News Release

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July 26, 2023 at 4:05 PM EDT

CONMED Corporation Announces Second Quarter 2023 Financial Results

LARGO, Fla.--(BUSINESS WIRE)--Jul. 26, 2023-- CONMED Corporation (NYSE: CNMD) today announced financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Highlights

  • Sales of $317.7 million increased 14.6% year over year as reported and 16.6% in constant currency. Acquisitions contributed approximately 400 basis points of growth.
  • Domestic revenue increased 17.1% year over year.
  • International revenue increased 11.7% year over year as reported and 16.0% in constant currency.
  • Diluted net earnings per share (GAAP) were $0.43 compared to diluted net loss per share (GAAP) of $5.65 in the second quarter of 2022.
  • Adjusted diluted net earnings per share(1) were $0.83, an increase of 9.2% compared to the second quarter of 2022.

“Our team drove excellent growth across both Orthopedics and General Surgery during the second quarter, building on the momentum we generated during the first three months of the year,” commented Curt R. Hartman, CONMED’s Chair of the Board, President, and Chief Executive Officer. “We remain confident in our ability to grow above market and continue to deliver clinical innovation to our customers.”

2023 Outlook

Based on the second quarter results, the Company is raising its revenue guidance for the full year 2023 and now expects revenue between $1.230 billion and $1.260 billion, compared to its prior guidance of between $1.205 billion and $1.250 billion.

The Company now expects full-year 2023 adjusted diluted net earnings per share(2) in the range of $3.40 to $3.55, compared to its prior range of $3.30 to $3.50.

The expected impact of foreign currency exchange rates is unchanged from the Company’s prior guidance.

Supplemental Financial Disclosures

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

(2) Information reconciling forward-looking adjusted diluted net earnings per share to the comparable GAAP financial measures is unavailable to the company without unreasonable effort, as discussed below.

Conference Call

The Company’s management will host a conference call today at 4:30 p.m. ET to discuss its second quarter 2023 results.

To participate in the conference call via telephone, please click here to pre-register and obtain the dial-in number and passcode.

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.

Consolidated Condensed Statements of Income (Loss)

(in thousands except per share amounts, unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

317,652

 

 

$

277,190

 

 

$

613,121

 

 

$

519,516

 

Cost of sales

 

 

146,962

 

 

 

125,413

 

 

 

287,110

 

 

 

231,748

 

Gross profit

 

 

170,690

 

 

 

151,777

 

 

 

326,011

 

 

 

287,768

 

% of sales

 

 

53.7

%

 

 

54.8

%

 

 

53.2

%

 

 

55.4

%

Selling & administrative expense

 

 

129,700

 

 

 

115,826

 

 

 

259,784

 

 

218,701

 

Research & development expense

 

 

13,572

 

 

 

11,493

 

 

 

26,110

 

 

 

22,165

 

Income from operations

 

 

27,418

 

 

 

24,458

 

 

 

40,117

 

 

 

46,902

 

% of sales

 

 

8.6

%

 

 

8.8

%

 

 

6.5

%

 

 

9.0

%

Interest expense

 

 

9,997

 

 

 

5,928

 

 

 

20,252

 

 

 

10,926

 

Other expense

 

 

-

 

 

 

112,011

 

 

 

-

 

 

 

112,011

 

Income (loss) before income taxes

 

 

17,421

 

 

 

(93,481

)

 

 

19,865

 

 

 

(76,035

)

Provision for income taxes

 

 

3,689

 

 

 

74,810

 

 

 

4,314

 

 

 

77,281

 

Net income (loss)

 

$

13,732

 

 

$

(168,291

)

 

$

15,551

 

 

$

(153,316

)

 

 

 

 

 

 

 

 

 

Basic EPS

 

$

0.45

 

 

$

(5.65

)

 

$

0.51

 

 

$

(5.18

)

Diluted EPS

 

 

0.43

 

 

 

(5.65

)

 

 

0.49

 

