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 2024 Financial Results
Largo, Florida, July 31, 2024 -
CONMED Corporation (NYSE: CNMD) today announced financial results for the second quarter ended June 30, 2024.
Second Quarter 2024 Highlights
"Our second quarter and first half
of 2024 played out largely as expected. Looking forward, we have not yet fully recovered from our supply chain challenges, which has delayed
the commercial reacceleration that we had contemplated in our plan at the beginning of the year," commented Curt R. Hartman, CONMED's
Chair of the Board, President, and Chief Executive Officer. "We remain highly focused on getting back on offense to serve our customers
and driving above-market, long-term growth."
Full year reported revenue is now expected
to be between $1.305 billion and $1.315 billion, compared to the prior guidance range of between $1.330 billion and $1.355 billion. Foreign
currency is expected to have a negative impact on revenue in the range of $5 million to $10 million for the full year.
The Company now expects full-year adjusted
diluted net earnings per share(2) in the range of $3.95 to $4.02, compared to its prior range of $4.25 to $4.35. Foreign currency
is expected to have an immaterial impact on earnings per share for the full year.
Supplemental Financial Disclosures
reconciliation of reported diluted net earnings per share to adjusted diluted net earnings per share, a non-GAAP financial measure, appears
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 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 | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net sales | $ | 332,097 | $ | 317,652 | $ | 644,371 | $ | 613,121 | ||||||||
| Cost of sales | 148,368 | 146,962 | 288,677 | 287,110 | ||||||||||||
| Gross profit | 183,729 | 170,690 | 355,694 | 326,011 | ||||||||||||
| % of sales | 55.3% | 53.7% | 55.2% | 53.2% | ||||||||||||
| Selling & administrative expense | 122,524 | 129,700 | 245,881 | 259,784 | ||||||||||||
| Research & development expense | 14,098 | 13,572 | 27,692 | 26,110 | ||||||||||||
| Income from operations | 47,107 | 27,418 | 82,121 | 40,117 | ||||||||||||
| % of sales | 14.2% | 8.6% | 12.7% | 6.5% | ||||||||||||
| Interest expense | 9,593 | 9,997 | 19,188 | 20,252 | ||||||||||||
| Income before income taxes | 37,514 | 17,421 | 62,933 | 19,865 | ||||||||||||
| Provision for income taxes | 7,538 | 3,689 | 13,248 | 4,314 | ||||||||||||
| Net income | $ | 29,976 | $ | 13,732 | $ | 49,685 | $ | 15,551 | ||||||||
| Basic EPS | $ | 0.97 | $ | 0.45 | $ | 1.61 | $ | 0.51 | ||||||||
| Diluted EPS | 0.96 | 0.43 | 1.59 | 0.49 | ||||||||||||
| Basic shares | 30,813 | 30,662 | 30,792 | 30,587 | ||||||||||||
| Diluted shares | 31,106 | 31,795 | 31,170 | 31,499 |
(in millions, unaudited)
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
| % 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 | $ | 139.5 | $ | 140.8 | -0.9% | 0.8% | -0.1% | -0.4% | -1.2% | 1.3% | 0.1% | |||||||||||||||||||||||||
| General Surgery | 192.6 | 176.9 | 8.9% | 0.5% | 9.4% | 8.9% | 8.8% | 1.7% | 10.5% | |||||||||||||||||||||||||||
| $ | 332.1 | $ | 317.7 | 4.5% | 0.7% | 5.2% | 6.1% | 2.6% | 1.4% | 4.0% | ||||||||||||||||||||||||||
