CONMED Corporation Announces Second Quarter 2022 Financial Results

LARGO, Fla.--()--CONMED Corporation (NYSE: CNMD) today announced financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights

  • Sales of $277.2 million increased 8.6% year over year as reported and 9.8% in constant currency. Acquisitions contributed approximately 80 basis points of growth.
  • Domestic revenue increased 3.9% year over year.
  • International revenue increased 14.7% year over year as reported and 17.2% in constant currency.
  • Diluted net loss per share (GAAP) was $5.65 compared to diluted net earnings per share (GAAP) of $0.41 in the second quarter of 2021.
  • Adjusted diluted net earnings per share(1) were $0.76, an increase of 7.0% over the second quarter of 2021.
  • Closed In2Bones transaction on June 13, 2022.

“I’m proud that our team drove strong revenue growth in the second quarter while also refinancing our debt and closing the acquisition of In2Bones,” commented Curt R. Hartman, CONMED’s Chair of the Board, President, and Chief Executive Officer. “We continue navigating the challenges of hospital staffing and inflation while remaining committed to enhancing the company’s long-term growth and profitability profiles.”

2022 Outlook

Due to changes in foreign exchange rates, the Company is lowering its revenue guidance for the full year 2022 and now expects revenue between $1.095 billion and $1.140 billion compared to its prior guidance of between $1.105 billion and $1.150 billion. Based on recent exchange rates, the Company now expects foreign exchange to have a 100 to 150 bps negative impact on full-year 2022 revenue growth.

The Company now expects full-year 2022 adjusted diluted net earnings per share in the range of $3.40 to $3.55, down from the prior range of $3.50 to $3.65 to account for a $0.10 currency headwind.

Supplemental Financial Disclosures

(1) A reconciliation of reported diluted net loss per share to adjusted diluted net earnings per share, a non-GAAP financial measure, appears below.

Conference Call

The Company’s management will host a conference call today at 4:30 p.m. ET to discuss its second quarter 2022 results.

To participate in the conference call via telephone, please click here to pre-register and obtain the dial-in number and passcode.

This conference call will also be webcast and can be accessed from the “Investors” section of CONMED's website at www.conmed.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.

Consolidated Condensed Statements of Income (Loss)

(in thousands except per share amounts, unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

Net sales

 

$

277,190

 

$

255,161

 

 

$

519,516

 

$

487,837

 

Cost of sales

 

 

125,413

 

 

113,737

 

 

 

231,748

 

 

217,964

 

Gross profit

 

 

151,777

 

 

141,424

 

 

 

287,768

 

 

269,873

 

% of sales

 

 

54.8

%

 

55.4

%

 

 

55.4

%

 

55.3

%

Selling & administrative expense

 

 

115,826

 

 

104,399

 

 

 

218,701

 

 

202,739

 

Research & development expense

 

 

11,493

 

 

11,318

 

 

 

22,165

 

 

21,344

 

Income from operations

 

 

24,458

 

 

25,707

 

 

 

46,902

 

 

45,790

 

% of sales

 

 

8.8

%

 

10.1

%

 

 

9.0

%

 

9.4

%

Interest expense

 

 

5,928

 

 

9,420

 

 

 

10,926

 

 

19,772

 

Other expense

 

 

112,011

 

 

-

 

 

 

112,011

 

 

-

 

Income (loss) before income taxes

 

 

(93,481

)

 

16,287

 

 

 

(76,035

)

 

26,018

 

Provision for income taxes

 

 

74,810

 

 

2,997

 

 

 

77,281

 

 

2,868

 

Net income (loss)

 

$

(168,291

)

$

13,290

 

 

$

(153,316

)

$

23,150

 

 

 

 

 

 

 

 

Basic EPS

 

$

(5.65

)

$

0.46

 

 

$

(5.18

)

$

0.80

 

Diluted EPS

 

 

(5.65

)

 

0.41

 

 

 

(5.18

)

 

0.72

 

 

 

 

 

 

 

 

Basic shares

 

 

29,775

 

 

29,125

 

 

 

29,601

 

 

29,052

 

Diluted shares

 

 

29,775

 

 

32,464

 

 

 

29,601

 

 

31,964

 

Sales Summary

(in millions, unaudited)

 

Three Months Ended June 30,

 

 

 

 

% Change

 

 

 

 

 

 

 

 

 

 

Domestic

 