 

 

(5.18

)

 

 

 

 

 

 

 

 

 

Basic shares

 

 

30,662

 

 

 

29,775

 

 

 

30,587

 

 

 

29,601

 

Diluted shares

 

 

31,795

 

 

 

29,775

 

 

 

31,499

 

 

 

29,601

 

Sales Summary

(in millions, unaudited)

 

Three Months Ended June 30,

% Change

Domestic

International

2023

2022

As Reported

Impact of Foreign Currency

Constant Currency

 

As Reported

As Reported

Impact of Foreign Currency

Constant Currency

Orthopedic Surgery

$

140.8

$

120.2

17.1

%

2.7

%

19.8

%

29.4

%

11.0

%

3.8

%

14.8

%

General Surgery

 

176.9

 

157.0

12.6

%

1.5

%

14.1

%

12.5

%

12.9

%

5.0

%

17.9

%

$

317.7

$

277.2

14.6

%

2.0

%

16.6

%

17.1

%

11.7

%

4.3

%

16.0

%

 

Single-use Products

$

264.8

$

230.3

14.9

%

2.0

%

16.9

%

15.7

%

13.9

%

4.5

%

18.4

%

Capital Products

 

52.9

 

46.9

12.9

%

2.2

%

15.1

%

25.8

%

3.4

%

3.6

%

7.0

%

$

317.7

$

277.2

14.6

%

2.0

%

16.6

%

17.1

%

11.7

%

4.3

%

16.0

%

 

Domestic

$

174.7

$

149.2

17.1

%

0.0

%

17.1

%

International

 

143.0

 

128.0

11.7

%

4.3

%

16.0

%

$

317.7

$

277.2

14.6

%

2.0

%

16.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

% Change

Domestic

International

 

2023

 

2022

As Reported

Impact of Foreign Currency

Constant Currency

 

As Reported

As Reported

Impact of Foreign Currency

Constant Currency

Orthopedic Surgery

$

272.0

$

227.7

19.4

%

3.3

%

22.7

%

29.2

%

14.3

%

4.9

%

19.2

%

General Surgery

 

341.1

 

291.8

16.9

%

2.0

%

18.9

%

17.8

%

14.9

%

6.5

%

21.4

%

$

613.1

$

519.5

18.0

%

2.6

%

20.6

%

21.0

%

14.5

%

5.6

%

20.1

%

 

Single-use Products

$

514.0

$

431.8

19.0

%

2.6

%

21.6

%

21.8

%

15.5

%

5.7

%

21.2

%

Capital Products

 

99.1

 

87.7

13.0

%

2.6

%

15.6

%

15.8

%

10.7

%

4.8

%

15.5

%

$

613.1

$

519.5

18.0

%

2.6

%

20.6

%

21.0

%

14.5

%

5.6

%

20.1

%

 

Domestic

$

339.3

$

280.4

21.0

%

0.0

%

21.0

%

International

 

273.8

 

239.1

14.5

%

5.6

%

20.1

%

$

613.1

$

519.5

18.0

%

2.6

%

20.6

%

 

Reconciliation of Reported Net Income (Loss) to Adjusted Net Income

(in thousands, except per share amounts, unaudited)

                                                               

Three Months Ended June 30, 2023

Gross Profit

Selling & Administrative Expense

Operating Income

Interest
Expense

Other Expense

Tax
Expense

Effective Tax Rate

Net Income

Basic EPS

Adjustments

Diluted EPS

As reported

$

170,690

 

$

129,700

 

$

27,418

 

$

9,997

 

$

-

 

$

3,689

 

21.2

%

$

 

13,732

 

   

$

-

$

 

13,732

 

% of sales

 

53.7

%

 

40.8

%

 

8.6

%

                             

EPS

                               

$

0.45

 

 

$

 

0.43

 

Shares

                               

 

30,662

 

 

1,133

 

 

31,795

 

Acquisition and integration costs(1)

 

2,173

 

 