| Single-use Products | $ | 279.3 | $ | 264.8 | 5.5% | 0.7% | 6.2% | 8.6% | 1.6% | 1.4% | 3.0% | |||||||||||||||||||||||||
| Capital Products | 52.8 | 52.9 | -0.3% | 0.7% | 0.4% | -8.4% | 7.0% | 1.3% | 8.3% | |||||||||||||||||||||||||||
| $ | 332.1 | $ | 317.7 | 4.5% | 0.7% | 5.2% | 6.1% | 2.6% | 1.4% | 4.0% | ||||||||||||||||||||||||||
| Domestic | $ | 185.4 | $ | 174.7 | 6.1% | 0.0% | 6.1% | |||||||||||||||||||||||||||||
| International | 146.7 | 143.0 | 2.6% | 1.4% | 4.0% | |||||||||||||||||||||||||||||||
| $ | 332.1 | $ | 317.7 | 4.5% | 0.7% | 5.2% |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
| % 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 | $ | 274.5 | $ | 272.0 | 0.9% | 0.5% | 1.4% | 4.9% | -1.5% | 0.8% | -0.7% | |||||||||||||||||||||||||
| General Surgery | 369.9 | 341.1 | 8.4% | 0.4% | 8.8% | 7.4% | 10.9% | 1.3% | 12.2% | |||||||||||||||||||||||||||
| $ | 644.4 | $ | 613.1 | 5.1% | 0.4% | 5.5% | 6.6% | 3.2% | 0.9% | 4.1% | ||||||||||||||||||||||||||
| Single-use Products | $ | 544.0 | $ | 514.0 | 5.8% | 0.4% | 6.2% | 7.6% | 3.5% | 0.9% | 4.4% | |||||||||||||||||||||||||
| Capital Products | 100.4 | 99.1 | 1.3% | 0.5% | 1.8% | 0.6% | 1.9% | 0.9% | 2.8% | |||||||||||||||||||||||||||
| $ | 644.4 | $ | 613.1 | 5.1% | 0.4% | 5.5% | 6.6% | 3.2% | 0.9% | 4.1% | ||||||||||||||||||||||||||
| Domestic | $ | 361.8 | $ | 339.3 | 6.6% | 0.0% | 6.6% | |||||||||||||||||||||||||||||
| International | 282.6 | 273.8 | 3.2% | 0.9% | 4.1% | |||||||||||||||||||||||||||||||
| $ | 644.4 | $ | 613.1 | 5.1% | 0.4% | 5.5% |
Reconciliation of Reported Net Income to Adjusted
(in thousands, except per share amounts, unaudited)
| Three Months Ended June 30, 2024 | ||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Tax Expense | Effective Tax Rate | Net Income | Diluted EPS | |||||||||||||||||||||||||
| As reported | $ | 183,729 | $ | 122,524 | $ | 47,107 | $ | 9,593 | $ | 7,538 | 20.1% | $ | 29,976 | $ | 0.96 | |||||||||||||||||
| % of sales | 55.3% | 36.9% | 14.2% | |||||||||||||||||||||||||||||
| Legal matters (1) | - | (1,343 | ) | 1,343 | - | 61 | 1,282 | |||||||||||||||||||||||||
| Contingent consideration fair value adjustments (2) | - | 8,673 | (8,673 | ) | - | (391 | ) | (8,282 | ) | |||||||||||||||||||||||
| $ | 183,729 | $ | 129,854 | $ | 39,777 | $ | 9,593 | $ | 7,208 | $ | 22,976 | |||||||||||||||||||||
| Adjusted gross profit % | 55.3% | |||||||||||||||||||||||||||||||
| Amortization (3) | $ | 1,500 | (7,157 | ) | 8,657 | (1,407 | ) | 2,436 | 7,628 | |||||||||||||||||||||||
| As adjusted | $ | 122,697 | $ | 48,434 | $ | 8,186 | $ | 9,644 | 24.0% | $ | 30,604 | $ | 0.98 | |||||||||||||||||||
| % of sales | 36.9% | 14.6% | ||||||||||||||||||||||||||||||
| Shares | 31,106 | |||||||||||||||||||||||||||||||
| Convertible note hedges (4) | - | |||||||||||||||||||||||||||||||
| Adjusted diluted shares | 31,106 |
| Three Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Tax Expense | Effective Tax Rate | Net Income | Diluted EPS | |||||||||||||||||||||||||
| As reported | $ | 170,690 | $ | 129,700 | $ | 27,418 | $ | 9,997 | $ | 3,689 | 21.2% | $ | 13,732 | $ | 0.43 | |||||||||||||||||
| % of sales | 53.7% | 40.8% | 8.6% | |||||||||||||||||||||||||||||
| Acquisition and integration costs (5) | 2,173 | (303 | ) | 2,476 | - | 492 | 1,984 | |||||||||||||||||||||||||
