CONMED Corporation (NYSE: CNMD) today announced financial
results for the fourth quarter and full-year ended December 31,
2023.
Fourth Quarter 2023 Highlights
- Sales of $327.0 million increased 30.4% year over year as
reported and 31.5% in constant currency
- Domestic revenue increased 33.3% year over year.
- International revenue increased 26.5% year over year as
reported and 29.0% in constant currency.
- Diluted net earnings per share (GAAP) were $1.05 compared to
diluted net earnings per share (GAAP) of $0.86 in the fourth
quarter of 2022.
- Adjusted diluted net earnings per share(1) were $1.06, an
increase of 152.4% compared to the fourth quarter of 2022.
Full-Year 2023 Highlights
- Sales of $1,244.7 million increased 19.1% year over year as
reported and 20.9% in constant currency. Acquisitions contributed
approximately 250 basis points of growth.
- Domestic revenue increased 20.9% year over year.
- International revenue increased 16.7% year over year as
reported and 20.9% in constant currency.
- Diluted net earnings per share (GAAP) were $2.04 compared to
diluted net loss per share (GAAP) of $2.68 in 2022.
- Adjusted diluted net earnings per share(1) were $3.45, an
increase of 30.2% compared to 2022.
“2023 was a great year for CONMED, and I am proud that our
global business delivered record revenue in both the fourth quarter
and for the full year,” commented Curt R. Hartman, CONMED’s Chair
of the Board, President, and Chief Executive Officer. “The balanced
growth we saw across our various businesses and geographies is a
testament to the strength of the portfolio that we have built. As
we shift our focus to 2024, we are very excited to continue
delivering innovative technology solutions to our customers and
patients across both the General Surgery and Orthopedics
categories.”
2024 Outlook
The Company expects full-year 2024 reported revenue between
$1.340 billion and $1.365 billion. This represents year-over-year
growth of approximately 8% to 10%.
The Company expects full-year 2024 adjusted diluted net earnings
per share(2) in the range of $4.30 to $4.40. This represents
year-over-year growth of approximately 25% to 28%.
The impact of foreign currency exchange rates in 2024 is
expected to be immaterial.
Supplemental Financial Disclosures
(1) A reconciliation of reported diluted net earnings (loss) per
share to adjusted diluted net earnings per share, a non-GAAP
financial measure, appears below.
(2) Information reconciling forward-looking adjusted diluted net
earnings per share to the comparable GAAP financial measures is
unavailable to the company without unreasonable effort, as
discussed below.
Conference Call
The Company’s management will host a conference call today at
4:30 p.m. ET to discuss its fourth quarter and full-year 2023
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
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Net sales
$
327,045
$
250,867
$
1,244,744
$
1,045,472
Cost of sales
144,870
119,005
568,499
474,227
Gross profit
182,175
131,862
676,245
571,245
% of sales
55.7
%
52.6
%
54.3
%
54.6
%
Selling & administrative expense
117,960
120,737
503,040
454,039
Research & development expense
14,028
12,220
52,602
47,152
Income (loss) from operations
50,187
(1,095
)
120,603
70,054
% of sales
15.3
%
-0.4
%
9.7
%
6.7
%
Interest expense
9,505
9,443
39,775
28,905
Other expense
-
-
-
112,011
Income (loss) before income taxes
40,682
(10,538
)
80,828
(70,862
)
Provision (benefit) for income taxes
7,611
(37,122
)
16,369
9,720
Net income (loss)
$
33,071
$
26,584
$
64,459
$
(80,582
)
Basic EPS
$
1.08
$
0.87
$
2.10
$
(2.68
)
Diluted EPS
1.05
0.86
2.04
(2.68
)
Basic shares
30,759
30,484
30,668
30,040
Diluted shares
31,502
30,931
31,548
30,040
Sales Summary
(in millions, unaudited)
Three Months Ended December
31,
% Change
Domestic
International
2023
2022
As Reported
