CNMD CONMED Corporation

CONMED Corporation (NYSE: CNMD) today announced financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights

• Sales of $312.3 million increased 5.7% year-over-year as reported and 5.9% in constant currency.
• Domestic revenue increased 7.2% year-over-year.
• International revenue increased 3.8% year-over-year as reported and 4.2% in constant currency.
• Diluted net earnings per share (GAAP) were $0.63 compared to diluted net earnings per share (GAAP) of $0.06 in the first quarter of 2023.
• Adjusted diluted net earnings per share(1) were $0.79, an increase of 19.7% compared to the first quarter of 2023.

“2024 is off to a solid start as the quarter delivered our expected top- and bottom-line growth and margin expansion,” commented Curt R. Hartman, CONMED’s Chair of the Board, President, and Chief Executive Officer. “We remain well positioned with a compelling and diverse portfolio to drive continued growth across the markets we serve.”

2024 Outlook

Based on current foreign currency exchange rates, the Company now expects incremental revenue currency headwinds of approximately $10 million. Therefore, full-year reported revenue is now expected to be between $1.330 billion and $1.355 billion, compared to the prior guidance range of between $1.340 billion and $1.365 billion.

Primarily as a result of these same incremental foreign currency headwinds, the Company now expects full-year adjusted diluted net earnings per share(2) in the range of $4.25 to $4.35, compared to its prior range of $4.30 to $4.40.

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.

(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 first quarter 2024 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

(in thousands except per share amounts, unaudited)

 

 

 

 

Three Months Ended

 

March 31,

 

2024

2023

 

 

 

Net sales

$

312,273

$

295,468

Cost of sales

 

140,308

 

140,147

Gross profit

 

171,965

 

155,321

% of sales

 

55.1%

 

52.6%

Selling & administrative expense

 

123,358

 

130,083

Research & development expense

 

13,594

 

12,539

Income from operations

 

35,013

 

12,699

% of sales

 

11.2%

 

4.3%

Interest expense

 

9,594

 

10,255

Income before income taxes

 

25,419

 

2,444

Provision for income taxes

 

5,710

 

625

Net income

$

19,709

$

1,819

 

 

 

Basic EPS

$

0.64

$

0.06

Diluted EPS

 

0.63

 

0.06

 

 

Basic shares

 

30,780

 

30,511

Diluted shares

 

31,272

 

31,204

 

Sales Summary

(in millions, unaudited)

 

Three Months Ended March 31,

% Change

Domestic

International

2024

2023

As

Reported

Impact

of

Foreign

Currency

Constant

Currency

As

Reported

As

Reported

Impact

of

Foreign

Currency

Constant

Currency

Orthopedic Surgery

$

134.9

$

131.2

2.8

%

0.2

%

3.0

%

10.6

%

-1.8

%

0.2

%

-1.6

%

General Surgery

 

177.4

 

164.3

8.0

%

0.2

%

8.2

%

5.7

%

13.3

%

0.8

%

14.1

%

$

312.3

$

295.5

5.7

%

0.2

%

5.9

%

7.2

%

3.8

%

0.4

%

4.2

%

 

Single-use Products

$

264.7

$

249.3

6.2

%

0.1

%

6.3

%

6.6

%

5.6

%

0.4

%

6.0

%

Capital Products

 

47.6

 

46.2

3.1

%

0.3

%

3.4

%

11.6

%

-3.6

%

0.5

%

-3.1

%

$

312.3

$

295.5

5.7

%

0.2

%

5.9

%

7.2

%

3.8

%

0.4

%

4.2

%

 

Domestic

$

176.4

$

164.6

7.2

%

0.0

%

7.2

%

International

 

135.9

 

130.9

3.8

%

0.4

%

4.2

%

$

312.3

$

295.5

5.7

%

0.2

%

5.9

%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Reported Net Income to Adjusted Net Income

(in thousands, except per share amounts, unaudited)

 

Three Months Ended March 31, 2024

 

Gross Profit

Selling & Administrative Expense

Operating Income

Interest

Expense

Tax

Expense

Effective Tax Rate

Net Income

Basic EPS

Adjustments

Diluted EPS

 

As reported

$

171,965

$

123,358

$

35,013

$

9,594

$

5,710

22.5%

$

19,709

$

-

$

19,709

 

% of sales

 

55.1%

 

39.5%

 

11.2%

 

EPS

$

0.64

$

0.63

 

Shares

 

30,780

 

492

 

31,272

 

Restructuring and related costs(1)

 

235

 

(1,539)

 

1,774

 

-

 

255

 

1,519

 

Asset impairment costs (2)

 

1,414

 

-

 

1,414

 

-

 

203

 

 

1,211

 

 

 

 

Legal matters(3)

