CONMED Corporation (NYSE: CNMD) today announced financial
results for the third quarter ended September 30, 2022.
Third Quarter 2022 Highlights
- Sales of $275.1 million increased 10.6% year over year as
reported and 12.1% in constant currency. Acquisitions contributed
approximately 420 basis points of growth.
- Domestic revenue increased 14.2% year over year.
- International revenue increased 6.2% year over year as reported
and 9.6% in constant currency.
- Diluted net earnings per share (GAAP) were $1.48, compared to
diluted net earnings per share (GAAP) of $0.47 in the third quarter
of 2021.
- Adjusted diluted net earnings per share(1) were $0.77, a
decrease of 3.8% compared to adjusted diluted net earnings per
share of $0.80 in the third quarter of 2021.
- Closed Biorez transaction on August 9, 2022.
- Published ESG Sustainability Report subsequent to quarter
end.
“I’m proud that our third quarter results delivered strong
top-line growth in a tougher-than-expected environment,” commented
Curt R. Hartman, CONMED’s Chair of the Board, President, and Chief
Executive Officer. “During the quarter we closed on our acquisition
of Biorez, and I am pleased that both our In2Bones and Biorez
integrations are off to fantastic starts. I am confident that both
of these businesses will add to our future outlook of sustained
growth in revenue and profitability.”
2022 Outlook
The Company is narrowing its revenue guidance for the full year
2022 and now expects revenue between $1.1 billion and $1.115
billion compared to its prior guidance of between $1.095 billion
and $1.140 billion. Based on recent exchange rates, the Company now
expects foreign exchange to have a 150 to 180 bps negative impact
on full-year 2022 revenue growth compared to its prior estimate of
100 to 150 bps negative impact.
The Company now expects full-year 2022 adjusted diluted net
earnings per share in the range of $3.21 to $3.28, down from the
prior range of $3.25 to $3.45.
Supplemental Financial Disclosures
(1) A reconciliation of reported diluted net earnings 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 third 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
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net sales
$
275,088
$
248,827
$
794,605
$
736,665
Cost of sales
123,473
106,521
355,222
324,485
Gross profit
151,615
142,306
439,383
412,180
% of sales
55.1
%
57.2
%
55.3
%
56.0
%
Selling & administrative expense
114,600
104,736
333,302
307,476
Research & development expense
12,767
10,859
34,932
32,203
Income from operations
24,248
26,711
71,149
72,501
% of sales
8.8
%
10.7
%
9.0
%
9.8
%
Interest expense
8,536
8,145
19,462
27,917
Other expense
-
1,127
112,011
1,127
Income (loss) before income taxes
15,712
17,439
(60,324
)
43,457
Provision (benefit) for income taxes
(30,438
)
2,491
46,842
5,359
Net income (loss)
$
46,150
$
14,948
$
(107,166
)
$
38,098
Basic EPS
$
1.51
$
0.51
$
(3.59
)
$
1.31
Diluted EPS
1.48
0.47
(3.59
)
1.19
Basic shares
30,473
29,179
29,892
29,097
Diluted shares
31,103
32,143
29,892
32,020
Sales Summary
(in millions, unaudited)
Three Months Ended September
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
$
118.6
$
105.7
12.2
%
1.8
%
14.0
%
20.4
%
7.6
%
2.8
%
10.4
%
General Surgery
156.5
143.1
9.4
%
1.3
%
10.7
%
11.8
%
4.0
%
4.5
%
8.5
%
$
275.1
$
248.8
10.6
%
1.5
%
12.1
%
14.2
%
6.2
%
3.4
%
9.6
%
Single-use Products
$
231.3
$
200.9
