CONMED Corporation Announces Fourth Quarter and Full-Year 2021 Financial Results

Rhea-AI Summary

CONMED Corporation (NYSE: CNMD) reported a strong financial performance for Q4 and full year 2021. Q4 sales reached $274.0 million, an increase of 8.4% year-over-year. Domestic revenue rose 5.0% while international sales surged 12.7%. Q4 diluted EPS stood at $0.75, down from $0.81 in 2020, yet adjusted EPS rose to $1.07 from $0.84. For 2021, total sales hit $1.01 billion, a 17.2% increase. The company anticipates 2022 revenue of $1.075 billion to $1.125 billion and adjusted EPS between $3.60 and $3.85.

Positive

• Q4 sales increased by 8.4% year-over-year to $274.0 million.
• Full-year 2021 sales reached $1.01 billion, marking a 17.2% growth.
• Adjusted diluted EPS for Q4 2021 improved to $1.07 from $0.84 in Q4 2020.
• Domestic revenue increased 14.6% year-over-year in 2021.

Negative

• Q4 diluted EPS declined to $0.75 from $0.81 in Q4 2020.

LARGO, Fla.--(BUSINESS WIRE)-- CONMED Corporation (NYSE: CNMD) today announced financial results for the fourth quarter and full year ended December 31, 2021.

Fourth Quarter 2021 Highlights

• Sales of $274.0 million increased 8.4% year over year as reported and 9.1% in constant currency.
• Domestic revenue increased 5.0% year over year.
• International revenue increased 12.7% year over year as reported and 14.3% in constant currency.
• Diluted net earnings per share (GAAP) were $0.75, compared to diluted net earnings per share of $0.81 during the fourth quarter of 2020.
• Adjusted diluted net earnings per share⁽¹⁾ were $1.07, compared to adjusted diluted net earnings per share of $0.84 during the fourth quarter of 2020.

Full-Year 2021 Highlights

• Sales of $1.01 billion increased 17.2% year over year as reported and 16.3% in constant currency.
• Domestic revenue increased 14.6% year over year.
• International revenue increased 20.4% year over year as reported and 18.4% in constant currency.
• Diluted net earnings per share (GAAP) were $1.94, compared to diluted net earnings per share of $0.32 in 2020.
• Adjusted diluted net earnings per share⁽¹⁾ were $3.21 versus adjusted diluted net earnings per share of $2.18 in 2020.

“Our 2021 financial performance finished favorably against the expectations we set at the beginning of the year despite the challenging environment. I am proud that CONMED has exceeded $1 billion in annual revenue, and our team remains focused on positioning the Company for long-term success,” commented Curt R. Hartman, CONMED’s Chair of the Board, President, and Chief Executive Officer.

2022 Outlook

The Company expects full-year 2022 revenue in the range of $1.075 billion to $1.125 billion. Based on recent exchange rates, the Company expects foreign exchange rates to be immaterial to full-year 2022 revenue growth.

The Company expects full-year 2022 adjusted diluted net earnings per share in the range of $3.60 to $3.85.

Supplemental Financial Disclosures

⁽¹⁾ A reconciliation of reported diluted net earnings per share to adjusted diluted net earnings per share, a non-GAAP financial measure, appears below.

Conference Call

The Company’s management will host a conference call today at 4:30 p.m. ET to discuss its fourth quarter and full-year 2021 results.

To participate in the conference call, dial 1-844-889-7792 (domestic) or +1-661-378-9936 (international) and refer to the passcode 5936618.

This conference call will also be webcast and can be accessed from the “Investors” section of CONMED's website at www.conmed.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.

A recording of the call will also be available from 7:30 p.m. ET on Wednesday, January 26, 2022, until 7:30 p.m. ET on Wednesday, February 2, 2022. To hear this recording, dial 1-855-859-2056 (domestic) or +1-404-537-3406 (international) and enter the passcode 5936618.

