Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Conmed Corp (CNMD, Financial) reported a year-over-year increase in total sales of 5.8% for the fourth quarter and 5% for the full year, demonstrating consistent growth.
- The General Surgery business showed strong performance with constant currency growth of 8.7% in Q4 and 7.5% for the full year.
- AirSeal experienced strong double-digit growth, with record capital and disposable sales, indicating robust demand.
- Adjusted net income for the fourth quarter increased by 26.2% year-over-year, and adjusted diluted net earnings per share rose by 26.4%.
- The company improved its adjusted gross margin by 120 basis points in Q4 and 110 basis points for the full year, reflecting better product mix and operating leverage.
Negative Points
- The Orthopedic business faced supply challenges, resulting in below-market performance with only 2.4% growth in Q4 and 2.5% for the full year.
- Despite improvements, the overall sales growth in 2024 was below the potential of Conmed Corp (CNMD)'s portfolio.
- The company is facing potential tariff impacts from international trade negotiations, which could affect future financial performance.
- Conmed Corp (CNMD) experienced a decrease in cash balance from $38.5 million in September to $24.5 million at year-end.
- The company is dealing with a currency headwind that is expected to impact gross margins and adjusted EPS in 2025.
Q & A Highlights
Q: In the investor deck, you state that the aggregate CONMED growth rate is 6.5% at the midpoint. You're guiding to a 5% constant currency this year at the midpoint. Where is that 150 basis points of delta coming from mainly?
A: Todd Garner, CFO: The delta mainly comes from the supply chain challenges we faced in 2024, which have lingered longer than expected. We've engaged a top-tier consulting firm to help us resolve these issues quickly, which have been a significant headwind, particularly for our sports medicine business.
Q: Can you provide some color on AirSeal's performance in Q4 and expectations for 2025?
A: Patrick Beyer, CEO: AirSeal had a record year in 2024, with double-digit growth in both capital and disposables in Q4. We expect AirSeal to continue as a double-digit grower in 2025, driven by its clinical insufflation platform's importance in robotic and laparoscopic surgeries.
Q: What are the main factors contributing to the conservatism in your 2025 guidance?
A: Todd Garner, CFO: The conservatism is due to the need to earn our way up the growth curve. We are focusing on resolving supply chain issues and getting our Orthopedics business back on track. We also face currency headwinds and are undergoing significant operational improvements, which may temporarily impact margins.
Q: Can you elaborate on the drivers for AirSeal's growth, particularly in the non-robotic segment?
A: Patrick Beyer, CEO: AirSeal reduces patient pain and hospital stay duration, benefiting both laparoscopic and robotic procedures. While robotic adoption continues, we've seen increased opportunities in laparoscopy, especially internationally, and now more in the U.S., driven by surgeon demand and patient outcomes.
Q: How are you approaching capital allocation and M&A in 2025?
A: Todd Garner, CFO: We remain open to compelling M&A opportunities but are focused on reducing leverage below 3x by the end of the year. In the absence of significant acquisitions, we will prioritize debt reduction.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
