Company Overview - CONMED Corporation is a major medical products manufacturer specializing in surgical instruments and devices for minimally invasive procedures and monitoring [12] - The company is headquartered in Utica, N.Y., employs approximately 3,600 individuals, and operates several manufacturing facilities [12] Investment Ratings - CONMED has a Zacks Rank of 3 (Hold) with a VGM Score of B, indicating a moderate investment outlook [12] - The company also has a Value Style Score of A, attributed to attractive valuation metrics such as a forward P/E ratio of 12.88, which may appeal to value investors [13] Earnings Estimates - For fiscal 2025, three analysts have revised their earnings estimates upwards in the last 60 days, with the Zacks Consensus Estimate increasing by $0.07 to $4.42 per share [13] - CONMED has demonstrated an average earnings surprise of 10.4%, suggesting a positive trend in earnings performance [13] Investment Considerations - With a solid Zacks Rank and top-tier Value and VGM Style Scores, CONMED is recommended for investors' consideration [13]

Financial Performance - Net sales increased by 2.9% to $321.3 million for the three months ended March 31, 2025, compared to $312.3 million in the same period of 2024[89] - Orthopedic surgery sales grew by 2.5% to $138.3 million, driven by growth in procedure-specific, foot and ankle, and BioBrace product offerings[90] - General surgery sales increased by 3.2% to $183.0 million, primarily due to growth in AirSeal, Buffalo Filter, and biliary product offerings[90] - Gross profit margin improved by 20 basis points to 55.3% for the three months ended March 31, 2025, compared to 55.1% in the same period of 2024[88] Expenses - Selling and administrative expenses rose to $148.8 million, representing 46.3% of net sales, an increase of 680 basis points from 39.5% in the prior year[92] - Research and development expenses decreased to $12.9 million, accounting for 4.0% of net sales, down from 4.4% in the same period of 2024[94] - Interest expense decreased to $8.3 million, with a weighted average interest rate of 2.90%, down from 3.18% in the previous year[95] Tax and Compliance - The effective tax rate for the three months ended March 31, 2025, was 21.3%, compared to 22.5% in the same period of 2024[97] - The company was in full compliance with covenants and restrictions of its senior credit agreement as of March 31, 2025[109] Sales and Market - International sales accounted for approximately 43% of consolidated net sales during the three months ended March 31, 2025[83] - There have been no significant changes in primary market risk exposures during the three months ended March 31, 2025[113] Operational Challenges - The company anticipates ongoing supply chain challenges and higher manufacturing costs due to inflation through 2025[84] - The company is experiencing higher manufacturing and operating costs due to inflationary pressures and ongoing supply chain challenges[105] Cash Flow and Capital Management - The net working capital position was $355.9 million as of March 31, 2025, with net cash provided by operating activities increasing to $41.5 million from $29.1 million year-over-year[102] - Capital expenditures rose to $3.8 million in the three months ended March 31, 2025, compared to $2.0 million in the same period a year ago[103] - Net cash used in financing activities increased to $28.4 million in the three months ended March 31, 2025, up from $17.0 million in 2024[104] - The company repaid $14.6 million on its term loan during the three months ended March 31, 2025, and paid $7.2 million in contingent consideration related to the Biorez acquisition[108] - As of March 31, 2025, there were $100.0 million in borrowings outstanding on the term loan facility, with no borrowings under the revolving credit facility and available borrowings of $583.4 million[106] - Management believes cash flow from operations will be adequate to meet anticipated operating working capital requirements and capital expenditures in the foreseeable future[104] Shareholder Returns - The Board of Directors authorized a $200.0 million share repurchase program, with $162.6 million spent to repurchase 6.1 million shares by March 31, 2025[111]

Core Insights - CONMED Corporation (CNMD) reported first-quarter 2025 adjusted earnings per share (EPS) of 95 cents, exceeding the Zacks Consensus Estimate of 81 cents by 17.3% and showing a 20.3% improvement year over year [1] - The company's revenues totaled $321.3 million, reflecting a 2.9% year-over-year increase and surpassing the Zacks Consensus Estimate by 2.4% [1][2] Revenue Breakdown - Revenues in the Orthopedic Surgery segment reached $138.3 million, up 2.5% year over year, with a 3.9% increase at constant exchange rates (CER) [3] - The General Surgery segment generated revenues of $183 million, marking a 3.2% year-over-year increase and a 3.8% increase at CER [4] - U.S. sales totaled $183.8 million, up 4.2% year over year, while international sales amounted to $137.5 million, up 1.2% year over year on a reported basis and up 3.4% at CER [5] Margin and Expenses - Adjusted gross profit improved 3.4% year over year to $181.2 million, with a gross margin of 56.4%, an increase of 80 basis points [6] - Selling and administrative expenses rose 20.7% year over year to $148.8 million, while research and development expenses decreased 4.8% to $12.9 million [6] Financial Position - The company ended the first quarter with a cash balance of $34.5 million, up from $24.5 million in the previous quarter [7] - Cash flow from operations was $41.5 million, compared to $29.1 million in the fourth quarter of 2024 [7] 2025 Guidance - CONMED raised its revenue guidance for 2025, now expecting full-year revenues between $1.35 billion and $1.378 billion, reflecting lower foreign exchange headwinds [9] - The adjusted EPS guidance for 2025 is now in the range of $4.45-$4.60, up from the previous range of $4.25-$4.40 [10] - For the second quarter of 2025, reported sales are expected to be between $335 million and $340 million, with adjusted EPS estimated between $1.10 and $1.15 [11] Market Performance and Outlook - CONMED shares rose 3.4% in after-hours trading following the earnings report, indicating positive market reception [12] - The company remains optimistic about 2025, focusing on growth in minimally invasive procedures and specific product lines such as AirSeal and BioBrace [15] - Supply chain issues are improving, with a decline in backordered SKUs and anticipated annual savings of at least $20 million [16] Tariff Impact - CONMED estimates a negative impact of $5.5 million in 2025 due to tariffs, primarily from China and Europe, and is actively working on mitigation strategies [18]

Core Viewpoint - Conmed (CNMD) reported a revenue of $321.26 million for the quarter ended March 2025, marking a year-over-year increase of 2.9% and exceeding the Zacks Consensus Estimate by 2.42% [1] Financial Performance - Earnings per share (EPS) for the quarter was $0.95, compared to $0.79 a year ago, resulting in an EPS surprise of 17.28% over the consensus estimate of $0.81 [1] - The stock has returned -13.9% over the past month, contrasting with the Zacks S&P 500 composite's -0.2% change, and currently holds a Zacks Rank 3 (Hold) [3] Revenue Breakdown - Domestic revenue reached $183.80 million, surpassing the two-analyst average estimate of $175.66 million, with a year-over-year change of +4.2% [4] - International revenue was $137.50 million, slightly below the average estimate of $138.31 million, reflecting a year-over-year change of +1.2% [4] - Net sales in Orthopedic Surgery totaled $138.30 million, exceeding the average estimate of $125.60 million, with a year-over-year increase of +2.5% [4] - Net sales in General Surgery were $183 million, slightly above the average estimate of $182.04 million, showing a year-over-year change of +3.2% [4] - Net sales of Single-use Products amounted to $276.30 million, surpassing the average estimate of $268.71 million, with a year-over-year change of +4.4% [4] - Net sales of Capital Products were $45 million, slightly below the average estimate of $45.25 million, indicating a year-over-year decline of -5.5% [4]

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]