Impact of Foreign
Currency
Constant Currency
As Reported
As Reported
Impact of Foreign
Currency
Constant Currency
Orthopedic Surgery
$
136.5
$
115.2
18.5
%
0.9
%
19.4
%
6.0
%
27.8
%
2.0
%
29.8
%
General Surgery
190.5
135.7
40.4
%
1.3
%
41.7
%
47.6
%
24.4
%
3.4
%
27.8
%
$
327.0
$
250.9
30.4
%
1.1
%
31.5
%
33.3
%
26.5
%
2.5
%
29.0
%
Single-use Products
$
271.3
$
211.9
28.1
%
1.1
%
29.2
%
33.1
%
20.6
%
2.6
%
23.2
%
Capital Products
55.7
39.0
42.9
%
0.9
%
43.8
%
34.5
%
49.3
%
1.9
%
51.2
%
$
327.0
$
250.9
30.4
%
1.1
%
31.5
%
33.3
%
26.5
%
2.5
%
29.0
%
Domestic
$
190.3
$
142.8
33.3
%
0.0
%
33.3
%
International
136.7
108.1
26.5
%
2.5
%
29.0
%
$
327.0
$
250.9
30.4
%
1.1
%
31.5
%
Year Ended December
31,
% Change
Domestic
International
2023
2022
As Reported
Impact of Foreign
Currency
Constant Currency
As Reported
As Reported
Impact of Foreign
Currency
Constant Currency
Orthopedic Surgery
$
533.1
$
461.5
15.5
%
2.2
%
17.7
%
15.2
%
15.7
%
3.5
%
19.2
%
General Surgery
711.6
584.0
21.9
%
1.5
%
23.4
%
23.4
%
18.4
%
5.1
%
23.5
%
$
1,244.7
$
1,045.5
19.1
%
1.8
%
20.9
%
20.9
%
16.7
%
4.2
%
20.9
%
Single-use Products
$
1,038.5
$
874.9
18.7
%
1.8
%
20.5
%
21.3
%
15.2
%
4.3
%
19.5
%
Capital Products
206.2
170.6
20.9
%
1.9
%
22.8
%
18.5
%
22.8
%
3.6
%
26.4
%
$
1,244.7
$
1,045.5
19.1
%
1.8
%
20.9
%
20.9
%
16.7
%
4.2
%
20.9
%
Domestic
$
700.1
$
579.0
20.9
%
0.0
%
20.9
%
International
544.6
466.5
16.7
%
4.2
%
20.9
%
$
1,244.7
$
1,045.5
19.1
%
1.8
%
20.9
%
Reconciliation of Reported Net
Income to Adjusted Net Income
(in thousands, except per share
amounts, unaudited)
Three Months Ended December
31, 2023
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Tax Expense
Effective Tax Rate
Net Income
Basic EPS
Adjustments
Diluted EPS
As reported
$
182,175
$
117,960
$
50,187
$
9,505
$
7,611
18.7
%
$
33,071
$
-
$
33,071
% of sales
55.7
%
36.1
%
15.3
%
EPS
$
1.08
$
1.05
Shares
30,759
743
31,502
Acquisition and integration costs(1)
2,154
-
2,154
-
(162
)
2,316
Contingent consideration fair value
adjustment(2)
-
9,370
(9,370
)
-
703
(10,073
)
$
184,329
$
127,330
$
42,971
$
9,505
$
8,152
$
25,314
Adjusted gross profit %
56.4
%
Amortization(3)
$
1,500
(7,295
)
8,795
(1,500
)
2,458
7,837
As adjusted
$
120,035
$
51,766
$
8,005
$
10,610
24.2
%
$
33,151
$
-
$
33,151
% of sales
36.7
%
15.8
%
Adjusted diluted EPS
$
1.06
Shares
30,759
743
31,502
Convertible note hedges(4)
(110
)
Adjusted diluted shares
31,392
Three Months Ended December
31, 2022
Gross Profit
Selling & Administrative
Expense
Operating Income
(Loss)
Interest Expense
Tax Expense (Benefit)
Effective Tax Rate
Net Income
Basic EPS
Adjustments(7)
Diluted EPS
As reported
$
131,862
$
120,737
$
(1,095
)
$
9,443
$
(37,122
)
352.3
%
$
26,584
$
-
$
26,584
% of sales
52.6
%
48.1
%
-0.4
%
EPS
$
0.87
$
0.86
Shares
30,484
447
30,931
Acquisition and integration costs(1)
2,096
(3,757
)
5,853
-
12,873
(7,020
)
Restructuring and related costs(5)
1,955
(786
)
2,741
-
6,029
(3,288
)
Software implementation costs(6)
-
(6,769
)
6,769
-
14,889
(8,120
)
Contingent consideration fair value
adjustment(2)
-
(2,518
)
2,518
-
5,538
(3,020
)
$
135,913
$
106,907
$
16,786
$
9,443
$
2,207
$
5,136
Adjusted gross profit %
54.2
%
Amortization(3)
$
1,500
(7,228
)
8,728
(1,506
)
2,446
7,788
As adjusted
$
99,679
$
25,514
$
7,937
$
4,653
26.5
%
$
12,924
$
-
$
12,924
% of sales
39.7
%
10.2
%
Adjusted diluted EPS
$
0.42
Shares
30,484
447
30,931
Convertible note hedges(4)
-
Adjusted diluted shares
30,931
(1) In 2023, the Company incurred charges
related to the amortization of inventory step-up to fair value
associated with the acquisition of In2Bones Global, Inc. In 2022,
the Company incurred charges related to the amortization of
inventory step-up to fair value and consulting fees, legal fees,
and other integration costs associated with the acquisitions of
In2Bones Global, Inc. and Biorez, Inc.
