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CONMED (CNMD) Beats on Q1 Earnings, Ups '23 EPS View
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CONMED Corporation (CNMD - Free Report) reported first-quarter 2023 adjusted earnings per share (EPS) of 66 cents, beating the Zacks Consensus Estimate of 60 cents by 10%. However, the bottom line declined 5.7% from the year-ago quarter’s level.
GAAP earnings per share (EPS) for the quarter was 6 cents compared with 47 cents in the year-ago period.
The company’s shares have gained 31.4% so far this year compared with the industry’s increase of 9.2%. The broader S&P 500 Index has increased 6.6% in the same time frame.
Image Source: Zacks Investment Research
Revenues in Detail
CONMED’s revenues were $295.5 million, up 21.9% year over year. The top line beat the Zacks Consensus Estimate by 10.5%. At the constant exchange rate (“CER”), revenues increased 25.1%. Additional sales from newly-acquired businesses contributed approximately 570 basis points of growth.
The first-quarter sales were adversely impacted due to implementation of a warehouse management software system during the fourth quarter of 2022. This implementation led to significant delays in shipping during the fourth quarter as well as the reported quarter.
CONMED had a shippable backlog of approximately $30 million at the end of the fourth quarter. However, the company stated that it has reduced the backlog to normal operating levels during the reported quarter. With normal backlogs, CNMD may see continued top-line growth in the next quarter as well.
The company continues to focus on regaining volumes that were affected by the implementation of the new system. The first quarter had a strong order book in spite of CONMED being uncertain about the further impact of this system.
Segmental Details
Revenues in the Orthopedic Surgery segment totaled $131.2 million, up 22% from the year-ago quarter on a reported basis. At CER, revenues increased 26%.
The top line improved 29% on a reported basis on the domestic front. It also increased 18.2% (up 24.3% at CER) from the prior-year quarter’s level on the international front.
Revenues in the General Surgery segment amounted to $164.3 million, up 21.9% year over year on a reported basis and 24.4% at CER. Domestically, the figure increased 24% year over year. International sales gained 17.1% on a reported basis (up 25.5% at CER).
Sales by Geography
Sales in the United States totaled $164.6 million, up 25.4% year over year. International sales were $130.9 million, up 17.8% year over year on a reported basis and 24.7% at CER.
Margins
CONMED’s gross profit improved 14.2% to $155.3 million. However, the gross margin declined 350 basis points to 52.6%.
Selling & administrative expenses increased 12.5% to $130.1 million. Research and development expenses rose 17.5% year over year to $12.5 million.
The company recorded an operating income of $12.7 million compared with $22.4 million in the prior-year quarter.
2023 Guidance
Based on strong first-quarter results, CONMED announced updated guidance for revenues and EPS for 2023. The company now expects revenues between $1.205 billion and $1.250 billion for full-year 2023, implying growth of 19.3-23.8% over 2022.
Previously, it expected revenues between $1.170 billion and $1.220 billion. The Zacks Consensus Estimate for the same currently stands at $1.21 billion.
Adjusted EPS for the full year is now expected in the range of $3.30-$3.50, up from the previous expectation of $3.20-$3.45. The Zacks Consensus Estimate for the same currently stands at $3.37. The current EPS guidance indicates an improvement of 24.5-32.1% year over year.
CNMD expects foreign exchange to have an unfavorable impact on its top line growthby 150 and 200 basis points in 2023. Currency rates are expected to negatively impact EPS by 20-25 cents.
Our Take
CONMED exited the first quarter on a strong note, wherein both earnings and revenues beat their respective consensus mark. The company’s revenues recovered from the shipping delays caused due to implementation of a warehouse management system during the fourth quarter. CNMD had a strong order flow in the first quarter. Shipping backlogs improved to normal, implying continued top line growth going forward.
However, rising costs of goods and higher operating expenses completely offset strong top-line growth, which led to a decline in earnings. Although the company has raised its bottom-line guidance, the metric is still expected to be under pressure going forward.
Meanwhile, the acquisition of In2Bones and Biorez last year is likely to bring additional sales for CONMED in 2023. Revenues from these two companies’ businesses exceeded management’s expectation so far.
CONMED Corporation Price, Consensus and EPS Surprise
Intuitive Surgical reported first-quarter 2023 adjusted EPS of $1.23, beating the Zacks Consensus Estimate of $1.19 per share. Revenues of $1.7 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 1.86%.
Chemed reported first-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 0.2%. Revenues of $560 million outpaced the consensus mark by 2.6%.
Chemed has a long-term estimated growth rate of 8.8%. CHE’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.12%.
Edwards Lifesciences reported first-quarter 2023 adjusted earnings of 62 cents per share, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion surpassed the Zacks Consensus Estimate by 4.7%.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 1.69%.
