CNMD CONMED Corporation

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Date of Report (Date of earliest event reported): July 31, 2024

 

 

CONMED CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware	001-39218	16-0977505
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification No.)

 

 

11311 Concept Blvd

Largo, Florida 33773

(Address of principal executive offices, including zip code)

 

(727) 392-6464

(Registrant's telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (See General Instruction A.2 below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Rule 12(b) of the Act

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	CNMD	NYSE

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

Results of Operations and Financial Condition.

 

On July 31, 2024, CONMED Corporation issued a press release announcing financial results for the second quarter ended June 30, 2024. A copy of this press release is attached hereto as Exhibit 99.1.

 

The information in this Current Report on Form 8-K that is furnished under “Item 2.02. Results of Operations and Financial Condition” and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

 

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits

 

The following exhibits are included herewith:

 

 

	Exhibit No.	Description of Exhibit
	99.1	Press Release dated July 31, 2024, issued by CONMED Corporation.
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date:     July 31, 2024		CONMED CORPORATION
		(Registrant)
	By:	/s/  Todd W. Garner
	Name:	Todd W. Garner
	Title:	Executive Vice President, Finance
		and Chief Financial Officer

 

 

	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

 

·

Sales of $332.1 million increased 4.5% year-over-year as reported and 5.2% in constant currency.

·

Domestic revenue increased 6.1% year-over-year.

·

International revenue increased 2.6% year-over-year as reported and 4.0% in constant currency.

·

Diluted net earnings per share (GAAP) were $0.96 compared to diluted net earnings per share (GAAP) of $0.43 in the second quarter of 2023.

·

Adjusted diluted net earnings per share(1) were $0.98, an increase of 18.1% compared to the second quarter of 2023.

 

“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.”

 

 

2024 Outlook

 

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

 

⁽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 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

 

 

Sales Summary

(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 Net Income

(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 Net Income

(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 & Adjusted 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 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.

 

v3.24.2

Cover	Jul. 31, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 31, 2024
Entity File Number	001-39218
Entity Registrant Name	CONMED CORPORATION
Entity Central Index Key	0000816956
Entity Tax Identification Number	16-0977505
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	11311 Concept Blvd
Entity Address, City or Town	Largo
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33773
City Area Code	(727)
Local Phone Number	392-6464
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	CNMD
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

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