CONMED Corporation (NYSE: CNMD) today announced financial
results for the second quarter ended June 30, 2022.
Second Quarter 2022 Highlights
- Sales of $277.2 million increased 8.6% year over year as
reported and 9.8% in constant currency. Acquisitions contributed
approximately 80 basis points of growth.
- Domestic revenue increased 3.9% year over year.
- International revenue increased 14.7% year over year as
reported and 17.2% in constant currency.
- Diluted net loss per share (GAAP) was $5.65 compared to diluted
net earnings per share (GAAP) of $0.41 in the second quarter of
2021.
- Adjusted diluted net earnings per share(1) were $0.76, an
increase of 7.0% over the second quarter of 2021.
- Closed In2Bones transaction on June 13, 2022.
“I’m proud that our team drove strong revenue growth in the
second quarter while also refinancing our debt and closing the
acquisition of In2Bones,” commented Curt R. Hartman, CONMED’s Chair
of the Board, President, and Chief Executive Officer. “We continue
navigating the challenges of hospital staffing and inflation while
remaining committed to enhancing the company’s long-term growth and
profitability profiles.”
2022 Outlook
Due to changes in foreign exchange rates, the Company is
lowering its revenue guidance for the full year 2022 and now
expects revenue between $1.095 billion and $1.140 billion compared
to its prior guidance of between $1.105 billion and $1.150 billion.
Based on recent exchange rates, the Company now expects foreign
exchange to have a 100 to 150 bps negative impact on full-year 2022
revenue growth.
The Company now expects full-year 2022 adjusted diluted net
earnings per share in the range of $3.40 to $3.55, down from the
prior range of $3.50 to $3.65 to account for a $0.10 currency
headwind.
Supplemental Financial Disclosures
(1) A reconciliation of reported diluted net loss per share to
adjusted diluted net earnings per share, a non-GAAP financial
measure, appears below.
Conference Call
The Company’s management will host a conference call today at
4:30 p.m. ET to discuss its second quarter 2022 results.
To participate in the conference call via telephone, please
click here to pre-register and obtain the dial-in number and
passcode.
This conference call will also be webcast and can be accessed
from the “Investors” section of CONMED's website at www.conmed.com.
The webcast replay of the call will be available at the same site
approximately one hour after the end of the call.
Consolidated Condensed
Statements of Income (Loss)
(in thousands except per share
amounts, unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Net sales
$
277,190
$
255,161
$
519,516
$
487,837
Cost of sales
125,413
113,737
231,748
217,964
Gross profit
151,777
141,424
287,768
269,873
% of sales
54.8
%
55.4
%
55.4
%
55.3
%
Selling & administrative expense
115,826
104,399
218,701
202,739
Research & development expense
11,493
11,318
22,165
21,344
Income from operations
24,458
25,707
46,902
45,790
% of sales
8.8
%
10.1
%
9.0
%
9.4
%
Interest expense
5,928
9,420
10,926
19,772
Other expense
112,011
-
112,011
-
Income (loss) before income taxes
(93,481
)
16,287
(76,035
)
26,018
Provision for income taxes
74,810
2,997
77,281
2,868
Net income (loss)
$
(168,291
)
$
13,290
$
(153,316
)
$
23,150
Basic EPS
$
(5.65
)
$
0.46
$
(5.18
)
$
0.80
Diluted EPS
(5.65
)
0.41
(5.18
)
0.72
Basic shares
29,775
29,125
29,601
29,052
Diluted shares
29,775
32,464
29,601
31,964
Sales Summary
(in millions, unaudited)
Three Months Ended June
30,
% Change
