CONMED Corporation (CNMD) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with EPS growth and improved cash flow. The transition to a share repurchase program and strategic focus on high-margin platforms are positive indicators. The Q&A reveals confidence in growth opportunities and strategic focus, despite minor portfolio adjustments. The positive sentiment is reinforced by strong OUS growth and a balanced approach to M&A and R&D investments. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
Key Financial Performance
Total Sales (Q4 2025) $373.2 million, a year-over-year increase of 7.9% as reported and 7.1% in constant currency. Growth attributed to strong performance in orthopedics and general surgery.
Total Sales (Full Year 2025) $1.375 billion, a year-over-year growth of 5.2% as reported and 5.1% in constant currency. Growth driven by orthopedics and general surgery segments.
Orthopedics Sales (Q4 2025) Increased 12.1% year-over-year in constant currency. Growth attributed to resolving supply chain constraints and strong demand.
Orthopedics Sales (Full Year 2025) Increased 5.5% year-over-year in constant currency. Growth supported by supply chain improvements and demand recovery.
General Surgery Sales (Q4 2025) Increased 3.8% year-over-year in constant currency. Growth driven by AirSeal and Buffalo Filter platforms.
General Surgery Sales (Full Year 2025) Increased 4.7% year-over-year in constant currency. Growth supported by innovation in surgical smoke evacuation and robotic surgery platforms.
Adjusted Earnings Per Share (Q4 2025) $1.43, a year-over-year increase of 6.7%. Growth driven by operational improvements and strategic focus on high-margin platforms.
Adjusted Earnings Per Share (Full Year 2025) $4.59, a year-over-year increase of 10.1%. Growth attributed to operational efficiencies and portfolio optimization.
Adjusted Gross Margin (Q4 2025) 56.6%, down 100 basis points year-over-year due to tariff impacts.
Adjusted Gross Margin (Full Year 2025) 56.4%, up 10 basis points year-over-year despite new tariffs, supported by organic mix tailwinds.
Cash Flow from Operations (Q4 2025) $46.3 million, an increase from $43.3 million in Q4 2024. Growth driven by operational improvements.
Cash Flow from Operations (Full Year 2025) $170.7 million, an increase from $167.0 million in 2024. Growth supported by operational efficiencies.
Capital Expenditures (Q4 2025) $5.1 million, an increase from $4.0 million in Q4 2024. Increase attributed to investments in infrastructure.
Capital Expenditures (Full Year 2025) $19.8 million, an increase from $13.1 million in 2024. Increase driven by investments in growth platforms.
Leverage Ratio (Q4 2025) 2.9x, improved from prior quarters due to strong cash flow and debt reduction.
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Operating Highlights
AirSeal: Used in approximately 1.6 million procedures in 2025, with growth opportunities in robotic and laparoscopic surgeries. Currently utilized in only 6%-7% of U.S. laparoscopic procedures, indicating significant potential for expansion.
Buffalo Filter: Recognized as a $1 billion-plus global market for surgical smoke evacuation. Launched next-generation PlumeSafe X5 in 2025, enhancing performance and efficiency.
BioBrace: Adopted across 70+ procedures, with growing utilization in rotator cuff and foot/ankle repairs. Supported by clinical trials and guidelines, with further expansion expected.
Robotics and Laparoscopy: Expansion opportunities outside the U.S. and in ambulatory surgery centers for AirSeal.
Surgical Smoke Evacuation: Progress in international markets, including Nordic countries and Canada, supported by legislation in 20 U.S. states.
Supply Chain Improvements: Significant progress in reducing back orders to a 3-year low, with plans to build a high-performance, agile supply chain.
Portfolio Optimization: Exited gastroenterology product lines to focus on high-growth areas, improving gross margin by 80 basis points.
Focus on High-Growth Platforms: Prioritizing AirSeal, Buffalo Filter, and BioBrace for innovation and market leadership.
CFO Transition: Todd Garner to transition to an advisory role, with a search underway for a new CFO.
