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CONMED (CNMD) Q3 Earnings and Revenues Surpass Estimates

Zacks Equity Research

CONMED Corporation CNMD reported third-quarter 2019 adjusted earnings per share of 62 cents, which beat the Zacks Consensus Estimate of 56 cents by 10.7%. Further, the figure improved 34.8% from the year-ago quarter.

The New York-based medical products manufacturer reported revenues of $233.6 million, up 15.5% on a year-over-year basis and 15.6% at constant currency (cc). Notably, the figure surpassed the Zacks Consensus Estimate of $228.3 million by 2.3%.

Segment Details

Orthopedic Surgery

Revenues in the segment totaled $110.3 million, up 7.2% from the year-ago quarter.

Domestically, Orthopedics revenues increased 7.5% from the prior-year quarter's level, while international sales advanced 7.6%. Per management, growth was driven by strong performances of the product portfolio.

General Surgery

Revenues in the segment totaled $123.3 million, up 24% year over year.

Domestically, General Surgery sales improved 26% year over year and international sales advanced 19.7%.

Sales by Geography

In the reported quarter, sales in the United States amounted to $128.2 million, up 19.2% year over year. International sales improved 11.2% to $105.4 million.

CONMED Corporation Price, Consensus and EPS Surprise

 

CONMED Corporation Price, Consensus and EPS Surprise

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

Margins

Gross profit in the quarter totaled $130.1 million, up 17.6% year over year. Per management, adjusted gross margin was 56.4%, expanding 170 bps.

Operating income came in at $20.9 million, up 81.7% year over year. Operating margin was 8.9%, up 320 bps year over year.

Financial Condition

Cash flow from operations for the nine months ended Sep 30, 2019, was $54.3 million compared with $50 million in the year-ago quarter. Long-term debt at the end of the quarter was $781 million, down 1.9% sequentially.

2019 Guidance Revised

CONMED now expects 2019 sales growth to range between $951 million and $957 million. This projection includes an increase to organic constant currency sales growth in the range of 6-6.5%.

The company has raised projected revenue contribution from the Buffalo Filter product line to a range of $47-$48 million (up from the previously guided range of $44-$47 million).

On the basis of current exchange rates, the negative impact to 2019 sales from forex is now anticipated to be about 80 bps, higher than the prior estimate of 50 bps.

CONMED has raised adjusted diluted net earnings per share earnings per share outlook. The company forecasts adjusted diluted net earnings per share in the range of $2.62 to $2.65, up from the previously guided range of $2.52-$2.57. This indicates growth of 20-22% over 2018. Notably, the Zacks Consensus Estimate is pegged at $2.55, lower than the guided range.

Wrapping Up

CONMED exited the third quarter on a solid note, with earnings and revenues beating estimates. The company’s core units — Orthopedic Surgery and General Surgery— continue to aid the top line. Solid international sales growth remains a positive. Management is confident of the product portfolio as well. The company continues to remain optimistic that the buyout of Buffalo Filter (completed on Feb 11, 2019) will bolster CONMED’s General Surgery portfolio. Strong 2019 guidance instills optimism in the stock. The company continues to expect investments in R&D to be between 4.5% and 5% of sales in 2019.

These apart, the company made stellar progress with regard to the integration of the Buffalo Filter buyout and remained focused toward launching new products.

Meanwhile, the company’s high long-term debt remains a concern. Additionally, CONMED operates in a highly competitive environment, especially with respect to the General Surgery business.

Zacks Rank

CONMED currently carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks which reported solid results this earning season are Edwards Lifesciences EW, Thermo Fisher Scientific Inc. TMO and ResMed Inc. RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Third-quarter net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the Zacks Consensus Estimate by 1.3%.

ResMed reported third-quarter 2019 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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