| Termination of distributor agreements (6) | - | (2,098 | ) | 2,098 | - | 417 | 1,681 | |||||||||||||||||||||||||
| Software implementation costs (7) | - | (1,797 | ) | 1,797 | - | 357 | 1,440 | |||||||||||||||||||||||||
| Contingent consideration fair value adjustments (2) | - | 636 | (636 | ) | - | (126 | ) | (510 | ) | |||||||||||||||||||||||
| $ | 172,863 | $ | 126,138 | $ | 33,153 | $ | 9,997 | $ | 4,829 | $ | 18,327 | |||||||||||||||||||||
| Adjusted gross profit % | 54.4% | |||||||||||||||||||||||||||||||
| Amortization (3) | $ | 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 | $ | 0.83 | |||||||||||||||||||
| % of sales | 37.4% | 13.2% | ||||||||||||||||||||||||||||||
| Shares | 31,795 | |||||||||||||||||||||||||||||||
| Convertible note hedges (4) | (214 | ) | ||||||||||||||||||||||||||||||
| Adjusted diluted shares | 31,581 |
| (1) In 2024, the Company incurred costs for third party services pertaining to potential issues with certain royalty payments to design surgeons. |
| (2) In 2024 and 2023, the Company recorded income 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 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. |
| (6) In 2023, the Company incurred costs related to the termination of distributor agreements. |
| (7) 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. |
Reconciliation of Reported Net Income to Adjusted
(in thousands, except per share amounts, unaudited)
| Six Months Ended June 30, 2024 | ||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Tax Expense | Effective Tax Rate | Net Income | Diluted EPS | |||||||||||||||||||||||||
| As reported | $ | 355,694 | $ | 245,881 | $ | 82,121 | $ | 19,188 | $ | 13,248 | 21.1% | $ | 49,685 | $ | 1.59 | |||||||||||||||||
| % of sales | 55.2% | 38.2% | 12.7% | |||||||||||||||||||||||||||||
| Legal matters (1) | - | (2,680 | ) | 2,680 | - | 253 | 2,427 | |||||||||||||||||||||||||
| Restructuring and related costs (2) | 235 | (1,539 | ) | 1,774 | - | 255 | 1,519 | |||||||||||||||||||||||||
| Asset impairment costs (3) | 1,414 | - | 1,414 | - | 203 | 1,211 | ||||||||||||||||||||||||||
| Termination of distributor agreement (4) | - | 970 | (970 | ) | - | (139 | ) | (831 | ) | |||||||||||||||||||||||
| Contingent consideration fair value adjustments (5) | - | 15,219 | (15,219 | ) | - | (1,331 | ) | (13,888 | ) | |||||||||||||||||||||||
| $ | 357,343 | $ | 257,851 | $ | 71,800 | $ | 19,188 | $ | 12,489 | $ | 40,123 | |||||||||||||||||||||
| Adjusted gross profit % | 55.5% | |||||||||||||||||||||||||||||||
| Amortization (6) | $ | 3,000 | (14,309 | ) | 17,309 | (2,813 | ) | 4,879 | 15,243 | |||||||||||||||||||||||
| As adjusted | $ | 243,542 | $ | 89,109 | $ | 16,375 | $ | 17,368 | 23.9% | $ | 55,366 | $ | 1.78 | |||||||||||||||||||
| % of sales | 37.8% | 13.8% | ||||||||||||||||||||||||||||||
| Shares | 31,170 | |||||||||||||||||||||||||||||||
| Convertible note hedges (7) | - | |||||||||||||||||||||||||||||||
| Adjusted diluted shares | 31,170 |
| Six Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||
| Gross Profit | Selling & Administrative Expense | Operating Income | Interest Expense | Tax Expense | Effective Tax Rate | Net Income | Diluted EPS | |||||||||||||||||||||||||
| As reported | $ | 326,011 | $ | 259,784 | $ | 40,117 | $ | 20,252 | $ | 4,314 | 21.7% | $ | 15,551 | $ | 0.49 | |||||||||||||||||
