CONMED Corporation CNMD delivered adjusted earnings per share (EPS) of $1.06 in fourth-quarter 2023, which missed the Zacks Consensus Estimate of $1.11 by 4.5%. However, the bottom line improved 152.4% from the year-ago quarter's level.
GAAP EPS for the quarter was $1.05 compared with 86 cents per share in the year-ago period.
The company's shares have lost 28.0% in the past six months compared with the industry's fall of 2.2%. The broader S&P 500 Index has gained 7% in the same time frame.
Zacks Investment Research
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Revenues in Detail
CONMED's revenues totaled $327.0 million, up 30.4% year over year. The top line beat the Zacks Consensus Estimate by 1.8%. At constant exchange rate (CER), revenues increased 31.5%. Additional sales from the newly acquired businesses contributed approximately 40 basis points of growth.
CNMD's fourth-quarter sales were driven by strong growth in the United States as well as international markets. The company's two products, In2Bones and BioBrace, were the key drivers during the reported quarter. However, its legacy orthopedic business was hurt by supply constraints.
Segmental Details
Revenues in the Orthopedic Surgery segment totaled $136.5 million, up 18.5% from the year-ago quarter's level on a reported basis. At CER, revenues increased 19.4%.
Sales improved 6.0% on a reported basis on the domestic front. It also increased 27.8% (29.8% at CER) from the prior-year quarter's level on the international front.
Revenues in the General Surgery segment amounted to $190.5 million, up 40.4% year over year on a reported basis and 41.7% at CER. Domestically, the figure increased 47.6% year over year. International sales improved 24.4% on a reported basis (27.8% at CER).
Sales by Geography
Sales in the United States totaled $190.3 million, up 33.3% year over year. International sales amounted to $136.7 million, up 26.5% year over year on a reported basis and 29.0% at CER.
Margins
CONMED's gross profit improved 35.6% to $184.3 million. The gross margin improved 220 basis points to 56.4%.
Selling & administrative expenses decreased 2.3% to $118 million. Research and development expenses rose 14.8% year over year to $14 million.
The company recorded an operating income of $50.2 million against a loss of $1.1 million in the prior-year quarter.
Full-Years Results
Conmed recorded total revenues of $1.24 billion in 2023, up 19.1% year over year. Adjusted EPS for 2023 was $3.45, up 30.2% from the prior year.
2024 Guidance
Conmed has issued its revenue and earnings guidance for 2024.
The company expects revenues between $1.34 billion and $1.365 billion for 2024, implying growth of 8-10% year over year. The Zacks Consensus Estimate is currently pegged at $1.36 billion.
Adjusted EPS is expected to be in the range of $4.30-$4.40. The Zacks Consensus Estimate is currently pegged at $4.42. The current EPS guidance indicates an improvement of 25-28% year over year.
CNMD expects foreign exchange to have an immaterial impact in 2024.
Our Take
CONMED exited the fourth quarter on a good note, wherein earnings missed its consensus estimate by 4.5% and revenues beat its consensus mark by 1.8%. However, the supply-chain disruption continues to pose a headwind for the company during the quarter. CNMD expects supply-chain issues to improve from the first quarter of 2024.
Favorable product mix supported gross margin improvement, which was partially offset by continued challenges in the U.S. Orthopedic business. CONMED expects to reach a gross margin of 60% by 2025.
CONMED Corporation Price, Consensus and EPS Surprise
CONMED Corporation Price, Consensus and EPS Surprise
Some better-ranked stocks in the broader medical space are Universal Health Services UHS, Integer Holdings Corporation ITGR and Acadia Healthcare ACHC.
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. UHS's earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
UHS's shares have gained 1.9% in the past six months against the industry's 5% decline.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR's earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings' shares have rallied 43.5% in the past year against the industry's 3.7% decline.
Acadia Healthcare, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10.4%. ACHC's long-term earnings are expected to grow at 11.2%.
Acadia's shares have gained 11.7% in the past six months against the industry's decline of 5%.
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