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Risk or Challenges
Supply Chain Constraints: The company has faced supply chain constraints in sports medicine, which have impacted the growth of its orthopedics portfolio. While progress has been made, the company acknowledges it has not yet achieved a world-class supply chain, posing a risk to operational efficiency and sales growth.
Exit from Gastroenterology Product Lines: The decision to exit the gastroenterology product lines will create near-term earnings dilution, which could impact financial performance in the short term.
Tariff Impacts: Tariffs have negatively affected the company's gross margin, with incremental tariffs expected to continue being a headwind in 2026, impacting profitability.
U.S. General Surgery Sales Decline: Declines in U.S. general surgery sales, particularly in OEM smoke evacuation SKUs and energy platforms, indicate challenges in maintaining growth in this segment.
CFO Transition: The transition of the CFO role could create temporary uncertainty or disruption in financial leadership, potentially impacting strategic execution.
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Guidance & Outlook
Revenue Guidance for 2026: The company is guiding full-year reported revenue between $1.345 billion and $1.375 billion, representing constant currency organic growth between 4.5% and 6%, with a potential FX tailwind of up to 50 basis points.
Adjusted Gross Margin: The company expects a net improvement of 50 to 100 basis points in adjusted gross margin for 2026, despite headwinds from incremental tariffs of 100 to 110 basis points. This improvement is attributed to strong organic mix tailwinds and cost improvements.
Adjusted SG&A Expense: For 2026, adjusted SG&A expense as a percentage of sales is expected to be between 38.0% and 38.5%, reflecting lower sales due to the GI exit and increased investments in key growth drivers.
Adjusted R&D Expense: The company anticipates full-year adjusted R&D expense in 2026 to be between 4.5% and 5% of sales, representing increased investment to support key growth drivers.
Adjusted EPS Guidance: Adjusted EPS for 2026 is projected to be between $4.30 and $4.45. Key headwinds include $0.45 to $0.50 from the GI exit and $0.30 to $0.35 from incremental tariffs, with a currency tailwind of about $0.10.
Operating Cash Flow and Free Cash Flow: The company expects full-year operating cash flow in 2026 to be between $145 million and $155 million, with capital expenditures in the $20 million to $30 million range, resulting in free cash flow around $125 million.
Adjusted EBITDA: Adjusted EBITDA for 2026 is projected to be between $255 million and $265 million.
Q1 2026 Guidance: For Q1 2026, reported revenue is expected to be between $308 million and $313 million. Adjusted SG&A expense as a percentage of sales will be the highest quarter of the year, and adjusted EPS is expected to be between $0.80 and $0.83.
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Shareholder Return Plan
Dividend Suspension: The Board suspended the company's dividend program, which historically represented approximately $25 million annually.
Share Repurchase Authorization: The Board approved a $150 million share repurchase authorization. This is expected to equate to approximately $0.07 of EPS in 2026, with the potential for additional repurchases beyond this minimum level.
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Key Q&A
Q:Can you talk about how you see the rest of the year playing out from a cadence standpoint? Are there any selling day differences to highlight for the year?
A:There are no selling day differences for the year, and all quarters have the same number of days. The rest of the year is expected to follow the normal seasonality typical of the med tech calendar.
Q:Where are you with the CFO search, and what are you looking for in a new CFO?
A:The company is actively searching for a new CFO. They are looking for someone focused on shareholder value accretion, a great teammate to the leadership team, and a steward of the shareholders.
Q:Why are the organic revenue numbers different between the slides shown at the healthcare conference and the current slides?
A:The difference is due to the timing of finalizing the 2025 numbers. At the healthcare conference, the guidance was broader (4%-6% organic constant currency growth). With finalized 2025 numbers, the range is now more precise at 4.5%-6%.
Q:What drove the upside in orthopedics and the downside in surgery, and how are you thinking about these businesses in 2026?