Consolidated Condensed Statements of Income
(in thousands except per share amounts, unaudited)
		Three Months Ended								Year Ended
		December 31,								December 31,
		2021				2020				2021				2020
Net sales		$	273,971			$	252,828			$	1,010,635			$	862,459
Cost of sales			118,115				117,314				442,599				402,159
Gross profit			155,856				135,514				568,036				460,300
% of sales			56.9	%			53.6	%			56.2	%			53.4	%
Selling & administrative expense			107,279				99,097				414,754				373,817
Research & development expense			11,361				11,716				43,565				40,473
Income from operations			37,216				24,701				109,717				46,010
% of sales			13.6	%			9.8	%			10.9	%			5.3	%
Interest expense			7,569				11,114				35,485				44,052
Other expense			-				89				1,127				355
Income before income taxes			29,647				13,498				73,105				1,603
Provision (benefit) for income taxes			5,203				(10,642	)			10,563				(7,914	)
Net income		$	24,444			$	24,140			$	62,542			$	9,517
Basic EPS		$	0.83			$	0.84			$	2.14			$	0.33
Diluted EPS			0.75				0.81				1.94				0.32
Basic shares			29,349				28,745				29,162				28,581
Diluted shares			32,769				29,941				32,216				29,464

Sales Summary
(in millions, unaudited)
	Three Months Ended December 31,
							% Change
																Domestic			International
	2021			2020			As Reported			Impact of Foreign Currency			Constant Currency			As Reported			As Reported			Impact of Foreign Currency			Constant Currency
Orthopedic Surgery	$	117.6		$	112.7		4.3	%		0.9	%		5.2	%		0.7	%		6.5	%		1.4	%		7.9	%
General Surgery		156.4			140.1		11.6	%		0.6	%		12.2	%		6.8	%		23.4	%		1.9	%		25.3	%
	$	274.0		$	252.8		8.4	%		0.7	%		9.1	%		5.0	%		12.7	%		1.6	%		14.3	%
Single-use Products	$	222.8		$	205.9		8.2	%		0.8	%		9.0	%		2.8	%		16.1	%		1.7	%		17.8	%
Capital Products		51.2			46.9		8.9	%		0.6	%		9.5	%		18.0	%		2.0	%		1.0	%		3.0	%
	$	274.0		$	252.8		8.4	%		0.7	%		9.1	%		5.0	%		12.7	%		1.6	%		14.3	%
Domestic	$	148.6		$	141.6		5.0	%		0.0	%		5.0	%
International		125.4			111.2		12.7	%		1.6	%		14.3	%
	$	274.0		$	252.8		8.4	%		0.7	%		9.1	%
	Year Ended December 31,
							% Change
																Domestic			International
	2021			2020			As Reported			Impact of Foreign Currency			Constant Currency			As Reported			As Reported			Impact of Foreign Currency			Constant Currency
Orthopedic Surgery	$	438.4		$	374.7		17.0	%		-1.3	%		15.7	%		13.5	%		19.1	%		-2.1	%		17.0	%
General Surgery		572.2			487.8		17.3	%		-0.6	%		16.7	%		15.1	%		22.6	%		-2.1	%		20.5	%
	$	1,010.6		$	862.5		17.2	%		-0.9	%		16.3	%		14.6	%		20.4	%		-2.0	%		18.4	%
Single-use Products	$	820.1		$	703.0		16.7	%		-0.9	%		15.8	%		13.1	%		21.6	%		-2.0	%		19.6	%
Capital Products		190.5			159.5		19.5	%		-1.1	%		18.4	%		23.3	%		16.4	%		-2.1	%		14.3	%
	$	1,010.6		$	862.5		17.2	%		-0.9	%		16.3	%		14.6	%		20.4	%		-2.0	%		18.4	%
Domestic	$	552.5		$	482.1		14.6	%		0.0	%		14.6	%
International		458.1			380.4		20.4	%		-2.0	%		18.4	%
	$	1,010.6		$	862.5		17.2	%		-0.9	%		16.3	%

