Company Announcements

CONMED Corporation Announces Second Quarter Financial Results

LARGO, Fla.--(BUSINESS WIRE)--Jul. 28, 2021-- CONMED Corporation (NYSE: CNMD) today announced financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights

  • Sales of $255.2 million increased 61.7% year over year as reported and 58.2% in constant currency.
  • Domestic revenue increased 64.2% year over year.
  • International revenue increased 58.6% year over year as reported and 50.7% in constant currency.
  • Diluted net earnings per share (GAAP) were $0.41, compared to a diluted net loss per share of $0.96 during the second quarter of 2020.
  • Adjusted diluted net earnings per share(1) were $0.71, compared to an adjusted diluted net loss per share of $0.07 during the second quarter of 2020.

“Our solid second quarter results, driven by the strong commitment and exceptional performance of our global team, have positioned us well as we continue to navigate the COVID-19 environment and its impacts on our business,” commented Curt R. Hartman, CONMED’s Chair of the Board, President, and Chief Executive Officer. “Our focus remains on new product innovation and strategically investing in our commercial and operations teams to better serve our global customers and drive shareholder value.”

2021 Outlook

Based on its first six-month results, the Company is increasing its guidance for the full year 2021 and now expects revenue between $1.015 billion and $1.035 billion, compared to its prior guidance of between $1.0 billion and $1.03 billion. Based on recent exchange rates, the Company continues to expect the positive impact to 2021 sales from foreign exchange in the range of 50 to 100 basis points.

The Company now expects full-year 2021 adjusted diluted net earnings per share in the range of $3.15 to $3.25, compared to its prior range of $3.05 to $3.20.

Supplemental Financial Disclosures

(1) A reconciliation of reported diluted net earnings (loss) per share to adjusted diluted net earnings (loss) per share, a non-GAAP financial measure, appears below.

Conference Call

The Company’s management will host a conference call today at 4:30 p.m. ET to discuss its second quarter 2021 results.

To participate in the conference call, dial 1-844-889-7792 (domestic) or +1-661-378-9936 (international) and refer to the passcode 7138188.

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.

A recording of the call will also be available from 7:30 p.m. ET on Wednesday, July 28, 2021, until 7:30 p.m. ET on Wednesday, August 4, 2021. To hear this recording, dial 1-855-859-2056 (domestic) or +1-404-537-3406 (international) and enter the passcode 7138188.

Consolidated Condensed Statements of Income (Loss)

(in thousands, except per share amounts, unaudited)

 

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2021

2020

2021

2020

 

 

 

 

 

Net sales

$

255,161

 

$

157,785

 

$

487,837

 

$

371,796

 

Cost of sales

 

113,737

 

 

85,856

 

 

217,964

 

 

180,707

 

Gross profit

 

141,424

 

 

71,929

 

 

269,873

 

 

191,089

 

% of sales

 

55.4

%

 

45.6

%

 

55.3

%

 

51.4

%

Selling & administrative expense

 

104,399

 

 

84,475

 

 

202,739

 

 

180,343

 

Research & development expense

 

11,318

 

 

8,700

 

 

21,344

 

 

18,820

 

Income (loss) from operations

 

25,707

 

 

(21,246

)

 

45,790

 

 

(8,074

)

% of sales

 

10.1

%

 

-13.5

%

 

9.4

%

 

-2.2

%

Interest expense

 

9,420

 

 

11,401

 

 

19,772

 

 

20,993

 

Other expense

 

-

 

 

89

 

 

-

 

 

178

 

Income (loss) before income taxes

 

16,287

 

 

(32,736

)

 

26,018

 

 

(29,245

)

Provision (benefit) for income taxes

 

2,997

 

 

(5,336

)

 

2,868

 

 

(7,772

)

Net income (loss)

$

13,290

 

$

(27,400

)

$

23,150

 

$

(21,473

)

 

 

 

 

 

Basic EPS

$

0.46

 

$

(0.96

)

$

0.80

 

$

(0.75

)

Diluted EPS

 

0.41

 

 

(0.96

)

 

0.72

 

 

(0.75

)

 

 

 

 

 

Basic shares

 

29,125

 

 

28,542

 

 

29,052

 

 

28,506

 

Diluted shares

 

32,464

 

 

28,542

 

 

31,964

 

 

28,506

 

Sales Summary

(in millions, unaudited)

 

Three Months Ended June 30,

% Change

Domestic

International

 

2021

2020

 

As Reported

Impact of Foreign Currency

Constant Currency

 

As Reported

 

As Reported

Impact of Foreign Currency

Constant Currency

Orthopedic Surgery

$ 107.9

$ 60.5

78.4%

-5.5%

72.9%

90.7%

71.7%

-8.6%

63.1%

General Surgery

147.3

97.3

51.4%

-2.3%

49.1%

55.7%

42.2%

-7.0%

35.2%

$ 255.2

$ 157.8

61.7%

-3.5%

58.2%

64.2%

58.6%

-7.9%

50.7%

 

