CONMED Q3 Earnings Call Highlights

CONMED NYSE: CNMD reported third-quarter 2026 revenue of $335.6 million, with organic constant-currency sales growth of 6.7% as the medical technology company cited broad-based contributions from its general surgery and orthopedic surgery businesses.

Reported net sales declined 0.7%, or 0.8% on a constant-currency basis, reflecting the company’s strategic exits from gastroenterology products. CONMED said its organic growth calculation excludes sales from those GI products.

Adjusted diluted earnings per share totaled $1.04, exceeding the company’s prior expectations. Adjusted net income was $31.4 million, compared with $33.4 million, or $1.08 per diluted share, in the year-earlier period.

General surgery growth led by AirSeal and direct smoke evacuation

General surgery sales increased 6.4% organically on a constant-currency basis. International general surgery revenue rose 15.5%, driven by performance in Europe, the Middle East and Africa and the Asia-Pacific region, while domestic growth was 1.9%.

President and CEO Pat Beyer said AirSeal, the company’s advanced insufflation platform, was the largest contributor to general surgery growth. AirSeal growth was supported by stable disposable sales and strong capital-equipment growth, particularly outside the U.S.

During the quarter, CONMED expanded the U.S. clinical indication for its AirSeal Robotic Solution to include use with Intuitive’s 8 mm hex cannulas. Beyer said the expanded indication allows the company to market AirSeal to hospitals and surgeons adopting Intuitive’s da Vinci 5 robotic platform.

The company also emphasized the opportunity in laparoscopic procedures. CONMED estimates AirSeal is used in only 6% to 7% of more than 3 million laparoscopic procedures performed annually in the U.S. Management said it is targeting procedure categories where the platform can have the greatest clinical and economic impact rather than pursuing all laparoscopic opportunities at once.

Direct sales of Buffalo Filter smoke-evacuation products also contributed meaningfully to growth, with Beyer describing the business as growing within its targeted high-single-digit to low-double-digit range. That performance was partly offset by lower sales to original equipment manufacturer customers.

Management said its strategy is focused on its direct smoke-evacuation business because it carries a stronger margin profile and places the company closer to end users. Beyer said Michigan and Pennsylvania recently enacted surgical-smoke legislation, bringing the total number of states with smoke-free operating room laws to 23, covering approximately 60% of the U.S. population.

Orthopedic sales supported by BioBrace international demand

Organic constant-currency orthopedic surgery sales grew 7.2% in the quarter. International orthopedic revenue increased 12.7%, with growth across the company’s major international regions, more than offsetting a 1.7% decline in U.S. orthopedic sales.

Beyer said domestic orthopedic performance continued to reflect commercial-organization actions taken earlier in the year. He said the company has made progress on those efforts and is focused on onboarding and operationalizing distributors, with the goal of returning the U.S. orthopedic business to growth during the first half of 2027.

BioBrace, CONMED’s reinforced bioinductive implant, was a key orthopedic growth driver, especially internationally. The company said BioBrace is designed to provide mechanical strength to protect repairs while promoting tissue growth. Beyer cited a 94% healing rate in high-risk patients when BioBrace was used to augment rotator cuff repair.

CONMED also secured regulatory clearance for BioBrace in Brazil during the quarter. Management said BioBrace is approved in several international markets for rotator cuff applications, while the company continues studies seeking additional indications in areas including the knee and Achilles tendon.

Margins, cash flow and capital structure

Third-quarter adjusted gross margin increased 40 basis points from the prior year to 56.4%, primarily due to favorable product mix. Adjusted operating margin rose 20 basis points to 15.4%.

CFO John Gallagher said gross margin was affected by a heavier mix of international distributor-oriented sales, which carry somewhat lower margins, as well as discrete operations and inventory items during the quarter.

Adjusted interest expense rose to $10.5 million from $6.3 million a year earlier, reflecting the company’s refinancing activity. During the second quarter, CONMED drew on a new $450 million term loan and its revolving credit facility to repurchase $645.2 million of its $800 million of 2.25% convertible notes ahead of their June 2027 maturity.

Free cash flow was $46.4 million, down 3.6% year over year. As of Sept. 30, the company had $48 million in cash, $815.9 million in total debt obligations and $468.5 million in available borrowing capacity. Its leverage ratio was 2.7 times.

CONMED repurchased about 1.2 million shares for $49.9 million during the first nine months of 2026 and expects to allocate about $62 million to share repurchases for the full year.

2026 outlook updated

CONMED narrowed its full-year organic constant-currency revenue growth outlook to 5% to 5.5%, from 5% to 6%. Gallagher said the company remains confident in achieving at least 5% growth but reduced the upper end of the range to reflect a more measured pace of sequential improvement and timing of international distributor orders that benefited the third quarter.

• Full-year GI revenue is now expected to be about $20 million, compared with the prior outlook of $20 million to $22 million.
• Foreign exchange is expected to provide a $9 million tailwind to reported revenue, compared with a prior estimate of $7 million to $7.5 million.
• Adjusted diluted EPS guidance was raised to $4.54 to $4.61, from $4.48 to $4.60.
• Adjusted gross margin is expected to be approximately 57.5%.
• Free cash flow is expected to be approximately $115 million.

For the fourth quarter, CONMED expects GAAP net sales of $364 million to $370 million, implying organic constant-currency growth of 5.1% to 6.8%, excluding expected GI revenue of about $3.7 million and an expected $650,000 foreign-exchange tailwind. Fourth-quarter adjusted EPS is projected at $1.23 to $1.30.

Looking ahead, Beyer said CONMED’s post-GI strategy is increasingly concentrated on minimally invasive surgery, smoke evacuation and orthopedic soft tissue repair, with AirSeal, Buffalo Filter and BioBrace serving as its principal growth platforms.

About CONMED (NYSE:CNMD)

CONMED Corporation is a medical technology company that develops, manufactures, and sells surgical devices and related equipment. Its products are used by hospitals, ambulatory surgery centers, and other healthcare providers in orthopedic and general surgery procedures.

The company's orthopedic portfolio includes arthroscopy systems, powered surgical instruments, sports medicine products, tissue ablation systems, implants, and related accessories. Its general surgery offerings include electrosurgical equipment, insufflation systems, smoke evacuation products, surgical visualization technologies, and devices used in minimally invasive procedures.

Founded in 1970, CONMED serves healthcare customers through direct sales and distribution channels in the United States and international markets.

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