CONMED (CNMD) Q4 Earnings Match Estimates, Revenues Beat

CONMED Corporation CNMD posted fourth-quarter 2018 adjusted earnings per share of 73 cents, in line with the Zacks Consensus Estimate. Also, the figure improved 5.8% from the year-ago quarter.

The New York-based medical products manufacturer posted revenues of $242.4 million, up 8.9% on a year-over-year basis and 10.8% at constant currency (cc). Notably, the figure surpassed the Zacks Consensus Estimate of $229.2 million.

Meanwhile, the Zacks Rank #4 (Sell) stock has rallied 18.1% against the industry’s 13.1% decline over the past year. The current level also compares favorably with the S&P 500 index’s 5.9% fall.

2018 Results at a Glance

CONMED reported full-year adjusted earnings per share of $2.18, edging past the Zacks Consensus Estimate by a penny. Earnings grew 15.3% from the year-ago figure.

On a full-year basis, CONMED reported revenues worth $859.6 million, which also outpaced the Zacks Consensus Estimate of $846.4 million. Revenues also climbed 7.9% year over year and 8.4% at cc.

Orthopedic Surgery sales totaled $446.7 million (52% of net revenues) while General Surgery sales grossed $412.9 million (48%).

CONMED Corporation Price, Consensus and EPS Surprise

 

CONMED Corporation Price, Consensus and EPS Surprise | CONMED Corporation Quote

Segment Details

Orthopedic Surgery

Revenues in the segment totaled $124.8 million, up 3.1% from the year-ago quarter.

Domestically, Orthopedics revenues increased 5.2% from the prior-year quarter's level, while international sales increased 1.9%. Per management, growth was driven by strong performance bythe product portfolio.

General Surgery

Revenues in the segment totaled $117.6 million, up 15.7% year over year.

Domestically, General Surgery sales improved 14.2% year over year and international sales increased 19.1%.

Sales by Geography

In the reported quarter, sales in the United States grossed $125.2 million, up 10.5% year over year. International sales climbed 7.2% to $117.2 million.

Margins

Gross profit in the quarter totaled $132.7 million, up 7% year over year. Gross margin was 54.7%, contracting 100 basis points (bps).

Adjusted operating income came in at $106.8 million, up 6% year over year. Adjusted operating margin was 44.1%, down 120 bps year over year.

Financial Condition

Cash flow from operations for the year was $74.7 million compared with $65.6 million in 2017. Long-term debt by the end of 2018 was $438.6 million.

2019 Guidance

CONMED expects 2019 sales growth in the range of 5-6% at cc.

The company forecasts 2019 adjusted diluted net earnings per share in the range of $2.42 to $2.47.This represents growth of 11-13% over 2018. Notably, the Zacks Consensus Estimate is pegged at $2.41, within the guided range.

The guidance excludes any potential impact from the pending acquisition of Buffalo Filter, which is expected to close in the first quarter of 2019.

Wrapping Up

CONMED exited the fourth quarter on a solid note, with earnings and revenues beating estimates. The company’s core units — Orthopedic Surgery and General Surgery— continue to boost the topline. Solid international sales growth is a positive. Management is confident of the product portfolio as well. It expects the ongoing buyout of Buffalo Filter to boost CONMED’s General Surgery portfolio. A strong 2019 guidance buoy optimism in the stock. The company has also invested significantly in R&D in recent times.

On the flip side, contraction in the company's gross and operating margins in the quarter is worrisome. CONMED operates in a highly competitive environment, especially with respect to the General Surgery business. The company’s high long-term debt is a concern.

Key Picks

Some better-ranked stocks from the broader medical space are Intuitive Surgical ISRG, Becton, Dickinson and Company BDX and AngioDynamics ANGO.

Intuitive Surgical’s long-term earnings growth is projected at 14.5%. The stock carries a Zacks Rank #2 (Buy).

Becton, Dickinson’s long-term earnings growth is expected at 11.5%. The stock carries a Zacks Rank #2.

AngioDynamics’ earnings growth for the current year is projected at 14.9%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rankstocks here.

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