ConMed lowers full-year guidance despite higher Q3 sales

Hospital-staffing shortages, supply-chain issues, and foreign-currency pressures together created a major concern for ConMed Corp. (NYSE: CNMD), pushing the medical-device maker to lower guidance for the remainder of the year in spite of a nearly 11 percent rise in net sales in the third quarter.

ConMed reported improved third-quarter sales of $275.1 million, boosted by acquisitions it made earlier in the year.

“I’m proud that our third-quarter results delivered strong top-line growth in a tougher-than-expected environment,” ConMed President/CEO Curt R. Hartman said in the earnings report. “During the quarter, we closed on our acquisition of Biorez, and I am pleased that both our In2Bones and Biorez integrations are off to fantastic starts. I am confident that both of these businesses will add to our future outlook of sustained growth in revenue and profitability.”

The surgical-device manufacturer, with roots in the Mohawk Valley, closed in August on its acquisition of Biorez, Inc., on a cash-free, debt-free basis for cash consideration of $85 million, financed through the company’s existing credit facility. The acquisition is expected to add $1 million in revenue to ConMed’s full-year guidance for 2022.

Biorez is a medical-device startup based in New Haven, Connecticut, with its proprietary BioBrace Implant technology that reinforces soft tissue and facilitates healing. At the time, ConMed officials said BioBrace helps the company advance into the next generation of sports medicine and will help drive ConMed’s long-term vision.

In2Bones, in its first full quarter as part of ConMed, delivered better-than-forecast results, comprising the bulk of the
$10.3 million in revenue from the two acquired companies. ConMed originally forecast the acquisition of In2Bones, a lower-extremity medical device manufacturer in Tennessee, would positively impact revenue by $20 million in 2022, but has since increased that expectation. 

“We’re very excited about the work they’re doing,” Hartman told investors and analysts during an Oct. 26 conference call. The company expects a strong fourth-quarter push in foot and ankle procedures. He also indicated the company’s products will ramping up in international markets soon.

In spite of the boost from those acquisitions, ConMed narrowed its revenue guidance for the full year to between $1.1 billion and $1.115 billion, compared with prior guidance of between $1.095 billion and $1.14 billion. The company expects net earnings per share in the range of $3.21 to $3.28, down from a range of $3.23 to $3.45.

Analyst Rick Wise of Stifel, an investment banking and wealth-management firm, noted sales fell below his firm’s expectations of about $281 million to $283 million due to the impacts of the “macro headwinds” of foreign currency, supply chain, and hospital staffing as well as weak capital sales. 

“While these factors are pushing our numbers lower, we still were encouraged about multiple positive drivers falling into place that support longer-term performance,” Wise’s research report stated. States around the country continue to pass smoke evacuation legislation, which bodes well for ConMed to see increased sales of its Buffalo Filter product. Wise projects fourth-quarter revenue of $313 million for ConMed.

Through Nov. 15, ConMed’s share price had declined more than 36 percent year to date, amid a difficult year for the broader stock market as well.

ConMed manufactures surgical devices and equipment for minimally invasive procedures for surgical areas including orthopedics, general surgery, gynecology, neurosurgery, thoracic surgery, and gastroenterology. The company moved its corporate headquarters from 525 French Road in New Hartford to Largo, Florida in 2021. It maintains manufacturing, finance, human resources, legal, and other corporate functions at the New Hartford facility.