CONMED Corporation (CNMD) is a leading medical technology company that has been delivering innovative surgical devices and equipment for over 55 years. Founded in 1970, the company has established itself as a trusted partner to healthcare professionals across a diverse range of specialties, including orthopedics, general surgery, gynecology, thoracic surgery, and gastroenterology.
Company History and Growth
The company's rich history is marked by a steadfast commitment to advancing patient care through its portfolio of cutting-edge products. CONMED's journey began in 1970 when it was founded and headquartered in Largo, Florida. Over the decades, the company has consistently expanded its product offerings, leveraging its deep expertise and engineering prowess to address the evolving needs of the medical community. This growth has been achieved through both internal development and strategic acquisitions, such as the 2016 acquisition of SurgiQuest, which brought the company's AirSeal insufflation system technology.
Product Portfolio
Today, CONMED's product lineup includes a comprehensive range of solutions, from single-use products to capital equipment, catering to the varied requirements of its global customer base. The company's orthopedic surgery segment encompasses sports medicine and lower extremities instrumentation and implants, small bone, large bone, and specialty powered surgical instruments, as well as imaging systems for minimally invasive procedures. Its general surgery segment, on the other hand, features a complete line of endo-mechanical instrumentation for laparoscopic and gastrointestinal procedures, smoke evacuation devices, cardiac monitoring products, and electrosurgical generators.
Financial Performance
CONMED's financial performance has been a testament to its adaptability and foresight. In the fourth quarter of 2024, the company reported total sales of $345.9 million, a 5.8% year-over-year increase as reported and a 6.0% increase in constant currency. This growth was driven by strong performance in the general surgery segment, which saw a constant currency increase of 8.7% in the quarter, as well as continued demand for innovative products like the AirSeal platform. The company's net income for the quarter was $33.8 million, a 2.1% increase year-over-year.
For the full year 2024, CONMED's total sales reached $1.307 billion, representing a 5.0% year-over-year increase as reported and a 5.3% increase in constant currency. The company's adjusted net income for the year grew 20.0% to $129.9 million, while adjusted diluted earnings per share increased 20.9% to $4.17. Net income for the full year was $130.4 million.
In the third quarter of 2024, CONMED reported net sales of $316.7 million, an increase of 4.0% year-over-year. The orthopedic surgery segment contributed $130.5 million in sales, up 4.7% compared to the prior year period, while the general surgery segment generated $186.2 million in sales, up 3.5% year-over-year. For the first nine months of 2024, consolidated net sales were $961.1 million, up 4.7% compared to the same period in 2023.
The company's gross profit margin expanded by 130 basis points to 56.5% in Q3 2024 and by 180 basis points to 55.6% in the first nine months of 2024, primarily due to favorable product mix. Selling and administrative expenses decreased as a percentage of net sales, from 41.1% in Q3 2023 to 31.5% in Q3 2024, and from 42.0% in the first nine months of 2023 to 36.0% in the first nine months of 2024.
Financials and Liquidity
CONMED's financial resilience is underpinned by its disciplined approach to capital allocation and balance sheet management. As of December 31, 2024, the company's cash balance stood at $24.5 million, and its long-term debt was $905.1 million, with a leverage ratio of 3.35x. The company's debt-to-equity ratio was 0.9408, and it had $547.4 million available under its revolving credit facility, with $36.0 million drawn as of the end of 2024.
CONMED's strong cash flow generation, with $167.0 million in cash flow from operations for the full year 2024, has enabled it to navigate the challenges posed by the evolving market environment. The company's free cash flow for the full year 2024 was $153.9 million. In the most recent quarter, operating cash flow was $43.3 million, with free cash flow of $39.3 million.
The company has also consistently paid a quarterly dividend to shareholders since 2012, demonstrating its commitment to returning value to investors. CONMED's current ratio stands at 2.301, while its quick ratio is 1.054, indicating a strong liquidity position.
Future Outlook and Strategies
Looking ahead, CONMED remains laser-focused on resolving the supply chain challenges that impacted its orthopedic business in 2024 and strengthening its operations. The company has engaged a top-tier consulting firm to help it transform its weaknesses into strengths, with the goal of optimizing its portfolio and cementing its position as a leader in the medical technology industry. This initiative was prompted by operational issues and supply chain disruptions that the company faced in the late 2010s, which impacted its financial performance.
For the full year 2025, CONMED expects constant currency revenue growth between 4% and 6%, with a currency headwind between approximately 100 and 120 basis points. This places their reported revenue guidance range between $1.344 billion and $1.372 billion. The company expects gross margins as a percentage of sales in 2025 to be at a similar level to 2024, citing a currency headwind of about 50 basis points and potential temporary challenges in their operations improvement efforts.
CONMED's adjusted EPS guidance for 2025 is between $4.25 and $4.40, with the currency headwind estimated to be between $0.15 and $0.20. Operating cash flow in 2025 is expected to be between $130 million and $140 million, with capital expenditures in the $20 million to $30 million range. Adjusted EBITDA is projected to be between $270 million and $280 million for 2025.
Key Growth Drivers
One of CONMED's key growth drivers is the AirSeal platform, which delivers innovative clinical insufflation solutions for robotic surgery and laparoscopy. The company reported record capital and disposable sales for AirSeal in 2024, and it expects the product line to continue delivering double-digit growth in the years to come, supported by the growing demand for improved patient outcomes and reduced hospital stays.
CONMED's BioBrace product, a highly differentiated solution for soft tissue repair in sports medicine, is another area of focus. The company has accumulated a robust body of clinical evidence, with 14 peer-reviewed publications and 9 ongoing clinical studies, underscoring the product's potential to drive long-term growth.
Market Position and Industry Trends
CONMED operates globally, with approximately 43% of consolidated net sales coming from international markets in 2024. The medical technology industry, in which CONMED operates, has seen steady growth in recent years, with an estimated CAGR of 5-7% over the past 5 years. This growth trend aligns well with CONMED's strategic focus on market-leading products and operational excellence.
Conclusion
The company's strategic focus on market-leading products, operational excellence, and prudent financial management has positioned CONMED well to navigate the evolving landscape of the medical technology industry. As it continues to execute on its growth initiatives and address the challenges posed by the macroeconomic environment, CONMED remains poised to deliver sustained value for its shareholders.