| % of sales | 53.2% | 42.4% | 6.5% | |||||||||||||||||||||||||||||
| Software implementation costs (8) | - | (6,056 | ) | 6,056 | - | 1,453 | 4,603 | |||||||||||||||||||||||||
| Acquisition and integration costs (9) | 4,269 | (752 | ) | 5,021 | - | 1,147 | 3,874 | |||||||||||||||||||||||||
| Contingent consideration fair value adjustments (5) | - | (3,799 | ) | 3,799 | - | 1,014 | 2,785 | |||||||||||||||||||||||||
| Restructuring and related costs (2) | 2,035 | (1,578 | ) | 3,613 | - | 930 | 2,683 | |||||||||||||||||||||||||
| Termination of distributor agreements (4) | - | (2,098 | ) | 2,098 | - | 417 | 1,681 | |||||||||||||||||||||||||
| $ | 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 | $ | 1.49 | |||||||||||||||||||
| % of sales | 37.7% | 12.8% | ||||||||||||||||||||||||||||||
| Shares | 31,499 | |||||||||||||||||||||||||||||||
| Convertible note hedges (7) | (138 | ) | ||||||||||||||||||||||||||||||
| Adjusted diluted shares | 31,361 |
| (1) In 2024, the Company incurred costs for third party services pertaining to potential issues with certain royalty payments to design surgeons. |
| (2) 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. |
| (3) In 2024, the Company wrote off inventory, tooling and equipment related to the cancellation of a planned new product line. |
| (4) In 2024, the Company recorded an accrual adjustment related to the previous termination of a distributor agreement. In 2023, the Company incurred costs related to the termination of distributor agreements. |
| (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) 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 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) 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. |
Reconciliation of Reported Net Income to EBITDA
(in thousands, unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net income | $ | 29,976 | $ | 13,732 | $ | 49,685 | $ | 15,551 | ||||||||
| Provision for income taxes | 7,538 | 3,689 | 13,248 | 4,314 | ||||||||||||
| Interest expense | 9,593 | 9,997 | 19,188 | 20,252 | ||||||||||||
| Depreciation | 4,165 | 4,164 | 8,211 | 8,222 | ||||||||||||
| Amortization | 13,674 | 13,900 | 27,666 | 27,777 | ||||||||||||
| EBITDA | $ | 64,946 | $ | 45,482 | $ | 117,998 | $ | 76,116 | ||||||||
| Stock based compensation | 6,974 | 6,422 | 13,214 | 12,148 | ||||||||||||
| Legal matters | 1,343 | - | 2,680 | - | ||||||||||||
| Contingent consideration fair value adjustments | (8,673 | ) | (636 | ) | (15,219 | ) | 3,799 | |||||||||
| Termination of distributor agreements | - | 2,098 | (970 | ) | 2,098 | |||||||||||
| Software implementation costs | - | 1,797 | - | 6,056 | ||||||||||||
| Acquisition and integration costs | - | 2,476 | - | 5,021 | ||||||||||||
| Restructuring and related costs | - | - | 1,774 | 3,613 | ||||||||||||
| Asset impairment costs | - | - | 1,414 | - | ||||||||||||
| Adjusted EBITDA | $ | 64,590 | $ | 57,639 | $ | 120,891 | $ | 108,851 | ||||||||
| EBITDA Margin | ||||||||||||||||
| EBITDA | 19.6% | 14.3% | 18.3% | 12.4% | ||||||||||||
| Adjusted EBITDA | 19.4% | 18.1% | 18.8% | 17.8% |
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
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.