Single-use Products

$ 208.9

$ 128.5

62.6%

-3.6%

59.0%

55.8%

72.7%

-8.8%

63.9%

Capital Products

46.3

29.3

58.0%

-3.4%

54.6%

126.6%

19.9%

-5.4%

14.5%

$ 255.2

$ 157.8

61.7%

-3.5%

58.2%

64.2%

58.6%

-7.9%

50.7%

 

Domestic

$ 143.6

$ 87.4

64.2%

0.0%

64.2%

International

111.6

70.4

58.6%

-7.9%

50.7%

$ 255.2

$ 157.8

61.7%

-3.5%

58.2%

 
 

Six Months Ended June 30,

% Change

Domestic

International

 

2021

2020

 

As Reported

Impact of Foreign Currency

Constant Currency

 

As Reported

 

As Reported

Impact of Foreign Currency

Constant Currency

Orthopedic Surgery

$ 215.0

$ 159.8

34.6%

-3.3%

31.3%

33.3%

35.3%

-5.1%

30.2%

General Surgery

272.8

212.0

28.7%

-1.7%

27.0%

28.3%

29.6%

-5.5%

24.1%

$ 487.8

$ 371.8

31.2%

-2.3%

28.9%

29.7%

33.1%

-5.3%

27.8%

 

Single-use Products

$ 396.3

$ 306.2

29.4%

-2.2%

27.2%

26.3%

33.7%

-5.4%

28.3%

Capital Products

91.5

65.6

39.6%

-2.8%

36.8%

51.1%

31.0%

-4.9%

26.1%

$ 487.8

$ 371.8

31.2%

-2.3%

28.9%

29.7%

33.1%

-5.3%

27.8%

 

Domestic

$ 267.5

$ 206.3

29.7%

0.0%

29.7%

International

220.3

165.5

33.1%

-5.3%

27.8%

$ 487.8

$ 371.8

31.2%

-2.3%

28.9%

Reconciliation of Reported Net Income (Loss) to Adjusted Net Income (Loss)

(in thousands, except per share amounts, unaudited)

 

Three Months Ended June 30, 2021

Gross Profit

Selling &
Administrative Expense

Operating Income

Interest
Expense

Tax
Expense

Effective Tax Rate

Net Income

Diluted EPS

As reported

$

141,424

 

$

104,399

 

$

25,707

 

$

9,420

 

$

2,997

 

18.4

%

$

13,290

 

$

0.41

 

% of sales

 

55.4

%

 

40.9

%

 

10.1

%

$

141,424

 

$

104,399

 

$

25,707

 

$

9,420

 

$

2,997

 

 

$

13,290

 

 

Adjusted gross profit %

 

55.4

%

Amortization(6)

$

1,500

 

 

(6,689

)

 

8,189

 

 

(3,586

)

 

2,886

 

 

8,889

 

 

Adjusted net income

$

97,710

 

$

33,896

 

$

5,834

 

$

5,883

 

21.0

%

$

22,179

 

$

0.71

 

% of sales

 

 

38.3

%

 

13.3

%

 

Diluted shares outstanding

 

30,482

 

Additional potential dilutive shares from in-the-money convertible notes(7)

 

1,982

 

Diluted shares, as reported

 

32,464

 

Convertible note hedges(8)

 

(1,362

)

Diluted shares, as adjusted

 

31,102

 

 

 

Three Months Ended June 30, 2020

Gross Profit

Selling &
Administrative Expense

Operating
Income (Loss)

Interest
Expense

Tax
Expense/ (Benefit)

Effective Tax Rate

Net Income (Loss)

Diluted EPS

As reported

$

71,929

 

$

84,475

 

$

(21,246

)

$

11,401

 

$

(5,336

)

16.3

%

$

(27,400

)

$

(0.96

)

% of sales

 

45.6

%

 

53.5

%

 

-13.5

%

Plant utilization costs (1)

 

6,586

 

 

-

 

 

6,586

 

 

-

 

 

739

 

 

5,847

 

Product rationalization costs (2)

 

2,169

 

 

(2,095

)

 

4,264

 

 

-

 

 

460

 

 

3,804

 

Restructuring and related costs (3)

 

1,087

 

 

(2,124

)

 

3,211

 

 

-

 

 

346

 

 

2,865

 

Manufacturing consolidation costs (4)

 

1,602

 

 

-

 

 

1,602

 

 

-

 

 

144

 

 

1,458

 

Acquisition and integration costs (5)

 

652

 

 

(439

)

 

1,091

 

 

-

 

 