Reconciliation of Reported Net Income to Adjusted Net Income
(in thousands, except per share amounts, unaudited)
		Three Months Ended December 31, 2021
		Gross Profit				Selling & Administrative Expense				Operating Income				Interest Expense				Tax Expense				Effective Tax Rate			Net Income			Diluted EPS
As reported		$	155,856			$	107,279			$	37,216			$	7,569			$	5,203			17.6	%		$	24,444		$	0.75
% of sales			56.9	%			39.2	%			13.6	%
Amortization(1)		$	1,500				(6,811	)			8,311				(3,386	)			2,744							8,953
Adjusted net income						$	100,468			$	45,527			$	4,183			$	7,947			19.2	%		$	33,397		$	1.07
% of sales							36.7	%			16.6	%
Diluted shares outstanding																													30,594
Additional potential dilutive shares from in-the-money convertible notes(4)																													2,175
Diluted shares, as reported																													32,769
Convertible note hedges(5)																													(1,446	)
Diluted shares, as adjusted																													31,323
		Three Months Ended December 31, 2020
		Gross Profit				Selling & Administrative Expense				Operating Income				Interest Expense				Tax Expense/ (Benefit)				Effective Tax Rate			Net Income			Diluted EPS
As reported		$	135,514			$	99,097			$	24,701			$	11,114			$	(10,642	)		-78.8	%		$	24,140		$	0.81
% of sales			53.6	%			39.2	%			9.8	%
Restructuring and related costs (2)			-				(1,649	)			1,649				-				1,548							101
Acquisition and integration costs (3)			567				-				567				-				532							35
		$	136,081			$	97,448			$	26,917			$	11,114			$	(8,562	)					$	24,276
Adjusted gross profit %			53.8	%
Amortization(1)		$	1,500				(6,998	)			8,498				(3,479	)			11,242							735
Adjusted net income						$	90,450			$	35,415			$	7,635			$	2,680			9.7	%		$	25,011		$	0.84
% of sales							35.8	%			14.0	%
Diluted shares outstanding																													29,705
Additional potential dilutive shares from in-the-money convertible notes(4)																													236
Diluted shares, as reported																													29,941
Convertible note hedges(5)																													(236	)
Diluted shares, as adjusted																													29,705

(1) Includes amortization of intangible assets, deferred financing fees and debt discount.

(2) In 2020, the Company incurred restructuring costs related to a restructuring of our sales force.

(3) In 2020, the Company incurred inventory adjustments associated with a prior acquisition.

(4) In 2021 and 2020 , the Company's average share price exceeded the conversion price of our 2.625% convertible notes due in 2024 (the "Notes") resulting in additional potential diluted shares.

(5) Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company's convertible note hedge transactions.