A:Orthopedics saw strong performance due to committed sales professionals, an improving supply chain, strength in BioBrace, and global approvals of clinical solutions. In surgery, the smoke and AirSeal business performed as expected, but U.S. growth was impacted by portfolio management and exiting minor products. The focus remains on accretive growth.
Q:Why does the constant currency full-year number for CONMED appear lower than what was stated at JPMorgan?
A:The difference is due to the mix between the GI business and organic sales. The presentation now separates GI revenue as a positive number, whereas it was previously subtracted from the top number.
Q:How will the GI business be reported going forward?
A:The GI business will be reported separately in the financial presentations.
Q:Why was OUS (outside U.S.) growth particularly strong compared to U.S. growth? Was any of it due to one-off factors like stocking orders?
A:OUS growth was strong due to distributor demand and economic factors, but there were no one-off stocking orders. U.S. growth was impacted by portfolio management, including exiting minor product lines and focusing on direct smoke business.
Q:Is there potential for further portfolio exits or divestitures?
A:Portfolio management will continue as an operational process, but there are no major exits or divestitures planned currently. The company is focused on its growth platforms in sports medicine and minimally invasive markets.
Q:Can you provide more color on OUS growth trends for AirSeal and the U.S. laparoscopic opportunity?
A:OUS growth for AirSeal is expanding into robotic opportunities, while U.S. growth is focusing more on the underpenetrated laparoscopic market. Both geographies present strong growth opportunities.
Q:What is the company's appetite for M&A and organic investments now that leverage is below 3?
A:The company is looking at M&A opportunities for technologies that fit its focus areas while also increasing R&D investments in growth platforms. A balanced approach between external acquisitions and internal investments will continue.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the scale of the AirSeal business, only referring to it as a significant portion of the company. Additionally, they did not provide precise information on the pipeline for organic investments, only mentioning a general increase in R&D spending.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Academy Orthopedic
AirSeal delivers
AirSeal digit
AirSeal environment
AirSeal today
American Academy
BioBrace foot
BioBrace signature
BioBrace tissue
CEO CONMED
CFO CONMED
CFO transition
CONMED CFO
CONMED analysis
CONMED capital
CONMED discussion
CONMED market
CONMED surgery
Canada market
Orthopedic Surgery
Pat President
PlumeSafe quieter
RC delivery
case
confidence
decision
dividend
focus
insufflation
laparoscopy
market product
momentum
portfolio review
profile
repurchase
resource
robotics
role
sale currency
strength
team
value
CNMD Transcript
CONMED Corporation (CNMD) Q4 2025 Earnings Call Transcript
Positive1-28
The earnings call highlights strong financial performance with EPS growth and improved cash flow. The transition to a share repurchase program and strategic focus on high-margin platforms are positive indicators. The Q&A reveals confidence in growth opportunities and strategic focus, despite minor portfolio adjustments. The positive sentiment is reinforced by strong OUS growth and a balanced approach to M&A and R&D investments. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
CONMED Corporation (CNMD) Presents at 44th Annual J.P. Morgan Healthcare Conference Transcript
Neutral1-12
CONMED Corporation (CNMD) Q3 2025 Earnings Call Transcript
Unknown11-5
The earnings call presents a mixed picture: while there is a slight increase in EPS and cash flow, there are concerns about declining gross margins, a significant drop in GAAP net income, and management's reluctance to provide future guidance. The leverage ratio improvement and AirSeal's growth are positives, but the orthopedic backlog and tariff impacts are negatives. The market cap suggests moderate volatility, leading to a neutral stock price prediction.
CONMED Corporation (CNMD) Q2 2025 Earnings Call Transcript
Positive7-30
The earnings call shows a positive sentiment due to strong financial performance, increased revenue and EPS guidance, and operational improvements. Despite high debt levels and market competition, the company is making progress in supply chain and innovation. The Q&A section confirms stable market conditions and legislative support for growth. The market cap indicates a moderate reaction, leading to a prediction of a positive stock price movement (2% to 8%) over the next two weeks.
CNMD Slides
CNMD Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
