ConMed boosts 2022 forecast based on Q1 results, acquisition

The lingering COVID-19 pandemic played a role in limiting sales to just single-digit percentage growth for the first quarter of 2022 for ConMed Corp. (NYSE: CNMD), a medical-device manufacturer with roots in the Utica area. 

However, the company boosted its full-year guidance based on its first-quarter performance, along with a recently announced acquisition.

“March was our best month of the quarter as the impact of Omicron was strongest in January and dissipated throughout the quarter,” ConMed’s president, CEO, and chairman Curt Hartman told investors in a May 4 conference call. Sales lagged in Asia, Japan, and Canada, while they were strong in Europe and Latin America, he noted. U.S. sales were slow before picking up toward the end of the first quarter.

Sales for the quarter increased 4.1 percent to $242.3 million from $232.7 million in the year-ago period, while net income jumped 51 percent from $9.9 million to $14.98 million. Earnings per share increased nearly 52 percent from 31 cents per share to 47 cents per share.

According to ConMed executive VP and CFO Todd Garner, the device maker was not immune from supply chain and other pandemic-related issues. Along with material-cost increases, the company has also seen an increase in the length of the sales backorder. Pre-pandemic, the backorder was just half a day, while it’s currently two days.

Guidance and acquisition 

In spite of the lingering pandemic woes, ConMed officials increased their forecasts for full-year revenue from between $1.075 billion and $1.125 billion to the range of $1.105 billion to $1.150 billion. The increase is based in large part on an anticipated $20 million revenue boost from the company’s announced acquisition of Memphis, Tennessee–based In2Bones Global, Inc.

ConMed will acquire In2Bones for $145 million including up to an additional $110 million in growth-based earnout payments over a four-year period. ConMed expects the acquisition to close late in the second quarter or early in the third quarter of this year.

In2Bones develops, manufactures, and distributes medical devices for treatment of the upper and lower extremities, with a large focus on the foot and ankle.

“The company brings to ConMed a very experienced leadership team, an innovative and comprehensive foot and ankle portfolio, a well-established and growing sales channel, an existing international presence, and an exciting platform for future innovation,” Hartman told investors.

The foot and ankle market is a $4.5 billion industry producing single-digit growth annually, ConMed executives said. At the same time, In2Bones has been growing in the double digits each year, with $36.8 million in revenue in 2021.

Zacks Investment Research rated ConMed’s stock as a “hold” with a quarter that ended on a strong note that beat its estimates.

“The company witnessed strong performances across its orthopedic and general surgery units,” a Zacks report stated. “It saw sales growth in both its domestic and overseas markets.”

However, “the continued pandemic-led impact in the first quarter does not augur well. ConMed operates in a highly competitive environment, especially with respect to the general surgery business, which raises further apprehension,” Zacks said.

Through May 10, ConMed’s stock price is down 23 percent so far this year amid broader stock-market weakness. For the full-year 2021, ConMed shares gained 27 percent during a strong year for the broader equity market.

ConMed manufactures surgical devices for minimally invasive procedures for a number of surgical areas including orthopedics, general surgery, gynecology, neurosurgery, thoracic surgery, and gastroenterology. The company moved its corporate headquarters from its 525 French Road, New Hartford facility to Largo, Florida in 2021. It still maintains a number of functions including manufacturing in the New Hartford facility.