International

2022

 

2021

 

As

Reported

 

Impact of

Foreign

Currency

 

Constant

Currency

 

As

Reported

 

As

Reported

 

Impact of

Foreign

Currency

 

Constant

Currency

Orthopedic Surgery

$

120.2

$

107.9

11.4

%

1.3

%

12.7

%

-0.8

%

18.8

%

1.9

%

20.7

%

General Surgery

 

157.0

 

147.3

6.6

%

1.1

%

7.7

%

5.7

%

8.6

%

3.4

%

12.0

%

$

277.2

$

255.2

8.6

%

1.2

%

9.8

%

3.9

%

14.7

%

2.5

%

17.2

%

 

Single-use Products

$

230.3

$

208.9

10.2

%

1.1

%

11.3

%

7.8

%

13.5

%

2.5

%

16.0

%

Capital Products

 

46.9

 

46.3

1.4

%

1.3

%

2.7

%

-16.0

%

19.6

%

2.5

%

22.1

%

$

277.2

$

255.2

8.6

%

1.2

%

9.8

%

3.9

%

14.7

%

2.5

%

17.2

%

 

Domestic

$

149.2

$

143.6

3.9

%

0.0

%

3.9

%

International

 

128.0

 

111.6

14.7

%

2.5

%

17.2

%

$

277.2

$

255.2

8.6

%

1.2

%

9.8

%

Six Months Ended June 30,

 

 

 

 

% Change

 

 

 

 

 

 

 

 

 

 

Domestic

 

International

2022

 

2021

 

As

Reported

 

Impact of

Foreign

Currency

 

Constant

Currency

 

As

Reported

 

As

Reported

 

Impact of

Foreign

Currency

 

Constant

Currency

Orthopedic Surgery

$

227.7

$

215.0

5.9

%

0.7

%

6.6

%

0.6

%

8.9

%

1.0

%

9.9

%

General Surgery

 

291.8

 

272.8

7.0

%

0.7

%

7.7

%

6.5

%

8.0

%

2.2

%

10.2

%

$

519.5

$

487.8

6.5

%

0.7

%

7.2

%

4.8

%

8.5

%

1.5

%

10.0

%

 

Single-use Products

$

431.8

$

396.3

8.9

%

0.7

%

9.6

%

7.1

%

11.4

%

1.5

%

12.9

%

Capital Products

 

87.7

 

91.5

-4.1

%

0.7

%

-3.4

%

-7.2

%

-1.5

%

1.3

%

-0.2

%

$

519.5

$

487.8

6.5

%

0.7

%

7.2

%

4.8

%

8.5

%

1.5

%

10.0

%

 

Domestic

$

280.4

$

267.5

4.8

%

0.0

%

4.8

%

International

 

239.1

 

220.3

8.5

%

1.5

%

10.0

%

$

519.5

$

487.8

6.5

%

0.7

%

7.2

%

 

Reconciliation of Reported Net Income (Loss) to Adjusted Net Income

(in thousands, except per share amounts, unaudited)

 

Three Months Ended June 30, 2022

Gross

Profit

Selling &

Administrative

Expense

Operating

Income

Interest

Expense

Other

Expense

Tax

Expense

Effective

Tax Rate

Net Income

(Loss)

Basic

EPS

Adjustments(8)

Diluted

EPS

As reported

$151,777

 

$115,826

 

$24,458

 

$5,928

 

$112,011

 

$74,810

 

-80.0%

 

$(168,291)

 

 

 

$-

 

$(168,291)

% of sales

54.8%

 

41.8%

 

8.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$(5.65)

 

 

 

$(5.65)

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,775

 

-

 

29,775

Acquisition costs(1)

349

 

(2,600)

 

2,949

 

-

 

-

 

(1,760)

 

 

 

4,709

 

 

 

 

 

 

Legal matters(2)

-

 

(775)

 

775

 

-

 

-

 

(462)

 

 

 

1,237

 

 

 

 

 

 

Convertible notes premium on extinguishment(3)

-

 

-

 

-

 

-

 

(103,125)

 

(61,521)

 

 

 

164,646

 

 

 

 

 

 

Change in fair value of convertible notes hedges upon settlement(4)

-

 

-

 

-

 

-

 

(5,460)

 

(3,257)

 

 

 

8,717

 

 

 

 

 

 

Loss on early extinguishment of debt(5)

-

 

-

 