(2) In 2023 and 2022, the Company incurred
income/(expense) related to the fair value adjustments of
contingent consideration.
(3) Includes amortization of intangible
assets and deferred financing fees.
(4) Non-GAAP adjusted dilutive weighted
average shares outstanding exclude dilution that is expected to be
offset by the Company’s convertible notes hedge transactions.
(5) In 2022, the Company incurred
consulting fees related to an operational cost improvement
initiative and severance related to the elimination of certain
positions.
(6) In 2022, the Company incurred
incremental freight, professional fees and other costs related to
the implementation of a warehouse management software.
(7) 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.
Reconciliation of Reported Net
Income (Loss) to Adjusted Net Income
(in thousands, except per
share amounts, unaudited)
Year Ended December 31,
2023
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
$
676,245
$
503,040
$
120,603
$
39,775
$
-
$
16,369
20.3
%
$
64,459
$
-
$
64,459
% of sales
54.3
%
40.4
%
9.7
%
EPS
$
2.10
$
2.04
Shares
30,668
880
31,548
Acquisition and integration costs(1)
8,617
(752
)
9,369
-
-
1,207
8,162
Termination of distributor
agreements(2)
-
(2,098
)
2,098
-
-
417
1,681
Restructuring and related costs(3)
2,035
(1,578
)
3,613
-
-
930
2,683
Software implementation costs(4)
-
(6,056
)
6,056
-
-
1,453
4,603
Contingent consideration fair value
adjustment(5)
-
2,421
(2,421
)
-
-
2,037
(4,458
)
$
686,897
$
494,977
$
139,318
$
39,775
$
-
$
22,413
$
77,130
Adjusted gross profit %
55.2
%
Amortization(6)
$
6,000
(29,068
)
35,068
(6,058
)
-
9,969
31,157
As adjusted
$
465,909
$
174,386
$
33,717
$
-
$
32,382
23.0
%
$
108,287
$
-
$
108,287
% of sales
37.4
%
14.0
%
Adjusted diluted EPS
$
3.45
Shares
30,668
880
31,548
Convertible note hedges(7)
(142
)
Adjusted diluted shares
31,406
Year Ended December 31,
2022
Gross Profit
Selling & Administrative
Expense
Operating Income
Interest Expense
Other Expense
Tax Expense
Effective Tax Rate
Net Income (Loss)
Basic EPS
Adjustments(12)
Diluted EPS
As reported
$
571,245
$
454,039
$
70,054
$
28,905
$
112,011
$
9,720
-13.7
%
$
(80,582
)
$
-
$
(80,582
)
% of sales
54.6
%
43.4
%
6.7
%
EPS
$
(2.68
)
$
(2.68
)
Shares
30,040
-
30,040
Acquisition and integration costs(1)
4,540
(10,063
)
14,603
-
-
46,965
(32,362
)
Legal matters(8)
-
(775
)
775
-
-
(462
)
1,237
Restructuring and related costs(3)
1,955
(786
)
2,741
-
-
6,029
(3,288
)
Software implementation costs(4)
-
(6,769
)
6,769
-
-
14,889
(8,120
)
Contingent consideration fair value
adjustment(5)
-
(2,518
)
2,518
-
-
5,538
(3,020
)
Convertible notes premium on
extinguishment(9)
-
-
-
-
(103,125
)
(61,521
)
164,646
Change in fair value of convertible notes
hedges upon settlement(10)
-
-
-
-
(5,460
)
(3,257
)
8,717
Loss on early extinguishment of
debt(11)
-
-
-
-
(3,426
)
(2,044
)
5,470
$
577,740
$
433,128
$
97,460
$
28,905
$
-
$
15,857
$
52,698
Adjusted gross profit %
55.3
%
Amortization(6)
$
6,000
(27,791
)
33,791
(4,910
)
-
9,381
29,320
As adjusted
$
405,337
$
131,251
$
23,995
$
-
$
25,238
23.5
%
$
82,018
$
2,978
$
84,996
% of sales
38.8
%
12.6
%
Adjusted diluted EPS
$
2.65
Shares
30,040
2,656
32,696
Convertible note hedges(7)
(578
)
Adjusted diluted shares
32,118
(1) In 2023, the Company incurred charges
related to the amortization of inventory step-up to fair value
associated with the acquisition of In2Bones Global, Inc., and
integration costs and professional fees associated with the
acquisitions of In2Bones Global, Inc. and Biorez, Inc. In 2022, the
Company incurred charges related to the amortization of inventory
step-up to fair value and consulting fees, legal fees, and other