(303

)

 

2,476

 

 

-

 

 

-

 

 

492

 

 

 

 

1,984

 

         

Termination of distributor agreements(2)

 

-

 

 

(2,098

)

 

2,098

 

 

-

 

 

-

 

 

417

 

 

 

 

1,681

 

         

Software implementation costs(3)

 

-

 

 

(1,797

)

 

1,797

 

 

-

 

 

-

 

 

357

 

 

 

 

1,440

 

         

Contingent consideration fair value adjustment(4)

 

-

 

 

636

 

 

(636

)

 

-

 

 

-

 

 

(126

)

 

 

 

 

(510

)

         

$

172,863

 

$

126,138

 

$

33,153

 

$

9,997

 

$

-

 

$

4,829

 

 

 

$

 

18,327

 

         

Adjusted gross profit %

 

54.4

%

                                     

Amortization(5)

$

1,500

 

 

(7,270

)

 

8,770

 

 

(1,506

)

 

-

 

 

2,490

 

 

 

 

7,786

 

         

As adjusted

   

$

118,868

 

$

41,923

 

$

8,491

 

$

-

 

$

7,319

 

21.9

%

$

 

26,113

 

   

$

-

$

 

26,113

 

% of sales

 

   

 

37.4

%

 

13.2

%

                             

Adjusted diluted EPS

                                     

$

 

0.83

 

                                         

Shares

                               

 

30,662

 

 

1,133

 

 

31,795

 

Convertible note hedges(6)

                                     

 

 

(214

)

Adjusted diluted shares

                                     

 

 

31,581

 

                                         

 

Three Months Ended June 30, 2022

Gross Profit

Selling & Administrative Expense

Operating Income

Interest
Expense

Other Expense

Tax
Expense

Effective Tax Rate

Net Income (Loss)

Basic EPS

Adjustments(11)

Diluted EPS

As reported

$

151,777

 

$

115,826

 

$

24,458

 

$

5,928

 

$

112,011

 

$

74,810

 

-80.0

%

$

 

(168,291

)

   

$

-

$

 

(168,291

)

% of sales

 

54.8

%

 

41.8

%

 

8.8

%

                             

EPS

                               

$

(5.65

)

 

 

$

 

(5.65

)

Shares

                               

 

29,775

 

 

-

 

 

29,775

 

Acquisition and integration costs(1)

 

349

 

 

(2,600

)

 

2,949

 

 

-

 

 

-

 

 

(1,760

)

 

 

 

4,709

 

         

Legal matters(7)

 

-

 

 

(775

)

 

775

 

 

-

 

 

-

 

 

(462

)

 

 

 

1,237

 

         

Convertible note premium on extinguishment(8)

 

-

 

 

-

 

 

-

 

 

-

 

 

(103,125

)

 

(61,521

)

 

 

 

164,646

 

         

Change in fair value of convertible note hedges upon settlement(9)

 

-

 

 

-

 

 

-

 

 

-

 

 

(5,460

)

 

(3,257

)

 

 

 

8,717

 

         

Loss on early extinguishment of debt(10)

 

-

 

 

-

 

 

-

 

 

-

 

 

(3,426

)

 

(2,044

)

 

 

 

5,470

 

         

$

152,126

 

$

112,451

 

$

28,182

 

$

5,928

 

$

-

 

$

5,766

 

 

 

$

 

16,488

 

         

Adjusted gross profit %

 

54.9

%

                                     

Amortization(5)

$

1,500

 

 

(6,808

)

 

8,308

 

 

(1,036

)

 

-

 

 

2,291

 

 

 

 

7,053

 

         

As adjusted

   

$

105,643

 

$

36,490

 

$

4,892

 

$

-

 

$

8,057

 

25.5

%

$

 

23,541

 

   

$

1,263

$

 

24,804

 

% of sales

   

 

38.1

%

 

13.2

%

                             

Adjusted diluted EPS

                                     

$

 

0.76

 

                                         