Domestic
International
2022
2021
As
Reported
Impact of
Foreign
Currency
Constant
Currency
As
Reported
As
Reported
Impact of
Foreign
Currency
Constant
Currency
Orthopedic Surgery
$
120.2
$
107.9
11.4
%
1.3
%
12.7
%
-0.8
%
18.8
%
1.9
%
20.7
%
General Surgery
157.0
147.3
6.6
%
1.1
%
7.7
%
5.7
%
8.6
%
3.4
%
12.0
%
$
277.2
$
255.2
8.6
%
1.2
%
9.8
%
3.9
%
14.7
%
2.5
%
17.2
%
Single-use Products
$
230.3
$
208.9
10.2
%
1.1
%
11.3
%
7.8
%
13.5
%
2.5
%
16.0
%
Capital Products
46.9
46.3
1.4
%
1.3
%
2.7
%
-16.0
%
19.6
%
2.5
%
22.1
%
$
277.2
$
255.2
8.6
%
1.2
%
9.8
%
3.9
%
14.7
%
2.5
%
17.2
%
Domestic
$
149.2
$
143.6
3.9
%
0.0
%
3.9
%
International
128.0
111.6
14.7
%
2.5
%
17.2
%
$
277.2
$
255.2
8.6
%
1.2
%
9.8
%
Six Months Ended June
30,
% Change
Domestic
International
2022
2021
As
Reported
Impact of
Foreign
Currency
Constant
Currency
As
Reported
As
Reported
Impact of
Foreign
Currency
Constant
Currency
Orthopedic Surgery
$
227.7
$
215.0
5.9
%
0.7
%
6.6
%
0.6
%
8.9
%
1.0
%
9.9
%
General Surgery
291.8
272.8
7.0
%
0.7
%
7.7
%
6.5
%
8.0
%
2.2
%
10.2
%
$
519.5
$
487.8
6.5
%
0.7
%
7.2
%
4.8
%
8.5
%
1.5
%
10.0
%
Single-use Products
$
431.8
$
396.3
8.9
%
0.7
%
9.6
%
7.1
%
11.4
%
1.5
%
12.9
%
Capital Products
87.7
91.5
-4.1
%
0.7
%
-3.4
%
-7.2
%
-1.5
%
1.3
%
-0.2
%
$
519.5
$
487.8
6.5
%
0.7
%
7.2
%
4.8
%
8.5
%
1.5
%
10.0
%
Domestic
$
280.4
$
267.5
4.8
%
0.0
%
4.8
%
International
239.1
220.3
8.5
%
1.5
%
10.0
%
$
519.5
$
487.8
6.5
%
0.7
%
7.2
%
Reconciliation of Reported Net
Income (Loss) to Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Three Months Ended June 30,
2022
Gross
Profit
Selling &
Administrative
Expense
Operating
Income
Interest
Expense
Other
Expense
Tax
Expense
Effective
Tax Rate
Net Income
(Loss)
Basic
EPS
Adjustments(8)
Diluted
EPS
As reported
$151,777
$115,826
$24,458
$5,928
$112,011
$74,810
-80.0%
$(168,291)
$-
$(168,291)
% of sales
54.8%
41.8%
8.8%
EPS
$(5.65)
$(5.65)
Shares
29,775
-
29,775
Acquisition costs(1)
349
(2,600)
2,949
-
-
(1,760)
4,709
Legal matters(2)
-
(775)
775
-
-
(462)
1,237
Convertible notes premium on
extinguishment(3)
-
-
-
-
(103,125)
(61,521)
164,646
Change in fair value of convertible notes
hedges upon settlement(4)
-
-
-
-
(5,460)
(3,257)
8,717
Loss on early extinguishment of
debt(5)
-
-
-
-
(3,426)
(2,044)
5,470
$152,126
$112,451
$28,182
$5,928
$-
$5,766
$16,488
Adjusted gross profit %
54.9%
Amortization(6)
$1,500
(6,808)
8,308
(1,036)
-
2,291
7,053
As adjusted
$105,643
$36,490
$4,892
$-
$8,057
25.5%
$23,541
$1,263
$24,804
% of sales
38.1%
13.2%
Adjusted Diluted EPS
$0.76
Shares
29,775
3,820
33,595
Convertible notes hedges(7)
(856)
Adjusted Diluted Shares
32,739
Three Months Ended June 30,
2021
Gross
Profit
Selling &
Administrative
Expense
Operating
Income
Interest
Expense
Other
Expense
Tax
Expense
Effective
Tax Rate
Net
Income
Basic
EPS
Adjustments(8)
Diluted
EPS
As reported
$141,424
$104,399
$25,707
$9,420
$-
$2,997
18.4%
$13,290
$-
$13,290
% of sales
55.4%
40.9%
10.1%
EPS
$0.46
$0.41
Shares
29,125
3,339
32,464
$141,424
$104,399
$25,707
$9,420
$-
$2,997
$13,290
Adjusted gross profit %
55.4%
Amortization(6)
$1,500
(6,689)
8,189
(3,586)
-
2,886
8,889
As adjusted
$97,710
$33,896
$5,834
$-
$5,883
21.0%
$22,179
$-
$22,179
% of sales
38.3%
13.3%
Adjusted Diluted EPS
$0.71
Shares
29,125
3,339
32,464
Convertible notes hedges(7)
(1,362)
Adjusted Diluted Shares
31,102
(1) In 2022, the Company incurred
inventory step-up adjustments and consulting and legal related
costs associated with the acquisition of In2Bones Global, Inc..
