CONMED Corporation (NASDAQ:CNMD), a leading global medical technology company, reported its first-quarter 2024 financial results, showcasing resilience in the face of macroeconomic challenges. The company's diversified product portfolio and operational efficiency enabled it to navigate the current environment effectively.

Financials

For the full year 2023, CONMED reported annual net income of $64,459,000 and annual revenue of $1,240,954,000. The company's annual operating cash flow stood at $125,348,000, while its annual free cash flow reached $106,316,000. These robust financial metrics demonstrated CONMED's ability to generate consistent profitability and strong cash flows, even in the midst of a dynamic market landscape.

In the first quarter of 2024, CONMED reported net sales of $312,273,000, representing a 5.7% increase as reported and a 5.9% increase in constant currency compared to the same period in the prior year. This top-line growth was driven by strong performance across both the Orthopedic Surgery and General Surgery segments.

The Orthopedic Surgery segment saw a 2.8% increase in sales, with the U.S. market growing 10.6% and international markets declining 1.6%. The General Surgery segment experienced an 8.0% increase in sales, with the U.S. market growing 5.7% and international markets growing 14.1%. This diversified performance highlighted CONMED's ability to navigate various market dynamics and capitalize on growth opportunities.

Gross profit margins for the first quarter of 2024 expanded by 250 basis points to 55.1%, primarily due to favorable product mix. Adjusted net income for the quarter was $24.8 million, an increase of 20.3% compared to the same period in the prior year. Adjusted diluted earnings per share were $0.79, up 19.7% year-over-year.

Liquidity

CONMED's balance sheet remained strong, with a cash balance of $33.9 million as of March 31, 2024. The company's long-term debt stood at $990.1 million, and its leverage ratio was 4.0x at the end of the quarter. Management expected the leverage ratio to drop to the low 3x range by the end of 2024 as the company continued to generate robust cash flows.

Outlook

Looking ahead, CONMED maintained its full-year 2024 guidance, despite a $10 million headwind from unfavorable foreign currency exchange rates. The company now expects reported revenue to be in the range of $1.33 billion to $1.355 billion, representing growth of 4% to 6% compared to the prior year. Adjusted earnings per share are expected to be between $4.25 and $4.35, reflecting growth of 23% to 26% over 2023.

The company's guidance for the second quarter of 2024 calls for reported revenue growth of 4% to 6%, with a 50 basis point headwind from currency. Gross margin improvement is expected to be in the range of 60 to 80 basis points over the prior-year period, as the company navigates the impact of currency and product mix.

Business Overview

CONMED's diversified product portfolio, which includes offerings in both Orthopedic Surgery and General Surgery, has been a key driver of its resilience. The company's flagship AirSeal® system, a clinically differentiated product in the General Surgery segment, continues to gain traction, with the company focused on expanding its presence in the ambulatory surgery center (ASC) market.

In the Orthopedic Surgery segment, CONMED's acquisition of Biorez in 2022 has been a success story, with the business expected to contribute double-digit millions in revenue in 2024. The company's recent launch of the BioBrace® platform in the Foot and Ankle space has also generated excitement, as it leverages the Biorez technology.

Recent Developments

CONMED's management team has demonstrated its ability to navigate the current macroeconomic environment, with a focus on operational efficiency, new product introductions, and strategic acquisitions. The company's strong balance sheet and cash flow generation provide the financial flexibility to invest in growth initiatives and pursue value-enhancing M&A opportunities.

Risks and Challenges

Despite the ongoing challenges posed by supply chain constraints and inflationary pressures, CONMED remains well-positioned to capitalize on the long-term growth trends in the medical technology industry. The company's diversified product portfolio, innovative solutions, and disciplined execution have positioned it as a trusted partner to healthcare providers worldwide.

Conclusion

As CONMED continues to execute on its strategic priorities, investors can look forward to the company's continued growth and value creation in the years ahead.