-

 

-

 

(3,426)

 

(2,044)

 

 

 

5,470

 

 

 

 

 

 

$152,126

 

$112,451

 

$28,182

 

$5,928

 

$-

 

$5,766

 

 

 

$16,488

 

 

 

 

 

 

Adjusted gross profit %

54.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization(6)

$1,500

 

(6,808)

 

8,308

 

(1,036)

 

-

 

2,291

 

 

 

7,053

 

 

 

 

 

 

As adjusted

 

 

$105,643

 

$36,490

 

$4,892

 

$-

 

$8,057

 

25.5%

 

$23,541

 

 

 

$1,263

 

$24,804

% of sales

 

 

38.1%

 

13.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,775

 

3,820

 

33,595

Convertible notes hedges(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(856)

Adjusted Diluted Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,739

Three Months Ended June 30, 2021

Gross

Profit

Selling &

Administrative

Expense

Operating

Income

Interest

Expense

Other

Expense

Tax

Expense

Effective

Tax Rate

Net

Income

Basic

EPS

Adjustments(8)

Diluted

EPS

As reported

$141,424

 

$104,399

 

$25,707

 

$9,420

 

$-

 

$2,997

 

18.4%

 

$13,290

 

 

 

$-

 

$13,290

% of sales

55.4%

 

40.9%

 

10.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.46

 

 

 

$0.41

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,125

 

3,339

 

32,464

$141,424

 

$104,399

 

$25,707

 

$9,420

 

$-

 

$2,997

 

 

 

$13,290

 

 

 

 

 

 

Adjusted gross profit %

55.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization(6)

$1,500

 

(6,689)

 

8,189

 

(3,586)

 

-

 

2,886

 

 

 

8,889

 

 

 

 

 

 

As adjusted

 

 

$97,710

 

$33,896

 

$5,834

 

$-

 

$5,883

 

21.0%

 

$22,179

 

 

 

$-

 

$22,179

% of sales

 

 

38.3%

 

13.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,125

 

3,339

 

32,464

Convertible notes hedges(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,362)

Adjusted Diluted Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,102

(1) In 2022, the Company incurred inventory step-up adjustments and consulting and legal related costs associated with the acquisition of In2Bones Global, Inc..

(2) In 2022, the Company incurred costs related to the settlement of litigation.

(3) In 2022, the Company incurred costs related to the conversion premium on the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes.

(4) In 2022, the Company incurred costs related to the settlement of convertible notes hedge transactions associated with the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes.

(5) In 2022, the Company incurred costs related to the write-off of deferred financing fees associated with the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes and term loan paydown.

(6) Includes amortization of intangible assets, deferred financing fees and debt discount.

(7) Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company’s convertible notes hedge transactions.

(8) The Company adopted ASU 2020-06, effective January 1, 2022. As a result of the adoption, the Company is required to compute diluted EPS using the if-converted method. Under the if-converted method, the numerator is adjusted for interest expense applicable to its convertible notes (net of tax) and the denominator includes additional common shares assuming conversion premium and principal portion of the notes (when permitted or required) are settled in shares. Subsequent to June 6, 2022, the Company is required to settle the principal value of its convertible notes in cash. Adjustments in 2022 are applicable on a non-GAAP basis only since GAAP results are in a loss position and therefore exclude dilutive potential shares.

Reconciliation of Reported Net Income (Loss) to Adjusted Net Income

(in thousands, except per share amounts, unaudited)

 

Six Months Ended June 30, 2022

Gross

Profit

Selling &

Administrative

Expense

Operating

Income

Interest

Expense

Other

Expense

Tax

Expense

Effective

Tax Rate

Net

Income

(Loss)

Basic

EPS

Adjustments(8)

Diluted

EPS

As reported

$287,768

 

$218,701

 

$46,902

 

$10,926

 

$112,011

 

$77,281

 

-101.6%

 

$(153,316)

 

 

 

$-

 

$(153,316)

% of sales

55.4%

 

42.1%

 

9.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$(5.18)

 

 

 

$(5.18)

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,601

 

-

 

29,601

Acquisition costs(1)

349

 

(2,600)

 

2,949

 

-

 

-

 

(1,760)

 

 

 

4,709

 

 

 

 

 

 

Legal matters(2)

-

 

(775)

 

775

 

-

 

-

 

(462)

 

 

 

1,237

 

 

 

 

 