(2) In 2022, the Company incurred costs
related to the settlement of litigation.
(3) In 2022, the Company incurred costs
related to the conversion premium on the repurchase and
extinguishment of $275.0 million of its 2.625% Convertible
Notes.
(4) In 2022, the Company incurred costs
related to the settlement of convertible notes hedge transactions
associated with the repurchase and extinguishment of $275.0 million
of its 2.625% Convertible Notes.
(5) In 2022, the Company incurred costs
related to the write-off of deferred financing fees associated with
the repurchase and extinguishment of $275.0 million of its 2.625%
Convertible Notes and term loan paydown.
(6) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(7) Non-GAAP adjusted dilutive weighted
average shares outstanding exclude dilution that is expected to be
offset by the Company’s convertible notes hedge transactions.
(8) The Company adopted ASU 2020-06,
effective January 1, 2022. As a result of the adoption, the Company
is required to compute diluted EPS using the if-converted method.
Under the if-converted method, the numerator is adjusted for
interest expense applicable to its convertible notes (net of tax)
and the denominator includes additional common shares assuming
conversion premium and principal portion of the notes (when
permitted or required) are settled in shares. Subsequent to June 6,
2022, the Company is required to settle the principal value of its
convertible notes in cash. Adjustments in 2022 are applicable on a
non-GAAP basis only since GAAP results are in a loss position and
therefore exclude dilutive potential shares.
Reconciliation of Reported Net
Income (Loss) to Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Six Months Ended June 30,
2022
Gross
Profit
Selling &
Administrative
Expense
Operating
Income
Interest
Expense
Other
Expense
Tax
Expense
Effective
Tax Rate
Net
Income
(Loss)
Basic
EPS
Adjustments(8)
Diluted
EPS
As reported
$287,768
$218,701
$46,902
$10,926
$112,011
$77,281
-101.6%
$(153,316)
$-
$(153,316)
% of sales
55.4%
42.1%
9.0%
EPS
$(5.18)
$(5.18)
Shares
29,601
-
29,601
Acquisition costs(1)
349
(2,600)
2,949
-
-
(1,760)
4,709
Legal matters(2)
-
(775)
775
-
-
(462)
1,237
Convertible notes premium on
extinguishment(3)
-
-
-
-
(103,125)
(61,521)
164,646
Change in fair value of convertible notes
hedges upon settlement(4)
-
-
-
-
(5,460)
(3,257)
8,717
Loss on early extinguishment of
debt(5)
-
-
-
-
(3,426)
(2,044)
5,470
$288,117
$215,326
$50,626
$10,926
$-
$8,237
$31,463
Adjusted gross profit %
55.5%
Amortization(6)
$3,000
(13,370)
16,370
(1,916)
-
4,451
13,835
As adjusted
$201,956
$66,996
$9,010
$-
$12,688
21.9%
$45,298
$2,978
$48,276
% of sales
38.9%
12.9%
Adjusted Diluted EPS
$1.45
Shares
29,601
4,774
34,375
Convertible note hedges(7)
(1,134)
Adjusted Diluted Shares
33,241
Six Months Ended June 30,
2021
Gross
Profit
Selling &
Administrative
Expense
Operating
Income
Interest
Expense
Other
Expense
Tax
Expense
Effective
Tax Rate
Net
Income
Basic
EPS
Adjustments(8)
Diluted
EPS
As reported
$269,873
$202,739
$45,790
$19,772
$-
$2,868
11.0%
$23,150
$-
$23,150
% of sales
55.3%
41.6%
9.4%
EPS
$0.80
$0.72
Shares
29,052
2,912
31,964
Restructuring and related costs(9)
-
(414)
414
-
-
109
305
$269,873
$202,325
$46,204
$19,772
$-
$2,977
$23,455
Adjusted gross profit %
55.3%
Amortization(6)
$3,000
(13,527)
16,527
(7,147)
-
5,855
17,819
As adjusted
