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CONMED's (CNMD) Q2 Earnings Surpass Estimates, '21 View Up

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CONMED Corporation (CNMD - Free Report) delivered adjusted earnings per share (“EPS”) of 71 cents in the second quarter of 2021 against the year-ago loss of 7 cents. The figure surpassed the Zacks Consensus Estimate by 14.5%.

GAAP EPS for the quarter was 41 cents a share against the year-earlier loss of 96 cents.

Revenues in Detail

CONMED registered revenues of $255.2 million in the second quarter, up 61.7% year over year. The figure surpassed the Zacks Consensus Estimate by 2.9%.

At constant exchange rate (CER), revenues improved 58.2%.

Robust segmental performances significantly drove the company’s second-quarter top line.

Segment Details

Revenues at the Orthopedic Surgery segment totaled $107.9 million, up 78.4% from the year-ago quarter on a reported basis. At CER, the revenue uptick was 72.9%.

On the domestic and international front, Orthopedics revenues rose 90.7% and 71.7% on a reported basis (up 63.1% at CER), respectively, from the prior-year levels.

The global Orthopedics arm continued to register improvement in procedures in both the international direct markets and the domestic business.

CONMED Corporation Price, Consensus and EPS Surprise

CONMED Corporation Price, Consensus and EPS Surprise

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

Revenues at the General Surgery segment amounted to $147.3 million, up 51.4% year over year on a reported basis and 49.1% at CER.

Domestically, General Surgery sales rose 55.7% year over year, while international sales rose 42.2% on a reported basis (up 35.2% at CER).

The global General Surgery business was significantly driven by continued strength in the company’s AirSeal and Buffalo Filter.

Sales by Geography

In the reported quarter, sales in the United States amounted to $143.6 million, up 64.2% year over year. International sales were $111.6 million, up by 58.6% and 50.7% year-over-year on a reported basis and at CER, respectively.

Margins

In the quarter under review, CONMED’s gross profit rose 96.6% to $141.4 million. Gross margin expanded by a huge 984 basis points (bps) to 55.4%.

Selling & administrative expenses rose 23.6% to $104.4 million. Research and development expenses went up 30.1% year over year to $11.3 million. Total operating expenses of $115.7 million increased 24.2% year over year.

Operating profit totaled $25.7 million, reflecting an improvement from the year-ago operating loss of $21.2 million.

2021 Guidance

On the basis of its performance till now, CONMED has raised its financial outlook for the full-year 2021.

Revenues are now projected in the range of $1.015-$1.035 billion compared with the previous guidance of $1-$1.03 billion. The Zacks Consensus Estimate is currently pegged at $1.02 billion.

Adjusted EPS for the full year is now expected to be in the range of $3.15-$3.25, up from its earlier-provided outlook of $3.05-$3.20. The Zacks Consensus Estimate is currently pegged at $3.15, which matches the lower end of the company-provided guidance.

Our Take

CONMED exited the second quarter with better-than-expected results. The company witnessed strong performances across its Orthopedic and General Surgery units. It saw sales growth in both its domestic and overseas markets. Per management, the company displayed strength and agility despite a tough second-quarter operating environment resulting from the impact of COVID-19 on its customers’ surgical procedure volumes. Expansion of gross margin bodes well for the stock. A raised full-year outlook also raises our optimism.

However, CONMED’s overall sports-related procedures still remain below the pre-COVID-19 levels, which is a concern. Continued pandemic-led impacts in the second quarter are also discouraging. CONMED operates in a highly competitive environment, especially with respect to the General Surgery business, which raises our apprehension.

Zacks Rank and Key Picks

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

Some better-ranked medical stocks which are expected to report earnings soon are AMN Healthcare Services Inc (AMN - Free Report) , Catalent, Inc. (CTLT - Free Report) and Change Healthcare Inc. (CHNG - Free Report) .

The Zacks Consensus Estimate for AMN Healthcare’s second-quarter 2021 adjusted EPS is currently pegged at $1.47. The consensus mark for second-quarter revenues stands at $829.4 million. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Catalent currently carries a Zacks Rank #2. The Zacks Consensus Estimate for Catalent’s fourth-quarter fiscal 2021 adjusted EPS is currently pegged at $1.04. The consensus mark for fiscal fourth-quarter revenues stands at $1.13 billion.

The Zacks Consensus Estimate for Change Healthcare’s first-quarter fiscal 2022 adjusted EPS is currently pegged at 46 cents. The consensus mark for its revenues stands at $851.9 million. The company carries a Zacks Rank #2.