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CONMED (CNMD) Beats on Q1 Earnings, Ups '23 EPS View
CONMED Corporation (CNMD - Free Report) reported first-quarter 2023 adjusted earnings per share (EPS) of 66 cents, beating the Zacks Consensus Estimate of 60 cents by 10%. However, the bottom line declined 5.7% from the year-ago quarter’s level.
GAAP earnings per share (EPS) for the quarter was 6 cents compared with 47 cents in the year-ago period.
The company’s shares have gained 31.4% so far this year compared with the industry’s increase of 9.2%. The broader S&P 500 Index has increased 6.6% in the same time frame.
Image Source: Zacks Investment Research
Revenues in Detail
CONMED’s revenues were $295.5 million, up 21.9% year over year. The top line beat the Zacks Consensus Estimate by 10.5%. At the constant exchange rate (“CER”), revenues increased 25.1%. Additional sales from newly-acquired businesses contributed approximately 570 basis points of growth.
The first-quarter sales were adversely impacted due to implementation of a warehouse management software system during the fourth quarter of 2022. This implementation led to significant delays in shipping during the fourth quarter as well as the reported quarter.
CONMED had a shippable backlog of approximately $30 million at the end of the fourth quarter. However, the company stated that it has reduced the backlog to normal operating levels during the reported quarter. With normal backlogs, CNMD may see continued top-line growth in the next quarter as well.
The company continues to focus on regaining volumes that were affected by the implementation of the new system. The first quarter had a strong order book in spite of CONMED being uncertain about the further impact of this system.
Segmental Details
Revenues in the Orthopedic Surgery segment totaled $131.2 million, up 22% from the year-ago quarter on a reported basis. At CER, revenues increased 26%.
The top line improved 29% on a reported basis on the domestic front. It also increased 18.2% (up 24.3% at CER) from the prior-year quarter’s level on the international front.
Revenues in the General Surgery segment amounted to $164.3 million, up 21.9% year over year on a reported basis and 24.4% at CER. Domestically, the figure increased 24% year over year. International sales gained 17.1% on a reported basis (up 25.5% at CER).
Sales by Geography
Sales in the United States totaled $164.6 million, up 25.4% year over year. International sales were $130.9 million, up 17.8% year over year on a reported basis and 24.7% at CER.
Margins
CONMED’s gross profit improved 14.2% to $155.3 million. However, the gross margin declined 350 basis points to 52.6%.
Selling & administrative expenses increased 12.5% to $130.1 million. Research and development expenses rose 17.5% year over year to $12.5 million.
The company recorded an operating income of $12.7 million compared with $22.4 million in the prior-year quarter.
2023 Guidance
Based on strong first-quarter results, CONMED announced updated guidance for revenues and EPS for 2023. The company now expects revenues between $1.205 billion and $1.250 billion for full-year 2023, implying growth of 19.3-23.8% over 2022.
Previously, it expected revenues between $1.170 billion and $1.220 billion. The Zacks Consensus Estimate for the same currently stands at $1.21 billion.
Adjusted EPS for the full year is now expected in the range of $3.30-$3.50, up from the previous expectation of $3.20-$3.45. The Zacks Consensus Estimate for the same currently stands at $3.37. The current EPS guidance indicates an improvement of 24.5-32.1% year over year.
CNMD expects foreign exchange to have an unfavorable impact on its top line growthby 150 and 200 basis points in 2023. Currency rates are expected to negatively impact EPS by 20-25 cents.
Our Take
CONMED exited the first quarter on a strong note, wherein both earnings and revenues beat their respective consensus mark. The company’s revenues recovered from the shipping delays caused due to implementation of a warehouse management system during the fourth quarter. CNMD had a strong order flow in the first quarter. Shipping backlogs improved to normal, implying continued top line growth going forward.
However, rising costs of goods and higher operating expenses completely offset strong top-line growth, which led to a decline in earnings. Although the company has raised its bottom-line guidance, the metric is still expected to be under pressure going forward.
Meanwhile, the acquisition of In2Bones and Biorez last year is likely to bring additional sales for CONMED in 2023. Revenues from these two companies’ businesses exceeded management’s expectation so far.
CONMED Corporation Price, Consensus and EPS Surprise
CONMED Corporation price-consensus-eps-surprise-chart | CONMED Corporation Quote
Zacks Rank and Stocks to Consider
Currently, CNMD carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Intuitive Surgical (ISRG - Free Report) , Chemed (CHE - Free Report) and Edwards Lifesciences (EW - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intuitive Surgical reported first-quarter 2023 adjusted EPS of $1.23, beating the Zacks Consensus Estimate of $1.19 per share. Revenues of $1.7 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 1.86%.
Chemed reported first-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 0.2%. Revenues of $560 million outpaced the consensus mark by 2.6%.
Chemed has a long-term estimated growth rate of 8.8%. CHE’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.12%.
Edwards Lifesciences reported first-quarter 2023 adjusted earnings of 62 cents per share, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion surpassed the Zacks Consensus Estimate by 4.7%.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 1.69%.