$188,798
$62,731
$12,625
$-
$8,832
17.6%
$41,274
$-
$41,274
% of sales
38.7%
12.9%
Adjusted Diluted EPS
$1.34
Shares
29,052
2,912
31,964
Convertible note hedges(7)
(1,201)
Adjusted Diluted Shares
30,763
(1) In 2022, the Company incurred
inventory step-up adjustments and consulting and legal related
costs associated with the acquisition of In2Bones Global, Inc..
(2) In 2022, the Company incurred costs
related to the settlement of litigation.
(3) In 2022, the Company incurred costs
related to the conversion premium on the repurchase and
extinguishment of $275.0 million of its 2.625% Convertible
Notes.
(4) In 2022, the Company incurred costs
related to the settlement of convertible notes hedge transactions
associated with the repurchase and extinguishment of $275.0 million
of its 2.625% Convertible Notes.
(5) In 2022, the Company incurred costs
related to the write-off of deferred financing fees associated with
the repurchase and extinguishment of $275.0 million of its 2.625%
Convertible Notes and term loan paydown.
(6) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(7) Non-GAAP adjusted dilutive weighted
average shares outstanding exclude dilution that is expected to be
offset by the Company’s convertible notes hedge transactions.
(8) The Company adopted ASU 2020-06,
effective January 1, 2022. As a result of the adoption, the Company
is required to compute diluted EPS using the if-converted method.
Under the if-converted method, the numerator is adjusted for
interest expense applicable to its convertible notes (net of tax)
and the denominator includes additional common shares assuming
conversion premium and principal portion of the notes (when
permitted or required) are settled in shares. Subsequent to June 6,
2022, the Company is required to settle the principal value of its
convertible notes in cash. Adjustments in 2022 are applicable on a
non-GAAP basis only since GAAP results are in a loss position and
therefore exclude dilutive potential shares.
(9) In 2021, the Company incurred
restructuring costs related to restructuring of our sales
force.
Reconciliation of Reported Net
Income (Loss) to EBITDA & Adjusted EBITDA
(in thousands, unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Net income (loss)
$
(168,291
)
$
13,290
$
(153,316
)
$
23,150
Provision for income taxes
74,810
2,997
77,281
2,868
Interest expense
5,928
9,420
10,926
19,772
Depreciation
4,059
3,984
8,090
8,741
Amortization
13,266
13,797
26,065
27,316
EBITDA
$
(70,228
)
$
43,488
$
(30,954
)
$
81,847
Stock based compensation
5,755
4,290
10,218
7,676
Acquisition costs
2,949
-
2,949
-
Legal matters
775
-
775
-
Convertible notes premium on
extinguishment
103,125
-
103,125
-
Change in fair value of convertible notes
hedges upon settlement
5,460
-
5,460
-
Loss on early extinguishment of debt
3,426
-
3,426
-
Restructuring and related costs
-
-
-
414
Adjusted EBITDA
$
51,262
$
47,778
$
94,999
$
89,937
EBITDA Margin
EBITDA
-25.3
%
17.0
%
-6.0
%
16.8
%
Adjusted EBITDA
18.5
%
18.7
%
18.3
%
18.4
%
About CONMED Corporation
CONMED is a medical technology company that provides surgical
devices and equipment for minimally invasive procedures. The
Company’s products are used by surgeons and physicians in a variety
of specialties, including orthopedics, general surgery, gynecology,
thoracic surgery, and gastroenterology. For more information, visit
www.conmed.com.
