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CONMED's (CNMD) Q3 Earnings Beat Estimates, Revenues Miss

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·4 min read
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  • CNMD
  • DGX
  • ABT
  • HCA

CONMED Corporation CNMD reported third-quarter 2021 adjusted earnings per share (EPS) of 80 cents, which surpassed the Zacks Consensus Estimate by 3.9%. The bottom line declined 9.1% from the year-ago quarter.

GAAP EPS for the quarter was 47 cents, compared with the year-ago quarter’s figure of 23 cents.

Revenues in Detail

CONMED’s third-quarter revenues were $248.8 million, up 4.6% year over year. The top line, however, missed the Zacks Consensus Estimate by 2.5%.

At constant exchange rate (CER), revenues improved 4.3%.

The company’s third-quarter top line gained significantly from robust segmental performances.

Segment Details

Revenues at the Orthopedic Surgery segment totaled $105.7 million, up 3.5% from the year-ago quarter on a reported basis. At CER, revenues improved 2.9%.

While Orthopedics revenues fell 2.5% on a reported basis on the domestic front. the same rose 7.1% (up 6.3% at CER) from the prior-year levels on the international front.

CONMED Corporation Price, Consensus and EPS Surprise

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

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

Revenues at the General Surgery segment amounted to $143.1 million, up 5.5% year over year on a reported basis and 5.3% at CER.

Domestically, General Surgery sales increased 3.3% year over year, while international sales advanced 10.6% on a reported basis (up 10% at CER).

Sales by Geography

In the reported quarter, sales in the United States amounted to $136.4 million, up 1.6% year over year. International sales were $112.4 million, up 8.5% and 7.7% year over year on a reported basis and at CER, respectively.

Margins

In the quarter under review, CONMED’s gross profit rose 6.4% to $142.3 million. Gross margin expanded by 100 basis points (bps) to 57.2%.

Selling & administrative expenses increased 10.9% to $104.7 million. Research and development expenses increased 9.3% year over year to $10.9 million.

Operating profit totaled $26.7 million, reflecting a decline of 9.1% from the prior-year quarter. Operating margin contracted by 170 bps to 10.7%.

2021 Guidance

On the basis of the continued uncertainty associated with the global pandemic and its impact on hospitals, CONMED is now targeting the lower end of its previously guided full-year 2021 revenue projection of $1.02-$1.04 billion. The Zacks Consensus Estimate is currently pegged at $1.02 billion.

Adjusted EPS for the full year is now expected to be $3.18-$3.23, (compared with the previously guided range of $3.15-$3.25). The Zacks Consensus Estimate is currently pegged at $3.19.

On the back of current exchange rates, CONMED anticipates around 100 bps of foreign exchange headwind with respect to fourth-quarter revenue growth.

Our Take

CONMED exited the third quarter on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. The company witnessed strong performances across its Orthopedic and General Surgery units. It saw sales growth in both its domestic and overseas markets. Per management, the company displayed strength and agility despite a tough third-quarter operating environment on account of the aggressive impact of the Delta variant. Expansion of gross margin bodes well for the stock.

On the flip side, continued pandemic-led impacts in the third quarter does not bode well. CONMED operates in a highly competitive environment, especially with respect to the General Surgery business, which raises further apprehension.

Zacks Rank

CONMED currently carries a Zacks Rank #4 (Sell).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Quest Diagnostics Incorporated DGX, Abbott Laboratories ABT, and HCA Healthcare, Inc. HCA, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics reported third-quarter 2021 adjusted EPS of $3.96, which beat the Zacks Consensus Estimate by 33.8%. Third-quarter revenues of $2.77 billion outpaced the consensus mark by 12.6%.

Abbott reported third-quarter 2021 adjusted EPS of $1.40, which surpassed the Zacks Consensus Estimate by 52.2%. Third-quarter revenues of $10.93 billion outpaced the Zacks Consensus Estimate by 15.3%.

HCA Healthcare reported third-quarter 2021 adjusted EPS of $4.57, surpassing the Zacks Consensus Estimate by 11.5%. Revenues of $15.28 billion surpassed the Zacks Consensus Estimate by 4.7%.


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