Shares

                               

 

29,775

 

 

3,820

 

 

33,595

 

Convertible note hedges(6)

                                     

 

 

(856

)

Adjusted diluted shares

                                     

 

 

32,739

 

                                         
                                                               

(1) In 2023, the Company incurred charges related to the amortization of inventory step-up to fair value associated with the acquisition of In2Bones Global, Inc., and integration costs and professional fees associated with the acquisitions of In2Bones Global, Inc. and Biorez, Inc. In 2022, the Company incurred charges related to the amortization of inventory step-up to fair value and consulting and legal related costs associated with the acquisition of In2Bones Global, Inc.

(2) In 2023, the Company incurred costs related to the termination of distributor agreements.

(3) In 2023, the Company incurred additional freight, labor and travel costs as well as professional fees related to the implementation of a warehouse management software.

(4) In 2023, the Company recorded fair value adjustments to contingent consideration.

(5) Includes amortization of intangible assets and deferred financing fees.

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

(7) In 2022, the Company incurred costs related to a legal settlement.

(8) In 2022, the Company incurred costs related to the conversion premium on the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes.

(9) In 2022, the Company incurred costs related to the settlement of convertible notes hedge transactions associated with the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes.

(10) In 2022, the Company incurred costs related to the write-off of deferred financing fees associated with the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes and term loan paydown.

(11) The Company adopted ASU 2020-06, effective January 1, 2022. As a result of the adoption, the Company is required to compute diluted EPS using the if-converted method. Under the if-converted method, the numerator is adjusted for interest expense applicable to its convertible notes (net of tax) and the denominator includes additional common shares assuming conversion premium and principal portion of the notes (when permitted or required) are settled in shares. Subsequent to June 6, 2022, the Company is required to settle the principal value of its convertible notes in cash. Adjustments in 2022 are applicable on a non-GAAP basis only since GAAP results are in a loss position and therefore exclude dilutive potential shares.

                                     

Reconciliation of Reported Net Income (Loss) to Adjusted Net Income

(in thousands, except per share amounts, unaudited)

 

Six Months Ended June 30, 2023

Gross Profit

Selling & Administrative Expense

Operating Income

Interest
Expense

Other Expense

Tax
Expense

Effective Tax Rate

Net Income

Basic EPS

Adjustments

Diluted EPS

As reported

$

326,011

 

$

259,784

 

$

40,117

 

$

20,252

 

$

-

 

$

4,314

 

21.7

%

$

15,551

 

$

-

$

15,551

 

% of sales

 

53.2

%

 

42.4

%

 

6.5

%

EPS

$

0.51

 

$

0.49

 

Shares

 

30,587

 

 

912

 

31,499

 

Acquisition and integration costs(1)

 

4,269

 

 

(752

)

 

5,021

 

 

-

 

 

-

 

 

1,147

 

 

3,874

 

Termination of distributor agreements(2)

 

-

 

 

(2,098

)

 

2,098

 

 

-

 

 

-

 

 

417

 

 

1,681

 

Restructuring and related costs(3)

 

2,035

 

 

(1,578

)

 

3,613

 

 

-

 

 

-

 

 

930

 

 

 

2,683

 

 

 

 

Software implementation costs(4)

 

-

 

 

(6,056

)

 

6,056

 

 

-

 

 

-

 

 

1,453

 

 

4,603

 

Contingent consideration fair value adjustment(5)

 

-

 

 

(3,799

)

 

3,799

 

 

-

 

 

-

 

 

1,014

 

 

2,785

 

$

332,315

 

$

245,501

 

$

60,704

 

$

20,252

 

$

-

 

$

9,275

 

 

$

31,177

 

Adjusted gross profit %

 

54.2

%

Amortization(6)

$

3,000

 

 

(14,535

)

 

17,535

 

 

(3,012

)

 

-

 

 

5,020

 

 

 

15,527

 

As adjusted

$

230,966

 

$

78,239

 

$

17,240

 