Forward-Looking Statements
This press release and the associated conference call may
contain forward-looking statements based on certain assumptions and
contingencies that involve risks and uncertainties, which could
cause actual results, performance, or trends to differ materially
from those expressed in the forward-looking statements herein or in
previous disclosures. For example, in addition to general industry
and economic conditions, factors that could cause actual results to
differ materially from those in the forward-looking statements may
include, but are not limited to, the risks posed to the Company’s
business, financial condition, and results of operations by the
COVID-19 global pandemic and the various government responses to
the pandemic, including deferral of surgeries, reductions in
hospital and ambulatory surgery center operating volumes,
disruption to potential supply chain reliability; any assumptions
underlying any of the foregoing as well as the risk factors
discussed in the Company's Annual Report on Form 10-K for the full
year ended December 31, 2021. Any and all forward-looking
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and relate to the
Company’s performance on a going-forward basis. The Company
believes that all forward-looking statements made by it have a
reasonable basis, but there can be no assurance that management’s
expectations, beliefs or projections as expressed in the
forward-looking statements will actually occur or prove to be
correct.
Supplemental Information - Reconciliation of GAAP to Non-GAAP
Financial Measures
The Company supplements the reporting of its financial
information determined under generally accepted accounting
principles in the United States (GAAP) with certain non-GAAP
financial measures, including percentage sales growth in constant
currency; adjusted gross profit; cost of sales excluding specified
items; adjusted selling and administrative expenses; adjusted
operating income; adjusted interest expense; adjusted other
expense; adjusted income tax expense (benefit); adjusted effective
income tax rate; adjusted net income, adjusted diluted shares and
adjusted diluted net earnings per share (EPS). The Company believes
that these non-GAAP measures provide meaningful information to
assist investors and shareholders in understanding its financial
results and assessing its prospects for future performance.
Management believes percentage sales growth in constant currency
and the other adjusted measures described above are important
indicators of its operations because they exclude items that may
not be indicative of, or are unrelated to, its core operating
results and provide a baseline for analyzing trends in the
Company’s underlying business. Further, the presentation of EBITDA
is a non-GAAP measurement that management considers useful for
measuring aspects of the Company’s cash flow. Management uses these
non-GAAP financial measures for reviewing the operating results and
analyzing potential future business trends in connection with its
budget process and bases certain management incentive compensation
on these non-GAAP financial measures.
Net sales on a constant currency basis is a non-GAAP measure.
The Company analyzes net sales on a constant currency basis to
better measure the comparability of results between periods. To
measure percentage sales growth in constant currency, the Company
removes the impact of changes in foreign currency exchange rates
that affect the comparability and trend of net sales. To measure
earnings performance on a consistent and comparable basis, the
Company excludes certain items that affect the comparability of
operating results and the trend of earnings. These adjustments are
irregular in timing, may not be indicative of past and future
performance and are therefore excluded to allow investors to better
understand underlying operating trends.
Because non-GAAP financial measures are not standardized, it may
not be possible to compare these financial measures with other
companies' non-GAAP financial measures having the same or similar
names. These adjusted financial measures should not be considered
in isolation or as a substitute for reported sales growth, gross
profit, cost of sales, selling and administrative expenses,
operating income, interest expense, other expense, income tax
expense (benefit), effective income tax rate, net income (loss),
diluted shares and diluted net earnings (loss) per share, the most
directly comparable GAAP financial measures. These non-GAAP
financial measures are an additional way of viewing aspects of the
Company’s operations that, when viewed with GAAP results and the
reconciliations to corresponding GAAP financial measures above,
provide a more complete understanding of the business. The Company
strongly encourages investors and shareholders to review its
financial statements and publicly filed reports in their entirety
and not to rely on any single financial measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220727005790/en/
CONMED Corporation Todd W. Garner Chief
Financial Officer 727-214-2975
ToddGarner@conmed.com
CONMED (NYSE:CNMD)
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