Full Press Release Details
| NEWS RELEASE | |
| CONTACT : | |
| CONMED Corporation | |
| Todd W. Garner | |
| Chief Financial Officer | |
| 727-214-2975 | |
| ToddGarner@conmed.com |
CONMED Corporation Announces Second Quarter 2023
Largo, Florida, July 26, 2023 -
CONMED Corporation (NYSE: CNMD) today announced financial results for the second quarter ended June 30, 2023.
Second Quarter 2023 Highlights
"Our team drove excellent growth across both
Orthopedics and General Surgery during the second quarter, building on the momentum we generated during the first three months of the
year," commented Curt R. Hartman, CONMED's Chair of the Board, President, and Chief Executive Officer. "We remain confident
in our ability to grow above market and continue to deliver clinical innovation to our customers."
Based on the second quarter results, the Company is
raising its revenue guidance for the full year 2023 and now expects revenue between $1.230 billion and $1.260 billion, compared to its
prior guidance of between $1.205 billion and $1.250 billion.
The Company now expects full-year 2023 adjusted diluted
net earnings per share(2) in the range of $3.40 to $3.55, compared to its prior range of $3.30 to $3.50.
The expected impact of foreign currency exchange rates
is unchanged from the Company's prior guidance.
Supplemental Financial Disclosures
reconciliation of reported diluted net earnings (loss) per share to adjusted diluted net earnings per share, a non-GAAP financial measure,
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.
The Company's management will host a conference
call today at 4:30 p.m. ET to discuss its second quarter 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 | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net sales | $ | 317,652 | $ | 277,190 | $ | 613,121 | $ | 519,516 | ||||||||
| Cost of sales | 146,962 | 125,413 | 287,110 | 231,748 | ||||||||||||
| Gross profit | 170,690 | 151,777 | 326,011 | 287,768 | ||||||||||||
| % of sales | 53.7% | 54.8% | 53.2% | 55.4% | ||||||||||||
| Selling & administrative expense | 129,700 | 115,826 | 259,784 | 218,701 | ||||||||||||
| Research & development expense | 13,572 | 11,493 | 26,110 | 22,165 | ||||||||||||
| Income from operations | 27,418 | 24,458 | 40,117 | 46,902 | ||||||||||||
| % of sales | 8.6% | 8.8% | 6.5% | 9.0% | ||||||||||||
| Interest expense | 9,997 | 5,928 | 20,252 | 10,926 | ||||||||||||
| Other expense | - | 112,011 | - | 112,011 | ||||||||||||
| Income (loss) before income taxes | 17,421 | (93,481 | ) | 19,865 | (76,035 | ) | ||||||||||
| Provision for income taxes | 3,689 | 74,810 | 4,314 | 77,281 | ||||||||||||
| Net income (loss) | $ | 13,732 | $ | (168,291 | ) | $ | 15,551 | $ | (153,316 | ) | ||||||
| Basic EPS | $ | 0.45 | $ | (5.65 | ) | $ | 0.51 | $ | (5.18 | ) | ||||||
| Diluted EPS | 0.43 | (5.65 | ) | 0.49 | (5.18 | ) | ||||||||||
| Basic shares | 30,662 | 29,775 | 30,587 | 29,601 | ||||||||||||
| Diluted shares | 31,795 | 29,775 | 31,499 | 29,601 |
(in millions, unaudited)
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
| % 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 | $ | 140.8 | $ | 120.2 | 17.1% | 2.7% | 19.8% | 29.4% | 11.0% | 3.8% | 14.8% | |||||||||||||||||||||||||
| General Surgery | 176.9 | 157.0 | 12.6% | 1.5% | 14.1% | 12.5% | 12.9% | 5.0% | 17.9% | |||||||||||||||||||||||||||
| $ | 317.7 | $ | 277.2 | 14.6% | 2.0% | 16.6% | 17.1% | 11.7% | 4.3% | 16.0% | ||||||||||||||||||||||||||
| Single-use Products | $ | 264.8 | $ | 230.3 | 14.9% | 2.0% | 16.9% | 15.7% | 13.9% | 4.5% | 18.4% | |||||||||||||||||||||||||
| Capital Products | 52.9 | 46.9 | 12.9% | 2.2% | 15.1% | 25.8% | 3.4% | 3.6% | 7.0% | |||||||||||||||||||||||||||
| $ | 317.7 | $ | 277.2 | 14.6% | 2.0% | 16.6% | 17.1% | 11.7% | 4.3% | 16.0% | ||||||||||||||||||||||||||
| Domestic | $ | 174.7 | $ | 149.2 | 17.1% | 0.0% | 17.1% | |||||||||||||||||||||||||||||
| International | 143.0 | 128.0 | 11.7% | 4.3% | 16.0% | |||||||||||||||||||||||||||||||
| $ | 317.7 | $ | 277.2 | 14.6% | 2.0% | 16.6% |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