119

 

 

972

 

$

84,025

 

$

79,817

 

$

(4,492

)

$

11,401

 

$

(3,528

)

 

$

(12,454

)

 

Adjusted gross profit %

 

53.3

%

Amortization(6)

$

1,500

 

 

(6,955

)

 

8,455

 

 

(3,413

)

 

1,280

 

 

10,588

 

 

Adjusted net income (loss)

$

72,862

 

$

3,963

 

$

7,988

 

$

(2,248

)

54.6

%

$

(1,866

)

$

(0.07

)

% of sales

 

46.2

%

 

2.5

%

 

(1) In 2020, the Company incurred a charge related to plant underutilization due to abnormally low production as a result of decreased sales caused by the COVID-19 pandemic.

(2) In 2020, the Company performed an analysis of product lines and determined certain catalog numbers, principally related to capital equipment, would be discontinued and consolidated into existing product offerings resulting in a charge to cost of sales. The Company also wrote-off related field inventory used for customer demonstration and evaluation of the discontinued products to selling and administrative expense.

(3) In 2020, the Company incurred restructuring costs related to a voluntary separation arrangement with employees as a result of the COVID-19 pandemic and restructuring of our sales force.

(4) In 2020, the Company incurred costs related to the consolidation of certain manufacturing operations. These costs related to winding down operations at certain locations and moving production lines to other facilities.

(5) In 2020, the Company incurred inventory adjustments associated with a prior acquisition and severance and integration costs mainly related to the Buffalo Filter, LLC acquisition.

(6) Includes amortization of intangible assets, deferred financing fees and debt discount.

(7) In 2021, the Company's average share price exceeded the conversion price of our 2.625% convertible notes due in 2024 (the "Notes") resulting in additional potential diluted shares.

(8) Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company's convertible note hedge transactions.

Reconciliation of Reported Net Income (Loss) to Adjusted Net Income

(in thousands, except per share amounts, unaudited)

Six Months Ended June 30, 2021

Gross Profit

Selling &
Administrative Expense

Operating Income

Interest
Expense

Tax
Expense

Effective Tax Rate

Net Income

Diluted EPS

As reported

$

269,873

 

$

202,739

 

$

45,790

 

$

19,772

 

$

2,868

 

11.0

%

$

23,150

 

$

0.72

 

% of sales

 

55.3

%

 

41.6

%

 

9.4

%

Restructuring and related costs (1)

 

-

 

 

(414

)

 

414

 

 

-

 

 

109

 

 

305

 

 

$

269,873

 

$

202,325

 

$

46,204

 

$

19,772

 

$

2,977

 

 

$

23,455

 

 

Adjusted gross profit %

 

55.3

%

Amortization(6)

$

3,000

 

 

(13,527

)

 

16,527

 

 

(7,147

)

 

5,855

 

 

 

17,819

 

 

Adjusted net income

$

188,798

 

$

62,731

 

$

12,625

 

$

8,832

 

17.6

%

$

41,274

 

$

1.34

 

% of sales

 

38.7

%

 

12.9

%

 

Diluted shares outstanding

 

30,352

 

Additional potential dilutive shares from in-the-money convertible notes(7)

 

1,612

 

Diluted shares, as reported

 

31,964

 

Convertible note hedges(8)

 

(1,201

)

Diluted shares, as adjusted

 

30,763

 

 

Six Months Ended June 30, 2020

Gross Profit

Selling &
Administrative Expense

Operating
Income (Loss)

Interest
Expense

Tax
Expense/ (Benefit)

Effective Tax Rate

Net Income (Loss)

Diluted EPS

As reported

$

191,089

 

$

180,343

 

$

(8,074

)

$

20,993

 

$

(7,772

)

26.6

%

$

(21,473

)

$

(0.75

)

% of sales

 

51.4

%

 

48.5

%

 

-2.2

%

Plant utilization costs (2)

 

6,586

 

 

-

 

 

6,586

 

 

-

 

 

739

 

 

5,847

 

Product rationalization costs (3)

 

2,169

 

 

(2,095

)

 

4,264

 

 

-

 

 

460

 

 

3,804

 

Restructuring and related costs (1)

 

1,087

 

 

(2,124

)

 

3,211

 

 

-

 

 

346

 

 

2,865

 

Manufacturing consolidation costs (4)

 

3,387

 

 

-

 

 

3,387

 

 

-

 

 

837

 

 

2,550

 

Acquisition and integration costs (5)

 

1,457

 

 

(1,192

)

 

2,649

 

 

-

 

 

722

 

 

1,927

 

$

205,775

 

$

174,932

 

$

12,023

 

$

20,993

 

$

(4,668

)

 

$

(4,480

)

 

Adjusted gross profit %

 

55.3

%

Amortization(6)

$

3,000

 

 

(13,954

)

 

16,954

 

 

(6,497

)

 

5,775

 

 

 

17,676

 

 

Adjusted net income

$

160,978

 

$

28,977

 

$

14,496

 

$

1,107

 

7.7

%

$

13,196

 

$

0.46

 

% of sales

 

43.3

%

 

7.8

%

(1) In 2021, the Company incurred restructuring costs related to restructuring of our sales force. In 2020, the Company incurred restructuring costs related to a voluntary separation arrangement with employees as a result of the COVID-19 pandemic and restructuring of our sales force.

