CONMED NYSE: CNMD executives told investors the company is sharpening its focus on higher-growth, higher-margin platforms after reaching agreements to divest its gastroenterology (GI) product lines, while posting first-quarter results that reflected the portfolio shift and improved gross margin.
Portfolio changes and first-quarter results
President and CEO Patrick Beyer said CONMED reached an agreement during the first quarter to divest certain GI products and then “in April, we reached a second agreement to divest our remaining GI products.” He noted the company will provide transition services under TSAs “through the end of this year and into 2027.” Beyer characterized the move as “intentional and strategic,” aimed at concentrating investment on “higher growth, higher margin offerings.”
For the quarter, Beyer reported total sales of $317 million, down 1.3% year-over-year. Excluding the impact of the company’s previously announced GI exit, he said total sales increased 3.8% year-over-year as reported and 2.1% in constant currency. Orthopedics delivered constant-currency growth, while general surgery was pressured by the GI exit.
On profitability, Beyer said adjusted net income (excluding special items) was $27.1 million, down 8.5% year-over-year, and adjusted diluted EPS was $0.89, down 6.3%, noting the results were “impacted by the exit of our GI business.”
Growth platforms: AirSeal, Buffalo Filter, and BioBrace
Beyer highlighted three “key growth platforms”—AirSeal, Buffalo Filter, and BioBrace—as central to CONMED’s strategy in minimally invasive surgery, smoke evacuation, and orthopedic soft tissue repair.
- AirSeal: Beyer said AirSeal has an installed base of “over 10,000 systems globally,” supported by growth in robotic and laparoscopic surgery. He pointed to under-penetration in laparoscopy, citing “more than 3 million laparoscopic procedures” annually in the U.S., with AirSeal used in “only in 6%-7%” of cases. He said these factors support confidence that AirSeal can deliver “high single-digit to low double-digit growth over the long term.”
- Buffalo Filter: Beyer said smoke evacuation remains a significant opportunity, noting “20 U.S. states with smoke-free operating room laws on the books,” covering about “51% of the population.” He added the company is seeing traction internationally in the Nordic countries, Canada, and Australia. He also said PlumeSafe X5, launched in the first half of 2025, is gaining traction due to a “smaller footprint, quieter operation, and faster smoke clearance,” particularly in outpatient settings. He emphasized a focus on “direct smoke evacuation,” with OEM remaining part of the portfolio but expected to be a smaller share over time.
- BioBrace: Beyer said BioBrace is performing “exceptionally well” and described it as “the only FDA-cleared implant that delivers structural reinforcement while also promoting biologic healing.” He said there are “over 30 published studies” on BioBrace, and a 268-patient randomized controlled trial is “on track to complete enrollment in 2026,” with publication expected in 2027. He also cited AAOS guidelines recommending augmentation in rotator cuff repair as supporting adoption.
Segment trends and margin performance
Advisor Todd Garner, who joined the call as the company continues its CFO search, provided additional detail, stating that first-quarter sales fell 2.9% year-over-year in constant currency, while organic sales (excluding GI) increased 2.1%.
In the U.S., total sales declined 5.8%, while international sales rose 1.0%. On an organic basis, U.S. sales increased 2.8% and international sales grew 1.3%.
Orthopedics grew 4.5% worldwide in the quarter, including 5.5% growth in the U.S. and 3.9% internationally. General surgery declined 8.5% worldwide, though Garner said organic worldwide general surgery sales were flat, with OEM smoke products a “meaningful headwind” and “the biggest drag on general surgery sales in Q1.”
Garner said both AirSeal and Direct Smoke grew in the first quarter, and the company continues to expect both to be in the “high single-digit to low double-digit range” for the full year, noting that first-quarter performance was below the expected full-year range as anticipated in the original guidance.
On margins, Garner reported adjusted gross margin of 57.4%, up 100 basis points year-over-year, driven by “favorable product mix and positive foreign currency impact.” He said the company’s full-year gross margin improvement guidance remains 50 to 100 basis points, and that management expects to be within that range “every quarter.”
Cash flow, leverage, and share repurchases
Garner said CONMED ended the quarter with $35.0 million in cash, down from $40.8 million at year-end. Accounts receivable days increased to 65, and inventory days rose to 246, which he attributed to intentionally building inventory “as we continue to focus on service levels.”
Long-term debt rose to $860.2 million from $834.2 million at Dec. 31, and the leverage ratio was 3.1x as of March 31. Garner said the company expects leverage to hold at roughly three times “as we balance debt leverage and share buybacks.” CONMED repurchased about 858,000 shares for $37.4 million in the quarter.
Operating cash flow was $13.5 million, compared with $41.5 million in the prior-year quarter. The company reiterated its full-year operating cash flow outlook of $145 million to $155 million, capital expenditures of $20 million to $30 million, and free cash flow around $125 million.
Guidance raised on organic growth; refinancing planned
Garner said CONMED raised its 2026 organic growth expectation to 5.0% to 6.5%, from 4.5% to 6.0%, and now expects foreign exchange to be a revenue tailwind of roughly 40 to 50 basis points. Reported revenue guidance was set at $1.35 billion to $1.375 billion, and the company guided second-quarter revenue to $336 million to $340 million.
Garner also provided an update on the GI exit assumptions embedded in guidance. In January, CONMED estimated GI sales of $21 million to $25 million in 2026; following the two divestiture agreements, the company now expects GI revenue of $14.5 million to $17.5 million. He said the lower GI revenue comes with lower costs and that the expected full-year EPS impact of $0.45 to $0.50 remains consistent with January expectations.
On financing, Garner said the company intends to refinance its debt during the second quarter before convertible notes go current. He said CONMED decided against issuing new convertible notes given “the historic trough in med tech multiples,” and instead intends to refinance with bank debt. That shift could increase full-year adjusted interest expense and reduce adjusted EPS by “at least $0.10,” though CONMED kept its full-year adjusted EPS guidance unchanged at $4.30 to $4.45. Second-quarter adjusted EPS guidance was $1.09 to $1.14.
During Q&A, Beyer said macro-related pressures, including commodity and component cost increases, are included in guidance. He said CONMED is working with vendors and supply chain partners to mitigate cost pressures and is also partnering with hospital systems on “cost-effective clinical solutions.”
In closing remarks, Beyer said CONMED entered 2026 with a “clear focus on execution,” and that exiting the GI portfolio “further sharpens our focus and positions CONMED as a more disciplined company going forward.”
About CONMED NYSE: CNMD
CONMED Corporation NYSE: CNMD is a global medical technology company headquartered in Utica, New York. Founded in 1970, CONMED develops, manufactures and markets a broad portfolio of surgical devices and accessories for minimally invasive procedures. The company's product line supports surgeons and healthcare providers in specialties including orthopedics, general surgery, gastroenterology and gynecology.
CONMED operates two principal segments: Orthopedics, and Visualization & Energy.
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