Reconciliation of Reported Net Income to Adjusted Net Income
(in thousands, except per share amounts, unaudited)
		Year Ended December 31, 2021
		Gross Profit				Selling & Administrative Expense				Operating Income				Interest Expense				Other Expense				Tax Expense				Effective Tax Rate			Net Income			Diluted EPS
As reported		$	568,036			$	414,754			$	109,717			$	35,485			$	1,127			$	10,563			14.4	%		$	62,542		$	1.94
% of sales			56.2	%			41.0	%			10.9	%
Restructuring and related costs (1)			-				(414	)			414				-				-				109							305
Debt refinancing costs (2)			-				-				-				-				(1,127	)			281							846
		$	568,036			$	414,340			$	110,131			$	35,485			$	-			$	10,953						$	63,693
Adjusted gross profit %			56.2	%
Amortization(7)		$	6,000				(27,133	)			33,133				(13,943	)			-				11,394							35,682
Adjusted net income						$	387,207			$	143,264			$	21,542			$	-			$	22,347			18.4	%		$	99,375		$	3.21
% of sales							38.3	%			14.2	%
Diluted shares outstanding																																	30,437
Additional potential dilutive shares from in-the-money convertible notes(8)																																	1,779
Diluted shares, as reported																																	32,216
Convertible note hedges(9)																																	(1,273	)
Diluted shares, as adjusted																																	30,943
		Year Ended December 31, 2020
		Gross Profit				Selling & Administrative Expense				Operating Income				Interest Expense				Other Expense				Tax Expense/ (Benefit)				Effective Tax Rate			Net Income			Diluted EPS
As reported		$	460,300			$	373,817			$	46,010			$	44,052			$	355			$	(7,914	)		-493.9	%		$	9,517		$	0.32
% of sales			53.4	%			43.3	%			5.3	%
Plant underutilization costs (3)			6,586				-				6,586				-				-				739							5,847
Product rationalization costs (4)			2,169				(2,095	)			4,264				-				-				460							3,804
Restructuring and related costs (1)			1,087				(4,782	)			5,869				-				-				1,807							4,062
Acquisition and integration costs (5)			2,820				(1,192	)			4,012				-				-				888							3,124
Manufacturing consolidation costs (6)			3,993				-				3,993				-				-				485							3,508
		$	476,955			$	365,748			$	70,734			$	44,052			$	355			$	(3,535	)					$	29,862
Adjusted gross profit %			55.3	%
Amortization(7)		$	6,000				(27,945	)			33,945				(13,414	)			-				13,037							34,322
Adjusted net income						$	337,803			$	104,679			$	30,638			$	355			$	9,502			12.9	%		$	64,184		$	2.18
% of sales							39.2	%			12.1	%

(1) In 2021, the Company incurred restructuring costs related to restructuring of our sales force. In 2020, the Company incurred restructuring costs related to a voluntary separation arrangement with employees as a result of the COVID-19 pandemic and restructuring of our sales force.

(2) In 2021, the Company incurred costs related to a loss on early extinguishment and third party fees associated with the seventh amended and restated senior credit agreement.

(3) In 2020, the Company incurred a charge related to plant underutilization due to abnormally low production as a result of decreased sales caused by the COVID-19 pandemic.

(4) In 2020, the Company performed an analysis of product lines and determined certain catalog numbers, principally related to capital equipment, would be discontinued and consolidated into existing product offerings resulting in a charge to cost of sales. The Company also wrote-off related field inventory used for customer demonstration and evaluation of the discontinued products to selling and administrative expense.

(5) In 2020, the Company incurred inventory adjustments associated with a prior acquisition and severance and integration costs mainly related to the Buffalo Filter, LLC acquisition.

(6) In 2020, the Company incurred costs related to the consolidation of certain manufacturing operations. These costs related to winding down operations at certain locations and moving production lines to other facilities.

(7) Includes amortization of intangible assets, deferred financing fees and debt discount.

(8) In 2021, the Company's average share price exceeded the conversion price of our 2.625% convertible notes due in 2024 (the "Notes") resulting in additional potential diluted shares.

(9) Non-GAAP adjusted dilutive weighted average shares outstanding exclude dilution that is expected to be offset by the Company's convertible note hedge transactions.

Reconciliation of Reported Net Income to EBITDA & Adjusted EBITDA
(in thousands, unaudited)
		Three Months Ended								Year Ended
		December 31,								December 31,
		2021				2020				2021				2020
Net income		$	24,444			$	24,140			$	62,542			$	9,517
Provision (benefit) for income taxes			5,203				(10,642	)			10,563				(7,914	)
Interest expense			7,569				11,114				35,485				44,052
Depreciation			3,975				4,427				16,494				18,044
Amortization			13,502				13,608				54,249				54,581
EBITDA		$	54,693			$	42,647			$	179,333			$	118,280
Stock based compensation			4,332				2,992				16,335				13,111
Debt refinancing costs			-				-				1,127				-
Plant underutilization costs			-				-				-				6,586
Product rationalization costs			-				-				-				4,264
Restructuring and related costs			-				1,649				414				5,869
Acquisition and integration costs			-				567				-				4,012
Manufacturing consolidation costs			-				-				-				3,993
Adjusted EBITDA		$	59,025			$	47,855			$	197,209			$	156,115
EBITDA Margin
EBITDA			20.0	%			16.9	%			17.7	%			13.7	%
Adjusted EBITDA			21.5	%			18.9	%			19.5	%			18.1	%