 

-

 

(1,337)

 

1,337

 

-

 

192

 

 

1,145

 

 

 

 

Termination of distributor agreement(4)

 

-

 

970

 

(970)

 

-

 

(139)

 

 

(831)

 

 

 

 

Contingent consideration fair value adjustments(5)

 

-

 

6,545

 

(6,545)

 

-

 

(940)

 

 

(5,605)

 

$

173,614

$

127,997

$

32,023

$

9,594

$

5,281

 

$

17,148

 

Adjusted gross profit %

 

55.6%

 

Amortization(6)

$

1,500

 

(7,152)

 

8,652

 

(1,407)

 

2,444

 

7,615

 

As adjusted

$

120,845

$

40,675

$

8,187

$

7,725

23.8%

$

24,763

$

-

$

24,763

 

% of sales

 

 

38.7%

 

13.0%

 

Adjusted diluted EPS

$

0.79

 

 

 

 

 

Three Months Ended March 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

$

155,321

$

130,083

$

12,699

$

10,255

$

625

25.6%

$

1,819

$

-

$

1,819

 

% of sales

 

52.6%

 

44.0%

 

4.3%

 

EPS

$

0.06

 

$

0.06

 

Shares

 

30,511

 

693

 

31,204

 

Acquisition and integration costs(7)

 

2,096

 

(448)

 

2,544

 

-

 

654

 

 

1,890

 

 

 

 

Restructuring and related costs(1)

 

2,035

 

(1,578)

 

3,613

 

-

 

930

 

 

2,683

 

 

 

 

Software implementation costs(8)

 

-

 

(4,259)

 

4,259

 

-

 

1,096

 

 

3,163

 

 

 

 

Contingent consideration fair value adjustments(5)

 

-

 

(4,436)

 

4,436

 

-

 

1,141

 

 

3,295

 

$

159,452

$

119,362

$

27,551

$

10,255

$

4,446

 

$

12,850

 

Adjusted gross profit %

 

54.0%

 

Amortization(6)

$

1,500

 

(7,265)

 

8,765

 

(1,506)

 

2,530

 

7,741

 

As adjusted

$

112,097

$

36,316

$

8,749

$

6,976

25.3%

$

20,591

$

-

$

20,591

 

% of sales

 

37.9%

 

12.3%

 

Adjusted diluted EPS

$

0.66

 

 

Shares

 

30,511

 

693

 

31,204

 

Convertible note hedges(9)

 

(64)

 

Adjusted diluted shares

 

31,140

 

 

(1) In 2024, the Company incurred severance costs related to the elimination of certain positions. In 2023, the Company incurred consulting fees related to an operational cost improvement initiative and severance related to the elimination of certain positions.

(2) In 2024, the Company wrote off inventory, tooling and equipment related to the cancellation of a planned new product line.

(3) In 2024, the Company incurred costs pertaining to potential issues with certain royalty payments to design surgeons.

(4) In 2024, the Company recorded an accrual adjustment related to the previous termination of a distributor agreement.

(5) In 2024 and 2023, 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) 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.

(8) In 2023, the Company incurred additional freight, labor and travel costs as well as professional fees related to the implementation of a warehouse management software.

(9) Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company’s convertible notes hedge transactions.

Reconciliation of Reported Net Income to EBITDA & Adjusted EBITDA

(in thousands, unaudited)

 

 

Three Months Ended

 

March 31,

 

2024

 

2023

 

 

 

 

Net income

$

19,709

 

$

1,819

Provision for income taxes

 

5,710

 

 

625

Interest expense

 

9,594

 

 

10,255

Depreciation

 

4,046

 

 

4,057

Amortization

 

13,992

 

 

13,877

EBITDA

$

53,051

 

$

30,633

 

 

 

 

Stock based compensation

 

6,240

 

 

5,726

Restructuring and related costs

 

1,774

 

 

3,613

Asset impairment costs

 

1,414

 

 

-

Legal matters

 

1,337

 

 

-

Termination of distributor agreement

 

(970)

 

 

-

Contingent consideration fair value adjustments

 

(6,545)

 

 

4,436

Acquisition and integration costs

 

-

 

 

2,544

Software implementation costs

 

-

 

 

4,259

Adjusted EBITDA

$

56,301

 

$

51,211

 

 

 

 

 

 

 

 

EBITDA Margin

 

 

 

EBITDA

 

17.0%

 

 

10.4%

Adjusted EBITDA

 

18.0%

 

 

17.3%

 

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, 2023 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 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, interest expense, income tax expense, effective income tax rate, net income, diluted shares and diluted net earnings 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240424235972/en/

CONMED Corporation Todd W. Garner Chief Financial Officer 727-214-2975 ToddGarner@conmed.com