$

-

 

$

14,295

 

23.4

%

$

46,704

 

$

-

$

46,704

 

% of sales

 

 

37.7

%

 

12.8

%

Adjusted diluted EPS

$

1.49

 

Shares

 

30,587

 

 

912

 

31,499

 

Convertible note hedges(7)

 

(138

)

Adjusted diluted shares

 

31,361

 

 

Six Months Ended June 30, 2022

Gross Profit

Selling & Administrative Expense

Operating Income

Interest
Expense

Other Expense

Tax
Expense

Effective Tax Rate

Net Income (Loss)

Basic EPS

Adjustments(12)

Diluted EPS

As reported

$

287,768

 

$

218,701

 

$

46,902

 

$

10,926

 

$

112,011

 

$

77,281

 

-101.6

%

$

(153,316

)

$

-

$

(153,316

)

% of sales

 

55.4

%

 

42.1

%

 

9.0

%

EPS

$

(5.18

)

 

$

(5.18

)

Shares

 

29,601

 

 

-

 

29,601

 

Acquisition and integration costs(1)

 

349

 

 

(2,600

)

 

2,949

 

 

-

 

 

-

 

 

(1,760

)

 

4,709

 

Legal matters(8)

 

-

 

 

(775

)

 

775

 

 

-

 

 

-

 

 

(462

)

 

1,237

 

Convertible note premium on extinguishment(9)

 

-

 

 

-

 

 

-

 

 

-

 

 

(103,125

)

 

(61,521

)

 

164,646

 

Change in fair value of convertible note hedges upon settlement(10)

 

-

 

 

-

 

 

-

 

 

-

 

 

(5,460

)

 

(3,257

)

 

8,717

 

Loss on early extinguishment of debt(11)

 

-

 

 

-

 

 

-

 

 

-

 

 

(3,426

)

 

(2,044

)

 

5,470

 

$

288,117

 

$

215,326

 

$

50,626

 

$

10,926

 

$

-

 

$

8,237

 

$

31,463

 

Adjusted gross profit %

 

55.5

%

Amortization(6)

$

3,000

 

 

(13,370

)

 

16,370

 

 

(1,916

)

 

-

 

 

4,451

 

 

13,835

 

As adjusted

$

201,956

 

$

66,996

 

$

9,010

 

$

-

 

$

12,688

 

21.9

%

$

45,298

 

$

2,978

$

48,276

 

% of sales

 

38.9

%

 

12.9

%

Adjusted diluted EPS

$

1.45

 

Shares

 

29,601

 

 

4,774

 

34,375

 

Convertible note hedges(7)

 

(1,134

)

Adjusted diluted shares

 

33,241

 

 

(1) In 2023, the Company incurred charges related to the amortization of inventory step-up to fair value associated with the acquisition of In2Bones Global, Inc., and integration costs and professional fees associated with the acquisitions of In2Bones Global, Inc. and Biorez, Inc. In 2022, the Company incurred charges related to the amortization of inventory step-up to fair value and consulting and legal related costs associated with the acquisition of In2Bones Global, Inc.

(2) In 2023, the Company incurred costs related to the termination of distributor agreements.

(3) In 2023, the Company incurred consulting fees related to an operational cost improvement initiative and severance related to the elimination of certain positions.

(4) In 2023, the Company incurred additional freight, labor and travel costs as well as professional fees related to the implementation of a warehouse management software.

(5) In 2023, the Company incurred expense related to the fair value adjustments of contingent consideration.

(6) Includes amortization of intangible assets and deferred financing fees.

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

(8) In 2022, the Company incurred costs related to a legal settlement.

(9) In 2022, the Company incurred costs related to the conversion premium on the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes.

(10) In 2022, the Company incurred costs related to the settlement of convertible notes hedge transactions associated with the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes.

(11) In 2022, the Company incurred costs related to the write-off of deferred financing fees associated with the repurchase and extinguishment of $275.0 million of its 2.625% Convertible Notes and term loan paydown.

