CONMED Corp Q3 FY2024 earnings call

Curt's Remarks - Total sales for the quarter were $316.7 million, up 4% year-over-year (4.3% constant currency). GAAP net income was $49 million, compared to $15.8 million in Q3 2023. Adjusted net income was $32.7 million, up 15% year-over-year. - Announced succession plan: Pat Beyer selected as next CEO; Curt Hartman to retire by end of 2024. ### Pat's Remarks - AirSeal U.S. capital sales continued strong growth with no slowdown in orders or disposables. - Orthopedic business made progress on supply chain improvements, though hurricanes caused a speed bump. ### Todd's Remarks - Third quarter financials: Adjusted gross margin 56.5%, up 60 basis points; R&D expense 4.3% of sales, 20 basis points higher; SG&A expenses 37.2% of sales, 50 basis points lower. - Cash balance at end of quarter $38.5 million; leverage ratio 3.6 times; cash flow from operations $51.2 million.

Total sales for the quarter were $316.7 million, a year-over-year increase of 4% as reported and 4.3% in constant currency. Worldwide, orthopedics grew 5.2% in the third quarter. U.S. orthopedic sales increased 7.4% and internationally orthopedic sales grew 3.9%. U.S. General Surgery revenue grew 7.4% while internationally General Surgery revenue declined 5.0%. AirSeal continued strong growth in the U.S. with both disposable and capital revenue, and internationally even against high comparables.

Fourth quarter expected reported revenue: $339 million to $344 million. ### Full year reported revenue guidance: $1.300 billion to $1.305 billion. ### Q4 EPS expected: $1.18 to $1.23 (11%-16% growth). ### Full year adjusted EPS guidance: $4.00 to $4.05 (15.9%-17.4% growth).

Hurricanes impacted facilities and procedures, causing delays in production and rescheduling of surgical procedures. ### IV fluid shortages affected surgical procedures, with hospitals allocating and deferring procedures. ### Transitory quality issue in smoke evacuation affected performance, though Q3 showed improvement. ### Slower-than-expected foot and ankle business affected contingent consideration, with timing of trial readout adjusted.

Q: Kristen Stewart asked about General Surgery and capital equipment revenues.

A: Todd Garner said it was a function of last year's back orders, with big capital products releasing from backorder in Q3 2023. Pat Beyer added it related to circuit board availability impacting generators and energy platforms.

Q: Mike Matson's question on orthopedics supply chain impact on implantables.

A: Pat Beyer stated improvements made across all categories, with a two-pronged approach of increasing manufacturing capability and improving supply chain with vendors.

Q: Lily Delaney asked about orthopedics supply chain and smoke evacuation.

A: Todd Garner said the smoke evacuation quality issue was transitory in Q2, with Q3 showing progress toward normal trend.

Q: Dino Weinstock asked about 2025 priorities and hurricane impacts.

A: Pat Beyer mentioned focusing on customers, employees, and shareholders; hurricane impacts included procedures being rebooked or deferred due to IV fluid shortages.

Q: Kristen Stewart asked about gross margins and contingent consideration.

A: Todd Garner said Q4 gross margin expected around 57%, and contingent consideration adjustment related to slower-than-expected foot and ankle business and adjusted trial timing for BioBrace.