About CONMED Corporation

CONMED is a medical technology company that provides surgical devices and equipment for minimally invasive procedures. The Company’s products are used by surgeons and physicians in a variety of specialties, including orthopedics, general surgery, gynecology, thoracic surgery, and gastroenterology. For more information, visit www.conmed.com.

Forward-Looking Statements

This press release and the associated conference call may contain forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties, which could cause actual results, performance, or trends to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. For example, in addition to general industry and economic conditions, factors that could cause actual results to differ materially from those in the forward-looking statements may include, but are not limited to, the risks posed to the Company’s business, financial condition, and results of operations by the COVID-19 global pandemic and the various government responses to the pandemic, including deferral of surgeries, reductions in hospital and ambulatory surgery center operating volumes, disruption to potential supply chain reliability, as well as the risk factors discussed in the Company's Annual Report on Form 10-K for the full year ended December 31, 2020 and listed under the heading Forward-Looking Statements in the Company’s most recently filed Form 10-Q. Any and all forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company’s performance on a going-forward basis. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management’s expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct.

Supplemental Information - Reconciliation of GAAP to Non-GAAP Financial Measures

The Company supplements the reporting of its financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including percentage sales growth in constant currency; adjusted gross profit; cost of sales excluding specified items; adjusted selling and administrative expenses; adjusted operating income; adjusted interest expense; adjusted other expense; adjusted income tax expense (benefit); adjusted effective income tax rate; adjusted net income, adjusted diluted shares and adjusted diluted net earnings per share (EPS). The Company believes that these non-GAAP measures provide meaningful information to assist investors and shareholders in understanding its financial results and assessing its prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of its operations because they exclude items that may not be indicative of, or are unrelated to, its core operating results and provide a baseline for analyzing trends in the Company’s underlying business. Further, the presentation of EBITDA is a non-GAAP measurement that management considers useful for measuring aspects of the Company’s cash flow. Management uses these non-GAAP financial measures for reviewing the operating results and analyzing potential future business trends in connection with its budget process and bases certain management incentive compensation on these non-GAAP financial measures.

Net sales on a constant currency basis is a non-GAAP measure. The Company analyzes net sales on a constant currency basis to better measure the comparability of results between periods. To measure percentage sales growth in constant currency, the Company removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of net sales. To measure earnings performance on a consistent and comparable basis, the Company excludes certain items that affect the comparability of operating results and the trend of earnings. These adjustments are irregular in timing, may not be indicative of past and future performance and are therefore excluded to allow investors to better understand underlying operating trends.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, cost of sales, selling and administrative expenses, operating income, interest expense, other expense, income tax expense (benefit), effective income tax rate, net income, diluted shares and diluted net earnings per share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures above, provide a more complete understanding of the business. The Company strongly encourages investors and shareholders to review its financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220126005914/en/

CONMED Corporation

Todd W. Garner

Chief Financial Officer

727-214-2975

ToddGarner@conmed.com

Source: CONMED Corporation

FAQ

What were CONMED's Q4 2021 financial results?

In Q4 2021, CONMED reported sales of $274.0 million, an increase of 8.4% year-over-year, with diluted EPS at $0.75.

How did CONMED perform in full year 2021?

For the full year 2021, CONMED achieved sales of $1.01 billion, a 17.2% increase from 2020, with diluted EPS of $1.94.

What is CONMED's revenue outlook for 2022?

CONMED anticipates 2022 revenue between $1.075 billion and $1.125 billion.

What is CONMED's adjusted EPS guidance for 2022?

The adjusted diluted EPS guidance for 2022 is projected to be between $3.60 and $3.85.