integration costs associated with the acquisition of In2Bones
Global, Inc. and Biorez, Inc.
(2) In 2023, the Company incurred costs
related to the termination of distributor agreements.
(3) In 2023 and 2022, the Company incurred
consulting fees related to an operational cost improvement
initiative and severance related to the elimination of certain
positions.
(4) In 2023 and 2022, the Company incurred
additional freight, labor and travel costs as well as professional
fees related to the implementation of a warehouse management
software.
(5) In 2023 and 2022, the Company incurred
income/(expense) related to the fair value adjustments of
contingent consideration.
(6) Includes amortization of intangible
assets and deferred financing fees.
(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) In 2022, the Company incurred costs
related to a legal settlement.
(9) 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.
(10) 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.
(11) 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.
(12) 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 EBITDA & Adjusted EBITDA
(in thousands, unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Net income (loss)
$
33,071
$
26,584
$
64,459
$
(80,582
)
Provision (benefit) for income taxes
7,611
(37,122
)
16,369
9,720
Interest expense
9,505
9,443
39,775
28,905
Depreciation
4,052
4,026
16,200
16,055
Amortization
13,950
13,709
55,674
53,464
EBITDA
$
68,189
$
16,640
$
192,477
$
27,562
Stock based compensation
5,923
5,758
24,257
21,729
Acquisition and integration costs
2,154
5,853
9,369
14,603
Contingent consideration fair value
adjustment
(9,370
)
2,518
(2,421
)
2,518
Termination of distributor agreements
-
-
2,098
-
Restructuring and related costs
-
2,741
3,613
2,741
Software implementation costs
-
6,769
6,056
6,769
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
-
-
-
3,426
Adjusted EBITDA
$
66,896
$
40,279
$
235,449
$
188,708
EBITDA Margin
EBITDA
20.9
%
6.6
%
15.5
%
2.6
%
Adjusted EBITDA
20.5
%
16.1
%
18.9
%
18.1
%
About CONMED Corporation
CONMED is a medical technology company that provides devices and
equipment for surgical procedures. The Company’s products are used
by surgeons and other healthcare professionals 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 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 risk factors discussed in the
Company's Annual Report on Form 10-K for the full year ended
December 31, 2022, listed under the heading Forward-Looking
Statements in the Company’s most recently filed Form 10-Q and other
risks and uncertainties, which may be detailed from time to time in
reports filed by CONMED with the SEC. 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; 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 (loss), 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.
We are unable to present a quantitative reconciliation of our
expected diluted net earnings per share to expected adjusted
diluted net earnings per share as we are unable to predict with
reasonable certainty and without unreasonable effort the impact and
timing of acquisition, integration and other charges. The financial
impact of these items is uncertain and is dependent on various
factors, including timing, and could be material to our
consolidated condensed statements of income.
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version on businesswire.com: https://www.businesswire.com/news/home/20240131915000/en/
CONMED Corporation Todd W. Garner Chief
Financial Officer 727-214-2975
ToddGarner@conmed.com
CONMED (NYSE:CNMD)
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