| % 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 | $ | 272.0 | $ | 227.7 | 19.4% | 3.3% | 22.7% | 29.2% | 14.3% | 4.9% | 19.2% | |||||||||||||||||||||||||
| General Surgery | 341.1 | 291.8 | 16.9% | 2.0% | 18.9% | 17.8% | 14.9% | 6.5% | 21.4% | |||||||||||||||||||||||||||
| $ | 613.1 | $ | 519.5 | 18.0% | 2.6% | 20.6% | 21.0% | 14.5% | 5.6% | 20.1% | ||||||||||||||||||||||||||
| Single-use Products | $ | 514.0 | $ | 431.8 | 19.0% | 2.6% | 21.6% | 21.8% | 15.5% | 5.7% | 21.2% | |||||||||||||||||||||||||
| Capital Products | 99.1 | 87.7 | 13.0% | 2.6% | 15.6% | 15.8% | 10.7% | 4.8% | 15.5% | |||||||||||||||||||||||||||
| $ | 613.1 | $ | 519.5 | 18.0% | 2.6% | 20.6% | 21.0% | 14.5% | 5.6% | 20.1% | ||||||||||||||||||||||||||
| Domestic | $ | 339.3 | $ | 280.4 | 21.0% | 0.0% | 21.0% | |||||||||||||||||||||||||||||
| International | 273.8 | 239.1 | 14.5% | 5.6% | 20.1% | |||||||||||||||||||||||||||||||
| $ | 613.1 | $ | 519.5 | 18.0% | 2.6% | 20.6% |
Reconciliation of Reported Net Income (Loss) to
(in thousands, except per share amounts, unaudited)
| Three Months Ended June 30, 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 | $ | 170,690 | $ | 129,700 | $ | 27,418 | $ | 9,997 | $ | - | $ | 3,689 | 21.2% | $ | 13,732 | $ | - | $ | 13,732 | |||||||||||||||||||||||||
| % of sales | 53.7% | 40.8% | 8.6% | |||||||||||||||||||||||||||||||||||||||||
| EPS | $ | 0.45 | $ | 0.43 | ||||||||||||||||||||||||||||||||||||||||
| Shares | 30,662 | 1,133 | 31,795 | |||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration costs (1) | 2,173 | (303 | ) | 2,476 | - | - | 492 | 1,984 | ||||||||||||||||||||||||||||||||||||
| Termination of distributor agreements (2) | - | (2,098 | ) | 2,098 | - | - | 417 | 1,681 | ||||||||||||||||||||||||||||||||||||
| Software implementation costs (3) | - | (1,797 | ) | 1,797 | - | - | 357 | 1,440 | ||||||||||||||||||||||||||||||||||||
| Contingent consideration fair value adjustment (4) | - | 636 | (636 | ) | - | - | (126 | ) | (510 | ) | ||||||||||||||||||||||||||||||||||
| $ | 172,863 | $ | 126,138 | $ | 33,153 | $ | 9,997 | $ | - | $ | 4,829 | $ | 18,327 | |||||||||||||||||||||||||||||||
| Adjusted gross profit % | 54.4% | |||||||||||||||||||||||||||||||||||||||||||
| Amortization (5) | $ | 1,500 | (7,270 | ) | 8,770 | (1,506 | ) | - | 2,490 | 7,786 | ||||||||||||||||||||||||||||||||||
| As adjusted | $ | 118,868 | $ | 41,923 | $ | 8,491 | $ | - | $ | 7,319 | 21.9% | $ | 26,113 | $ | - | 26,113 | ||||||||||||||||||||||||||||
| % of sales | 37.4% | 13.2% | ||||||||||||||||||||||||||||||||||||||||||
| Adjusted diluted EPS | $ | 0.83 | ||||||||||||||||||||||||||||||||||||||||||
| Shares | 30,662 | 1,133 | 31,795 | |||||||||||||||||||||||||||||||||||||||||
| Convertible note hedges (6) | (214) | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted diluted shares | 31,581 |
| 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 (11) | 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 and integration costs (1) | 349 | (2,600 | ) | 2,949 | - | - | (1,760 | ) | 4,709 | |||||||||||||||||||||||||||||||||||
| Legal matters (7) | - | (775 | ) | 775 | - | - | (462 | ) | 1,237 | |||||||||||||||||||||||||||||||||||
| Convertible note premium on extinguishment (8) | - | - | - | - | (103,125 | ) | (61,521 | ) | 164,646 | |||||||||||||||||||||||||||||||||||
| Change in fair value of convertible note hedges upon settlement (9) | - | - | - | - | (5,460 | ) | (3,257 | ) | 8,717 | |||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of debt (10) | - | - | - | - | (3,426 | ) | (2,044 | ) | 5,470 | |||||||||||||||||||||||||||||||||||
| $ | 152,126 | $ | 112,451 | $ | 28,182 | $ | 5,928 | $ | - | $ | 5,766 | $ | 16,488 | |||||||||||||||||||||||||||||||
| Adjusted gross profit % | 54.9% | |||||||||||||||||||||||||||||||||||||||||||
| Amortization (5) | $ | 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 note hedges (6) | (856) | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted diluted shares | 32,739 |
(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 and legal related costs associated with the acquisition
of In2Bones Global, Inc.
