CONMED Q2 Earnings Call Highlights

Key Points

• CONMED delivered better-than-expected Q2 results: Organic sales rose 6%, adjusted EPS increased 20% to $1.38, and free cash flow grew 46% to $34.2 million. Results benefited from a $0.21-per-share tariff refund, though earnings still exceeded the high end of prior guidance without it.
• Growth was led by general surgery products AirSeal and Buffalo Filter and international orthopedics, including BioBrace. AirSeal growth came in below expectations, while U.S. orthopedic sales were essentially flat as the company reorganized its commercial team.
• CONMED raised its 2026 adjusted EPS outlook to $4.48–$4.60 but narrowed organic sales-growth guidance to 5%–6% and lowered free-cash-flow expectations to about $115 million. The company also refinanced and repurchased $645.2 million of convertible notes due in 2027.

CONMED NYSE: CNMD reported second-quarter 2026 net sales of $343.5 million, up 0.3% on a reported basis but down 0.5% in constant currency. Organic sales, which exclude the company’s exited gastroenterology product offerings, rose 6% year over year and modestly exceeded management’s expectations.

Adjusted diluted earnings per share increased 20% year over year to $1.38, compared with $1.15 in the prior-year period. The result included a $0.21-per-share benefit from tariff refunds that had not been included in the company’s guidance. Excluding that benefit, earnings still exceeded the high end of CONMED’s prior guidance by about $0.03 per share, President and CEO Pat Beyer said.

“We were pleased to deliver strong financial performance in the second quarter,” Beyer said, pointing to organic growth in both the general surgery and orthopedic surgery businesses.

General Surgery Growth Led by AirSeal and Buffalo Filter

General surgery organic sales increased 5.3%, with mid-single-digit growth in the U.S. and high-single-digit international growth. AirSeal, CONMED’s advanced insufflation platform, and Buffalo Filter, its smoke-evacuation platform, were the principal contributors.

AirSeal sales grew in both capital equipment and single-use products, and trends improved sequentially from the first quarter. However, Beyer said growth was below the company’s expectations. CONMED now expects AirSeal growth to improve in the second half of 2026, though at a slower pace than previously assumed in guidance.

The company maintained its long-term view that AirSeal can grow at a high-single-digit to low-double-digit rate, citing its use in robotic and laparoscopic procedures as well as expansion opportunities in ambulatory surgery centers, international markets and U.S. laparoscopy. CONMED estimates AirSeal is used in only 6% to 7% of more than 3 million laparoscopic procedures performed annually in the United States.

CONMED also announced that its AirSeal Robotic Solution is now indicated for use with Intuitive’s 8mm hex cannulas, in addition to the existing indication for 8mm round cannulas. The hex cannulas were introduced with the da Vinci 5 system and are compatible across Intuitive’s X, Xi and da Vinci 5 multi-port platforms. Beyer said the expanded indication was already incorporated into the company’s outlook.

Buffalo Filter’s direct smoke-evacuation portfolio delivered year-over-year growth above the company’s long-term expectation of high-single-digit to low-double-digit growth, more than offsetting modest declines in its OEM smoke-evacuation business. CONMED said it is prioritizing direct sales because of closer customer relationships and a stronger margin profile.

The company cited legislative support for surgical smoke evacuation, including recently enacted laws in Michigan and Maryland. CONMED said 22 states now have smoke-free operating-room laws, covering about 57% of the U.S. population, while more than 10 additional states have pending legislation.

Orthopedics Posts International Strength

Orthopedic surgery sales increased 6.8%, driven by 10.8% international growth, including particular strength in Asia-Pacific and Europe, the Middle East and Africa. U.S. orthopedic sales were essentially flat and below expectations.

Beyer said the domestic orthopedic business had undertaken strategic actions to strengthen its commercial organization during the quarter, which temporarily affected growth. He said the U.S. team is “back on offense” and positioned to return to growth.

BioBrace, CONMED’s reinforced bioinductive implant, was a leading contributor to orthopedic growth. The product is being used across orthopedic and foot-and-ankle procedures, particularly rotator cuff repairs. Beyer cited CONMED’s clinical data and updated American Academy of Orthopaedic Surgeons guidelines supporting augmentation in rotator cuff repair as factors supporting adoption.

The company said BioBrace RC, launched one year ago to streamline use of the implant in rotator cuff procedures, has generated increasing new-user adoption and repeat use among surgeons.

Margins, Cash Flow and Debt Refinancing

Adjusted gross profit rose 5.6%, while adjusted gross margin expanded 300 basis points to 59.5%. The tariff refund accounted for approximately 250 basis points of margin improvement. Excluding the refund, adjusted gross margin increased 50 basis points, aided by product mix and foreign currency.

• Adjusted operating margin was 18.2%, compared with 15.7% a year earlier.
• Adjusted net income was $41.7 million, compared with $35.6 million in the prior-year quarter.
• Free cash flow rose 46% to $34.2 million.
• Cash totaled $37.3 million at June 30, while total debt obligations were $834.2 million.
• CONMED’s leverage ratio was 2.9 times at quarter-end.

During June, CONMED secured a new $450 million senior secured term loan facility maturing in 2030. It used the proceeds, along with borrowings under its revolving credit facility, to repurchase $645.2 million of convertible notes for $637.2 million. The notes had been scheduled to mature in June 2027.

The company also repurchased about 1 million shares for $43.7 million during the first half and continues to expect approximately $61.8 million in full-year share repurchases.

Guidance Updated for 2026

CONMED narrowed its expected organic constant-currency sales growth range to 5% to 6%, from 5% to 6.5%. Beyer said the company reaffirmed confidence in achieving at least 5% growth, but adopted a more measured expectation for improvement in the second half because of the AirSeal outlook.

The company raised its full-year adjusted EPS forecast to $4.48 to $4.60 from $4.30 to $4.45. CFO John Gallagher said the increase reflected the tariff refund, better-than-expected second-quarter operations, a smaller expected headwind from the GI exit and share repurchases. Those factors were partly offset by higher expected interest expense and a higher tax-rate assumption.

CONMED now expects adjusted interest expense of about $33 million for 2026, compared with its earlier forecast of $25 million to $27 million. It reduced its free-cash-flow outlook to approximately $115 million from approximately $125 million, primarily due to working capital, interest expense and tax-rate changes.

For the third quarter, CONMED forecast GAAP net sales of $334 million to $339 million, organic constant-currency growth of 6.4% to 7.6%, and adjusted EPS of $0.98 to $1.03.

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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