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CONMED (CNMD) Q2 Earnings and Revenues Surpass Estimates

Zacks Equity Research

CONMED Corporation CNMD delivered second-quarter 2019 adjusted earnings per share of 56 cents, which beat the Zacks Consensus Estimate of 53 cents by 5.7%. Further, the figure improved 21.7% from the year-ago quarter.

The New York-based medical products manufacturer reported revenues of $238.3 million, up 11.9% on a year-over-year basis and 12.8% at constant currency (cc). Notably, the figure surpassed the Zacks Consensus Estimate of $233.1 million by 2.2%.

Segment Details

Orthopedic Surgery

Revenues in the segment totaled $115.8 million, up 5.2% from the year-ago quarter.

Domestically, Orthopedics revenues increased 5.5% from the prior-year quarter's level, while international sales rose 6.8%. Per management, growth was driven by strong performances of the product portfolio.

General Surgery

Revenues in the segment totaled $122.5 million, up 19.3% year over year.

Domestically, General Surgery sales improved 24.8% year over year and international sales advanced 9.8%.

CONMED Corporation Price, Consensus and EPS Surprise

 

CONMED Corporation Price, Consensus and EPS Surprise

CONMED Corporation price-consensus-eps-surprise-chart | CONMED Corporation Quote

Sales by Geography

In the reported quarter, sales in the United States grossed $129 million, up 17.6% year over year. International sales climbed 6% to $109.3 million.

Margins

Gross profit in the quarter totaled $131.2 million, up 12.8% year over year. Per management, adjusted gross margin was 55.3%, expanding 70 bps.

Operating income came in at $18.7 million, up 11.8% year over year. Operating margin was 7.8%, remaining flat year over year.

Financial Condition

Cash flow from operations in the second quarter was $22 million compared with $21 million in the year-ago quarter. Long-term debt at the end of the quarter was $796 million, down 0.9% sequentially.

2019 Guidance Raised

CONMED expects 2019 sales growth to range between $951 million and $958 million. This projection includes an increase to organic constant currency sales growth in the range of 6-6.5%, up from the prior range of 5.25-6.25%.

On the basis of current exchange rates, the negative impact to 2019 sales from forex is now anticipated to be about 50 bps, lower than the prior estimate of 75 bps.

The company forecasts adjusted diluted net earnings per share in the range of $2.52 to $2.57, up from the previously guided range of $2.47-$2.52. This indicates growth of 16-18% over 2018. Notably, the Zacks Consensus Estimate is pegged at $2.50, within the guided range.

Wrapping Up

CONMED exited the second quarter on a solid note, with earnings and revenues beating estimates. The company’s core units — Orthopedic Surgery and General Surgery— continue to aid the top line. Solid international sales growth is a positive. Management is confident of the product portfolio as well. The company remains optimistic that the buyout of Buffalo Filter (completed on Feb 11, 2019) will bolster CONMED’s General Surgery portfolio. Raised 2019 guidance buoys optimism in the stock. The company continues to expect investments in R&D to be between 4.5% and 5% of sales in 2019.

These apart, the company made stellar progress with regard to the integration of the Buffalo Filter buyout and remained focused toward launching new products, like its Infinity Knee system in the market.

Meanwhile, the company’s high long-term debt remains a concern. Additionally, CONMED operates in a highly competitive environment, especially with respect to the General Surgery business.

Zacks Rank

CONMED currently carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks which reported solid results this earning season are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG.

Stryker delivered second-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter delivered second-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company carries a Zacks Rank #2.

Intuitive Surgical reported second-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1.

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