(2) In 2023, the Company incurred costs related to
the termination of distributor agreements.
(3) 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.
(4) In 2023, the Company recorded fair value adjustments
to contingent consideration.
(5) Includes amortization of intangible assets and
deferred financing fees.
(6) Non-GAAP adjusted dilutive weighted average shares
outstanding exclude dilution that is expected to be offset by the Company's convertible notes hedge transactions.
(7) In 2022, the Company incurred costs related to
(8) 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.
(9) 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%
(10) 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.
(11) 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
(in thousands, except per share amounts, unaudited)
| Six Months Ended June 30, 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 | $ | 326,011 | $ | 259,784 | $ | 40,117 | $ | 20,252 | $ | - | $ | 4,314 | 21.7% | $ | 15,551 | $ | - | $ | 15,551 | |||||||||||||||||||||||||
| % of sales | 53.2% | 42.4% | 6.5% | |||||||||||||||||||||||||||||||||||||||||
| EPS | $ | 0.51 | $ | 0.49 | ||||||||||||||||||||||||||||||||||||||||
| Shares | 30,587 | 912 | 31,499 | |||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration costs (1) | 4,269 | (752 | ) | 5,021 | - | - | 1,147 | 3,874 | ||||||||||||||||||||||||||||||||||||
| 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) | - | (3,799 | ) | 3,799 | - | - | 1,014 | 2,785 | ||||||||||||||||||||||||||||||||||||
| $ | 332,315 | $ | 245,501 | $ | 60,704 | $ | 20,252 | $ | - | $ | 9,275 | $ | 31,177 | |||||||||||||||||||||||||||||||
| Adjusted gross profit % | 54.2% | |||||||||||||||||||||||||||||||||||||||||||
| Amortization (6) | $ | 3,000 | (14,535 | ) | 17,535 | (3,012 | ) | - | 5,020 | 15,527 | ||||||||||||||||||||||||||||||||||
| As adjusted | $ | 230,966 | $ | 78,239 | $ | 17,240 | $ | - | $ | 14,295 | 23.4% | $ | 46,704 | $ | - | $ | 46,704 | |||||||||||||||||||||||||||
| % of sales | 37.7% | 12.8% | ||||||||||||||||||||||||||||||||||||||||||
| Adjusted diluted EPS | $1.49 | |||||||||||||||||||||||||||||||||||||||||||
| Shares | 30,587 | 912 | 31,499 | |||||||||||||||||||||||||||||||||||||||||
| Convertible note hedges (7) | (138) | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted diluted shares | 31,361 |
| 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 (12) | 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 and integration costs (1) | 349 | (2,600 | ) | 2,949 | - | - | (1,760 | ) | 4,709 | |||||||||||||||||||||||||||||||||||
| Legal matters (8) | - | (775 | ) | 775 | - | - | (462 | ) | 1,237 | |||||||||||||||||||||||||||||||||||
| Convertible note premium on extinguishment (9) | - | - | - | - | (103,125 | ) | (61,521 | ) | 164,646 | |||||||||||||||||||||||||||||||||||
| Change in fair value of convertible note hedges upon settlement (10) | - | - | - | - | (5,460 | ) | (3,257 | ) | 8,717 | |||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of debt (11) | - | - | - | - | (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 |
(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 and legal related costs associated with the acquisition
of In2Bones Global, Inc.
(2) In 2023, the Company incurred costs related to
the termination of distributor agreements.
(3) In 2023, the Company incurred consulting fees
related to an operational cost improvement initiative and severance related to the elimination of certain positions.
(4) 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.
(5) In 2023, the Company incurred 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
(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%
(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