 

Convertible notes premium on extinguishment(3)

-

 

-

 

-

 

-

 

(103,125)

 

(61,521)

 

 

 

164,646

 

 

 

 

 

 

Change in fair value of convertible notes hedges upon settlement(4)

-

 

-

 

-

 

-

 

(5,460)

 

(3,257)

 

 

 

8,717

 

 

 

 

 

 

Loss on early extinguishment of debt(5)

-

 

-

 

-

 

-

 

(3,426)

 

(2,044)

 

 

 

5,470

 

 

 

 

 

 

$288,117

 

$215,326

 

$50,626

 

$10,926

 

$-

 

$8,237

 

 

 

$31,463

 

 

 

 

 

 

Adjusted gross profit %

55.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization(6)

$3,000

 

(13,370)

 

16,370

 

(1,916)

 

-

 

4,451

 

 

 

13,835

 

 

 

 

 

 

As adjusted

 

 

$201,956

 

$66,996

 

$9,010

 

$-

 

$12,688

 

21.9%

 

$45,298

 

 

 

$2,978

 

$48,276

% of sales

 

 

38.9%

 

12.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,601

 

4,774

 

34,375

Convertible note hedges(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,134)

Adjusted Diluted Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,241

Six Months Ended June 30, 2021

Gross

Profit

Selling &

Administrative

Expense

Operating

Income

Interest

Expense

Other

Expense

Tax

Expense

Effective

Tax Rate

Net

Income

Basic

EPS

Adjustments(8)

Diluted

EPS

As reported

$269,873

 

$202,739

 

$45,790

 

$19,772

 

$-

 

$2,868

 

11.0%

 

$23,150

 

 

 

$-

 

$23,150

% of sales

55.3%

 

41.6%

 

9.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.80

 

 

 

$0.72

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,052

 

2,912

 

31,964

Restructuring and related costs(9)

-

 

(414)

 

414

 

-

 

-

 

109

 

 

 

305

 

 

 

 

 

 

$269,873

 

$202,325

 

$46,204

 

$19,772

 

$-

 

$2,977

 

 

 

$23,455

 

 

 

 

 

 

Adjusted gross profit %

55.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization(6)

$3,000

 

(13,527)

 

16,527

 

(7,147)

 

-

 

5,855

 

 

 

17,819

 

 

 

 

 

 

As adjusted

 

 

$188,798

 

$62,731

 

$12,625

 

$-

 

$8,832

 

17.6%

 

$41,274

 

 

 

$-

 

$41,274

% of sales

 

 

38.7%

 

12.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,052

 

2,912

 

31,964

Convertible note hedges(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,201)

Adjusted Diluted Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,763

 

(1) In 2022, the Company incurred inventory step-up adjustments and consulting and legal related costs associated with the acquisition of In2Bones Global, Inc..

(2) In 2022, the Company incurred costs related to the settlement of litigation.

(3) In 2022, the Company incurred costs related to the conversion premium on the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes.

(4) In 2022, the Company incurred costs related to the settlement of convertible notes hedge transactions associated with the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes.

(5) In 2022, the Company incurred costs related to the write-off of deferred financing fees associated with the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes and term loan paydown.

(6) Includes amortization of intangible assets, deferred financing fees and debt discount.

(7) Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company’s convertible notes hedge transactions.

(8) The Company adopted ASU 2020-06, effective January 1, 2022. As a result of the adoption, the Company is required to compute diluted EPS using the if-converted method. Under the if-converted method, the numerator is adjusted for interest expense applicable to its convertible notes (net of tax) and the denominator includes additional common shares assuming conversion premium and principal portion of the notes (when permitted or required) are settled in shares. Subsequent to June 6, 2022, the Company is required to settle the principal value of its convertible notes in cash. Adjustments in 2022 are applicable on a non-GAAP basis only since GAAP results are in a loss position and therefore exclude dilutive potential shares.

(9) In 2021, the Company incurred restructuring costs related to restructuring of our sales force.