15.1
%
1.6
%
16.7
%
18.8
%
10.2
%
3.8
%
14.0
%
Capital Products
43.8
47.9
-8.5
%
1.2
%
-7.3
%
-9.0
%
-8.0
%
2.3
%
-5.7
%
$
275.1
$
248.8
10.6
%
1.5
%
12.1
%
14.2
%
6.2
%
3.4
%
9.6
%
Domestic
$
155.7
$
136.4
14.2
%
0.0
%
14.2
%
International
119.4
112.4
6.2
%
3.4
%
9.6
%
$
275.1
$
248.8
10.6
%
1.5
%
12.1
%
Nine Months Ended September
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
$
346.3
$
320.8
8.0
%
1.0
%
9.0
%
7.1
%
8.4
%
1.7
%
10.1
%
General Surgery
448.3
415.9
7.8
%
0.9
%
8.7
%
8.3
%
6.6
%
3.0
%
9.6
%
$
794.6
$
736.7
7.9
%
0.9
%
8.8
%
8.0
%
7.7
%
2.2
%
9.9
%
Single-use Products
$
663.1
$
597.3
11.0
%
1.0
%
12.0
%
11.0
%
11.0
%
2.3
%
13.3
%
Capital Products
131.5
139.4
-5.6
%
0.9
%
-4.7
%
-7.8
%
-3.7
%
1.7
%
-2.0
%
$
794.6
$
736.7
7.9
%
0.9
%
8.8
%
8.0
%
7.7
%
2.2
%
9.9
%
Domestic
$
436.1
$
404.0
8.0
%
0.0
%
8.0
%
International
358.5
332.7
7.7
%
2.2
%
9.9
%
$
794.6
$
736.7
7.9
%
0.9
%
8.8
%
Reconciliation of Reported Net
Income to Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Three Months Ended September
30, 2022
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Other Expense
Tax Expense/ (Benefit)
Effective Tax Rate
Net Income
Basic EPS
Adjustments(4)
Diluted EPS
As reported
$
151,615
$
114,600
$
24,248
$
8,536
$
-
$
(30,438
)
-193.7
%
$
46,150
$
-
$
46,150
% of sales
55.1
%
41.7
%
8.8
%
EPS
$
1.51
$
1.48
Shares
30,473
630
31,103
Acquisition costs(1)
2,096
(3,706
)
5,802
-
-
35,852
(30,050
)
$
153,711
$
110,894
$
30,050
$
8,536
$
-
$
5,414
$
16,100
Adjusted gross profit %
55.9
%
Amortization(2)
$
1,500
(7,193
)
8,693
(1,488
)
-
2,484
7,697
As adjusted
$
103,701
$
38,743
$
7,048
$
-
$
7,898
24.9
%
$
23,797
$
-
$
23,797
% of sales
37.7
%
14.1
%
Adjusted Diluted EPS
$
0.77
Shares
30,473
630
31,103
Convertible notes hedges(3)
(45
)
Adjusted Diluted Shares
31,058
Three Months Ended September
30, 2021
Gross Profit
Selling &
Administrative Expense
Operating Income
Interest Expense
Other Expense
Tax Expense
Effective Tax Rate
Net Income
Basic EPS
Adjustments
Diluted EPS
As reported
$
142,306
$
104,736
$
26,711
$
8,145
$
1,127
$
2,491
14.3
%
$
14,948
$
-
$
14,948
% of sales
57.2
%
42.1
%
10.7
%
EPS
$
0.51
$
0.47
Shares
29,179
2,964
32,143
Loss on early extinguishment of
debt(5)
-
-
-
-
(1,127
)
281
846
$
142,306
$
104,736
$
26,711
$
8,145
$
-
$
2,772
$
15,794
Adjusted gross profit %
57.2
%
Amortization(2)
$
1,500
(6,796
)
8,296
(3,410
)
-
2,798
8,908
As adjusted
$
97,940
$
35,007
$
4,735
$
-
$
5,570
18.4
%
$
24,702
$
-
$
24,702
% of sales
39.4
%
14.1
%
Adjusted Diluted EPS
$
0.80
Shares
29,179
2,964
32,143
Convertible notes hedges(3)
(1,244
)
Adjusted Diluted Shares
30,899
(1) In 2022, the Company incurred
inventory step-up adjustments associated with the acquisition of
In2Bones Global, Inc. and consulting fees, legal fees and other
integration related costs associated with the acquisitions of
In2Bones Global, Inc. and Biorez, Inc.
(2) Includes amortization of intangible
assets, deferred financing fees and debt discount.
(3) Non-GAAP adjusted dilutive weighted
average shares outstanding exclude dilution that is expected to be
offset by the Company’s convertible notes hedge transactions.
(4) 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.
(5) In 2021, the Company incurred costs
related to a loss on early extinguishment and third party fees
associated with the seventh amended and restated senior credit
agreement.
