenses of $606,000 in Q4 2024[16] Strategic Focus and Future Outlook - The company aims to enhance operations and establish a stronger foundation for future above-market revenue and profitability growth in 2025[2] - The company plans to continue focusing on market expansion and new product development in the upcoming quarters[29] Non-GAAP Financial Measures - The company utilizes non-GAAP financial measures to provide meaningful insights into its financial results, including percentage sales growth in constant currency and adjusted net income[31] - Net sales on a constant currency basis is analyzed to measure comparability of results between periods, excluding the impact of foreign currency exchange rates[32] - The company emphasizes that non-GAAP measures should not be considered in isolation and encourages a comprehensive review of financial statements[33] - Adjusted measures are important indicators of operations as they exclude items not indicative of core operating results, providing a baseline for analyzing trends[31] - The company believes that EBITDA is a useful non-GAAP measurement for assessing aspects of cash flow[31] - Management bases certain incentive compensation on non-GAAP financial measures, reflecting their importance in reviewing operating results[31] Risk Factors and Forward-Looking Statements - The company’s Annual Report on Form 10-K discusses risk factors that could cause actual results to differ from forward-looking statements[30] - Forward-looking statements are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, indicating management's expectations for future performance[30] - The financial impact of certain items affecting earnings performance is uncertain and may be material to consolidated statements of income[34] - The company is unable to provide a quantitative reconciliation of expected diluted net earnings per share to expected adjusted diluted net earnings per share due to uncertainties related to acquisition and integration charges[34]

Core Viewpoint - The article emphasizes the importance of value investing and highlights specific stocks, CONMED and McKesson, as strong candidates based on their valuation metrics and earnings outlook. Group 1: CONMED (CNMD) - CONMED has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4] - The stock is currently trading at a P/E ratio of 14.19, which is lower than the industry average of 17.14 [4] - CNMD's Forward P/E has fluctuated between 13 and 31.12 over the past 52 weeks, with a median of 15.41 [4] - The PEG ratio for CNMD is 0.74, significantly lower than the industry average of 1.94, indicating potential undervaluation [5] - CNMD's P/B ratio stands at 2.27, compared to the industry's average of 4.56, suggesting a solid valuation [6] - The P/CF ratio for CNMD is 10.19, which is also lower than the industry average of 18.44, reinforcing its undervalued status [7] Group 2: McKesson (MCK) - McKesson is also rated 2 (Buy) with a Value Score of A, making it another attractive option for value investors [8] - The stock is trading at a forward earnings multiple of 16.24, which is below the industry P/E of 17.14 [8] - MCK's PEG ratio is 1.15, lower than the industry average of 1.94, indicating it may be undervalued [8] - The P/B ratio for McKesson is -27.89, which is significantly lower than the industry's average of 4.56, suggesting a unique valuation scenario [9] - Overall, both CONMED and McKesson are highlighted as likely undervalued stocks with strong earnings outlooks, making them appealing to value investors [10]