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| Statement |
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| As Curt said, the benefit of our diversified portfolio was on full display this quarter, delivering healthy double-digit organic growth for CONMED |
| Again, raising the bottom end of the full year guide by a little less than the beat but I think we still feel the year shaping up pretty much the same as we did three months ago and are happy with the performance through the first nine months |
| So I think all of that bodes well for the continued growth of the overall smoke evacuation market |
| We are making solid progress in all of these areas |
| And in both cases, whether it’s in robotics or in laparoscopic, we’re replacing standard insufflation, and we feel really good about our offering |
| And we have very good and growing representation in the general laparoscopic market |
| And we saw that dynamic deliver a very healthy Q3 2023 with double digit organic growth |
| I will start by saying we're very pleased with our team's performance in the third quarter and as important year-to-date |
| We feel is uniquely positioned in the marketplace today |
| The underlying surgical specialties and markets that we serve are healthy and healthcare staffing levels continue to improve |
| In summary, I am very pleased with the focus and the results delivered in the quarter and year-to-date and confident that we will finish 2023 in great shape and with positive momentum to start the new year |
| But yes, we see CONMED as a double-digit organic grower given a healthy medtech market |
| Obviously, we’re pushing for as much growth and market capture as we can, and we’re in a very good spot right now |
| And so we called out those two really strong growth drivers that we felt would be very resistant and durable and sustainable even through the uncertainties of the ups and downs of those years that we went through |
| We remain very encouraged after one year with BioBrace product offering and the cadence of market acceptance that we have seen |
| We remain confident in our ability to deliver innovation to our customers while driving above market growth and profitability over the long-term |
| But we feel good about our offering right now and had really strong performance, as you noted in the quarter, and internationally had very strong performance on the capital side, so it was great to see |
| Just continues to be a really encouraging play for our team |
| We think the business right now is better than the numbers in the quarter |
| To the question of our Orthopedics business, we feel really good about it |
| As Curt said, we are pleased with the performance through the first nine months and are focused on executing a strong finish to the year |
| So I think we felt really good about the performance in Q3 |
| Our ability to improve our cost position and have margins approach that 60% level by the end of 2025, as we’ve said before |
| When we guided Q3, I also projected that Q4 margins should improve again sequentially at least 100 basis points |
| We still expect sequential improvement in Q4 gross margins, but due to the supply disruptions, I just talked about, we now expect that improvement to be less than 100 basis points sequentially, but well above gross margins from Q4 a year ago |
| So we feel very good about the mixed tailwind of the business |
| But to update you on thesis and why to feel good about that is really the mix of our business, right? All the things that are growing faster and all the product lines that are getting our resources through R&D and through acquisition, all come at higher growth than the company average and higher margin than the company average |
| General Surgery revenue grew 12.9%, while internationally General Surgery revenue increased 23.8% |
| So we’re very excited about what’s going on |
| And the last one on there is above market growth and leveraged earnings growth |
| Statement |
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| And beyond MTF as Todd noted in his opening comments, there were a few supply constraints on just the single use consumables and implants that delayed our revenue in the quarter |
| At a macro level, the new cycle has been challenging and global events unsettling |
| So just working through all that, listening to other earnings calls out of non-med tech and GE and Boeing have supply chain challenges, it doesn’t surprise me that our industry is still having some supply chain challenges |
| In addition to those issues, during Q3, our allograft tissue partner, MTF, informed us of an industry-wide reagent supply disruption that will linger into Q4 |
| However, we continued to experience supply constraints on our legacy orthopedic business |
| Ortho business and the allograft lack of availability |
| If we dip down to 9% growth, I don’t think we’re going to be disappointed |
| This compares to $46.2 million in the third quarter of 2022 and represents a decline of 65.7% |
| In addition, there has being a lot of noise in the medtech markets |
| Taxes came in lower than expected, principally due to finalizing our federal tax return |
| And there was a supply constraint on that |
| Research and development expense for the third quarter was 4.1% of sales, 50 basis points lower than the prior year quarter |
| I'll remind you we started giving that level of disclosure in the pandemic when there was large uncertainty about how CONMED was going to do given our size, given the challenges with the global pandemic |
| Please refer to the risks and other uncertainties disclosed under the forward-looking information in today's press release as well as the company's SEC filings for more details on the risks and uncertainties that may cause actual results to differ materially |
| The way our calendar fell, Q3 had two fewer selling days compared to the prior year quarter |
| And in fact, any water that came over the side of the boat would sink us in a quarter |
| Todd Garner I think last year it was a bigger issue for us, and so I don't think it's as big of an issue as we go into 2024, but I'm not going to get any more granular |
| There’s a period in time where we couldn’t absorb that up and down |
| The one caveat that we’ve always said with that statement is that assumes a kind of normal, healthy, medtech market, right? So we’re not expecting any better than normal from a medtech market to be able to deliver that |
| So the issue at hand, which impacted the entire tissue processing industry, was the availability of a reagent that is used in the sterile processing and the overall processing of the tissue |
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