Reconciliation of Reported Net
Income (Loss) to Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Nine Months Ended September
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
$
439,383
$
333,302
$
71,149
$
19,462
$
112,011
$
46,842
-77.7
%
$
(107,166
)
$
-
$
(107,166
)
% of sales
55.3
%
41.9
%
9.0
%
EPS
$
(3.59
)
$
(3.59
)
Shares
29,892
-
29,892
Acquisition costs(1)
2,445
(6,306
)
8,751
-
-
34,092
(25,341
)
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
$
441,828
$
326,221
$
80,675
$
19,462
$
-
$
13,650
$
47,563
Adjusted gross profit %
55.6
%
Amortization(6)
$
4,500
(20,563
)
25,063
(3,404
)
-
6,934
21,533
As adjusted
$
305,658
$
105,738
$
16,058
$
-
$
20,584
23.0
%
$
69,096
$
2,978
$
72,074
% of sales
38.5
%
13.3
%
Adjusted Diluted EPS
$
2.22
Shares
29,892
3,392
33,284
Convertible note hedges(7)
(771
)
Adjusted Diluted Shares
32,513
Nine Months Ended September
30, 2021
Gross Profit
Selling &
Administrative Expense
Operating Income
Interest Expense
Other Expense
Tax Expense
Effective Tax Rate
Net Income
Basic EPS
Adjustments
Diluted EPS
As reported
$
412,180
$
307,476
$
72,501
$
27,917
$
1,127
$
5,359
12.3
%
$
38,098
$
-
$
38,098
% of sales
56.0
%
41.7
%
9.8
%
EPS
$
1.31
$
1.19
Shares
29,097
2,923
32,020
Restructuring and related costs(9)
-
(414
)
414
-
-
109
305
Loss on early extinguishment of
debt(5)
-
-
-
-
(1,127
)
281
846
$
412,180
$
307,062
$
72,915
$
27,917
$
-
$
5,749
$
39,249
Adjusted gross profit %
56.0
%
Amortization(6)
$
4,500
(20,323
)
24,823
(10,557
)
-
8,653
26,727
As adjusted
$
286,739
$
97,738
$
17,360
$
-
$
14,402
17.9
%
$
65,976
$
-
$
65,976
% of sales
38.9
%
13.3
%
Adjusted Diluted EPS
$
2.14
Shares
29,097
2,923
32,020
Convertible note hedges(7)
(1,213
)
Adjusted Diluted Shares
30,807
(1) In 2022, the Company incurred
inventory step-up adjustments associated with the acquisition of
In2Bones Global, Inc. and consulting fees, legal fees and other
integration related costs associated with the acquisitions of
In2Bones Global, Inc. and Biorez, 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. In 2021, the Company
incurred costs related to a loss on early extinguishment and third
party fees associated with the seventh amended and restated senior
credit agreement.
(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
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net income (loss)
$
46,150
$
14,948
$
(107,166
)
$
38,098
Provision (benefit) for income taxes
(30,438
)
2,491
46,842
5,359
Interest expense
8,536
8,145
19,462
27,917
Depreciation
3,938
3,778
12,028
12,519
Amortization
13,689
13,432
39,754
40,747
EBITDA
$
41,875
$
42,794
$
10,920
$
124,640
Stock based compensation
5,754
4,327
15,972
12,003
Acquisition costs
5,802
-
8,751
-
Legal matters
-
-
775
-
Convertible notes premium on
extinguishment
-
-
103,125
-
Change in fair value of convertible notes
hedges upon settlement
-
-
5,460
-
Loss on early extinguishment of debt
-
1,127
3,426
1,127
Restructuring and related costs
-
-
-
414
Adjusted EBITDA
$
53,431
$
48,248
$
148,429
$
138,184
EBITDA Margin
EBITDA
15.2
%
17.2
%
1.4
%
16.9
%
Adjusted EBITDA
19.4
%
19.4
%
18.7
%
18.8
%
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/20221026005907/en/
CONMED Corporation Todd W. Garner Chief
Financial Officer 727-214-2975
ToddGarner@conmed.com
CONMED (NYSE:CNMD)
Historical Stock Chart
From May 2024 to Jun 2024
CONMED (NYSE:CNMD)
Historical Stock Chart
From Jun 2023 to Jun 2024