(2) In 2020, the Company incurred a charge related to plant underutilization due to abnormally low production as a result of decreased sales caused by the COVID-19 pandemic.

(3) In 2020, the Company performed an analysis of product lines and determined certain catalog numbers, principally related to capital equipment, would be discontinued and consolidated into existing product offerings resulting in a charge to cost of sales. The Company also wrote-off related field inventory used for customer demonstration and evaluation of the discontinued products to selling and administrative expense.

(4) In 2020, the Company incurred costs related to the consolidation of certain manufacturing operations. These costs related to winding down operations at certain locations and moving production lines to other facilities.

(5) In 2020, the Company incurred inventory adjustments associated with a prior acquisition and severance and integration costs mainly related to the Buffalo Filter, LLC acquisition.

(6) Includes amortization of intangible assets, deferred financing fees and debt discount.

(7) In 2021, the Company's average share price exceeded the conversion price of our 2.625% convertible notes due in 2024 (the "Notes") resulting in additional potential diluted shares.

(8) Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company's convertible note hedge transactions.

 

Reconciliation of Reported Net Income (Loss) to EBITDA & Adjusted EBITDA

(in thousands, unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2021

2020

 

2021

2020

 

 

 

 

 

 

Net income (loss)

$

13,290

 

$

(27,400

)

 

$

23,150

 

$

(21,473

)

Provision (benefit) for income taxes

 

2,997

 

 

(5,336

)

 

 

2,868

 

 

(7,772

)

Interest expense

 

9,420

 

 

11,401

 

 

 

19,772

 

 

20,993

 

Depreciation

 

3,984

 

 

4,588

 

 

 

8,741

 

 

9,234

 

Amortization

 

13,797

 

 

13,616

 

 

 

27,316

 

 

27,392

 

EBITDA

$

43,488

 

$

(3,131

)

 

$

81,847

 

$

28,374

 

 

 

 

 

 

 

Stock based compensation

 

4,290

 

 

3,555

 

 

 

7,676

 

 

6,587

 

Plant underutilization costs

 

-

 

 

6,586

 

 

 

-

 

 

6,586

 

Product rationalization costs

 

-

 

 

4,264

 

 

 

-

 

 

4,264

 

Restructuring and related costs

 

-

 

 

3,211

 

 

 

414

 

 

3,211

 

Manufacturing consolidation costs

 

-

 

 

1,602

 

 

 

-

 

 

3,387

 

Acquisition and integration costs

 

-

 

 

1,091

 

 

 

-

 

 

2,649

 

Adjusted EBITDA

$

47,778

 

$

17,178

 

 

$

89,937

 

$

55,058

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA Margin

 

 

 

 

 

EBITDA

 

17.0

%

 

-2.0

%

 

 

16.8

%

 

7.6

%

Adjusted EBITDA

 

18.7

%

 

10.9

%

 

 

18.4

%

 

14.8

%

About CONMED Corporation

CONMED is a medical technology company that provides surgical devices and equipment for minimally invasive procedures. The Company’s products are used by surgeons and physicians in a variety of specialties, including orthopedics, general surgery, gynecology, neurosurgery, thoracic surgery, and gastroenterology. For more information, visit www.conmed.com.

Forward-Looking Statements

This press release and today’s 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 risks posed to the Company’s business, financial condition, and results of operations by the COVID-19 global pandemic and the various government responses to the pandemic, including deferral of surgeries, reductions in hospital and ambulatory surgery center operating volumes, disruption to potential supply chain reliability, as well as the risk factors discussed in the Company's Annual Report on Form 10-K for the full year ended December 31, 2020 and listed under the heading Forward-Looking Statements in the Company’s most recently filed Form 10-Q. 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 accounting principles generally accepted 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 (loss); adjusted interest expense; adjusted income tax expense (benefit); adjusted effective income tax rate; adjusted net income (loss), adjusted diluted shares and adjusted diluted net earnings (loss) 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 (loss), interest expense, income tax expense (benefit), effective income tax rate, net income (loss), diluted shares and diluted net earnings (loss) 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.

CONMED Corporation
Todd W. Garner
Chief Financial Officer
727-214-2975
ToddGarner@conmed.com

Source: CONMED Corporation