Reconciliation of Reported Net Income (Loss) to EBITDA & Adjusted EBITDA

(in thousands, unaudited)

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

Net income (loss)

$

(168,291

)

$

13,290

 

$

(153,316

)

$

23,150

 

Provision for income taxes

 

74,810

 

 

2,997

 

 

77,281

 

 

2,868

 

Interest expense

 

5,928

 

 

9,420

 

 

10,926

 

 

19,772

 

Depreciation

 

4,059

 

 

3,984

 

 

8,090

 

 

8,741

 

Amortization

 

13,266

 

 

13,797

 

 

26,065

 

 

27,316

 

EBITDA

$

(70,228

)

$

43,488

 

$

(30,954

)

$

81,847

 

 

 

 

 

 

Stock based compensation

 

5,755

 

 

4,290

 

 

10,218

 

 

7,676

 

Acquisition costs

 

2,949

 

 

-

 

 

2,949

 

 

-

 

Legal matters

 

775

 

 

-

 

 

775

 

 

-

 

Convertible notes premium on extinguishment

 

103,125

 

 

-

 

 

103,125

 

 

-

 

Change in fair value of convertible notes hedges upon settlement

 

5,460

 

 

-

 

 

5,460

 

 

-

 

Loss on early extinguishment of debt

 

3,426

 

 

-

 

 

3,426

 

 

-

 

Restructuring and related costs

 

-

 

 

-

 

 

-

 

 

414

 

Adjusted EBITDA

$

51,262

 

$

47,778

 

$

94,999

 

$

89,937

 

 

 

 

 

 

EBITDA Margin

 

 

 

 

EBITDA

 

-25.3

%

 

17.0

%

 

-6.0

%

 

16.8

%

Adjusted EBITDA

18.5

%

18.7

%

18.3

%

18.4

%

About CONMED Corporation

CONMED is a medical technology company that provides surgical devices and equipment for minimally invasive procedures. The Company’s products are used by surgeons and physicians in a variety of specialties, including orthopedics, general surgery, gynecology, thoracic surgery, and gastroenterology. For more information, visit www.conmed.com.

Forward-Looking Statements

This press release and the associated conference call may contain forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties, which could cause actual results, performance, or trends to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. For example, in addition to general industry and economic conditions, factors that could cause actual results to differ materially from those in the forward-looking statements may include, but are not limited to, the risks posed to the Company’s business, financial condition, and results of operations by the COVID-19 global pandemic and the various government responses to the pandemic, including deferral of surgeries, reductions in hospital and ambulatory surgery center operating volumes, disruption to potential supply chain reliability; any assumptions underlying any of the foregoing as well as the risk factors discussed in the Company's Annual Report on Form 10-K for the full year ended December 31, 2021. Any and all forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company’s performance on a going-forward basis. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management’s expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct.

Supplemental Information - Reconciliation of GAAP to Non-GAAP Financial Measures

The Company supplements the reporting of its financial information determined under generally accepted accounting principles in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; adjusted gross profit; cost of sales excluding specified items; adjusted selling and administrative expenses; adjusted operating income; adjusted interest expense; adjusted other expense; adjusted income tax expense (benefit); adjusted effective income tax rate; adjusted net income, adjusted diluted shares and adjusted diluted net earnings per share (EPS). The Company believes that these non-GAAP measures provide meaningful information to assist investors and shareholders in understanding its financial results and assessing its prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of its operations because they exclude items that may not be indicative of, or are unrelated to, its core operating results and provide a baseline for analyzing trends in the Company’s underlying business. Further, the presentation of EBITDA is a non-GAAP measurement that management considers useful for measuring aspects of the Company’s cash flow. Management uses these non-GAAP financial measures for reviewing the operating results and analyzing potential future business trends in connection with its budget process and bases certain management incentive compensation on these non-GAAP financial measures.

Net sales on a constant currency basis is a non-GAAP measure. The Company analyzes net sales on a constant currency basis to better measure the comparability of results between periods. To measure percentage sales growth in constant currency, the Company removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of net sales. To measure earnings performance on a consistent and comparable basis, the Company excludes certain items that affect the comparability of operating results and the trend of earnings. These adjustments are irregular in timing, may not be indicative of past and future performance and are therefore excluded to allow investors to better understand underlying operating trends.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, cost of sales, selling and administrative expenses, operating income, interest expense, other expense, income tax expense (benefit), effective income tax rate, net income (loss), diluted shares and diluted net earnings (loss) per share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures above, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review its financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

Contacts

CONMED Corporation
Todd W. Garner
Chief Financial Officer
727-214-2975
ToddGarner@conmed.com

Contacts

CONMED Corporation
Todd W. Garner
Chief Financial Officer
727-214-2975
ToddGarner@conmed.com