(12) The Company adopted ASU 2020-06, effective January 1, 2022. As a result of the adoption, the Company is required to compute diluted EPS using the if-converted method. Under the if-converted method, the numerator is adjusted for interest expense applicable to its convertible notes (net of tax) and the denominator includes additional common shares assuming conversion premium and principal portion of the notes (when permitted or required) are settled in shares. Subsequent to June 6, 2022, the Company is required to settle the principal value of its convertible notes in cash. Adjustments in 2022 are applicable on a non-GAAP basis only since GAAP results are in a loss position and therefore exclude dilutive potential shares.

Reconciliation of Reported Net Income (Loss) to EBITDA & Adjusted EBITDA

(in thousands, unaudited)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Net income (loss)

$

13,732

 

 

$

(168,291

)

 

$

15,551

 

 

$

(153,316

)

Provision for income taxes

 

3,689

 

 

 

74,810

 

 

 

4,314

 

 

 

77,281

 

Interest expense

 

9,997

 

 

 

5,928

 

 

 

20,252

 

 

 

10,926

 

Depreciation

 

4,164

 

 

 

4,059

 

 

 

8,222

 

 

 

8,090

 

Amortization

 

13,900

 

 

 

13,266

 

 

 

27,777

 

 

 

26,065

 

EBITDA

$

45,482

 

 

$

(70,228

)

 

$

76,116

 

 

$

(30,954

)

 

 

 

 

 

 

 

 

Stock based compensation

 

6,422

 

 

 

5,755

 

 

 

12,148

 

 

 

10,218

 

Acquisition and integration costs

 

2,476

 

 

 

2,949

 

 

 

5,021

 

 

 

2,949

 

Termination of distributor agreements

 

2,098

 

 

 

-

 

 

 

2,098

 

 

 

-

 

Restructuring and related costs

 

-

 

 

 

-

 

 

 

3,613

 

 

 

-

 

Software implementation costs

 

1,797

 

 

 

-

 

 

 

6,056

 

 

 

-

 

Contingent consideration fair value adjustment

 

(636

)

 

 

-

 

 

 

3,799

 

 

 

-

 

Legal matters

 

-

 

 

 

775

 

 

 

-

 

 

 

775

 

Convertible notes premium on extinguishment

 

-

 

 

 

103,125

 

 

 

-

 

 

 

103,125

 

Change in fair value of convertible notes hedges upon settlement

 

-

 

 

 

5,460

 

 

 

-

 

 

 

5,460

 

Loss on early extinguishment of debt

 

-

 

 

 

3,426

 

 

 

-

 

 

 

3,426

 

Adjusted EBITDA

$

57,639

 

 

$

51,262

 

 

$

108,851

 

 

$

94,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA Margin

 

 

 

 

 

 

 

EBITDA

 

14.3

%

 

 

-25.3

%

 

 

12.4

%

 

 

-6.0

%

Adjusted EBITDA

 

18.1

%

 

 

18.5

%

 

 

17.8

%

 

18.3

%

About CONMED Corporation

CONMED is a medical technology company that provides devices and equipment for surgical procedures. The Company’s products are used by surgeons and other healthcare professionals 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 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 risk factors discussed in the Company's Annual Report on Form 10-K for the full year ended December 31, 2022, listed under the heading Forward-Looking Statements in the Company’s most recently filed Form 10-Q and other risks and uncertainties, which may be detailed from time to time in reports filed by CONMED with the SEC. 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 generally accepted accounting principles 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; 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, effective income tax rate, net income (loss), diluted shares and diluted net earnings (loss) 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.

We are unable to present a quantitative reconciliation of our expected diluted net earnings per share to expected adjusted diluted net earnings per share as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of acquisition, integration and other charges. The financial impact of these items is uncertain and is dependent on various factors, including timing, and could be material to our consolidated condensed statements of income.

CONMED Corporation
Todd W. Garner
Chief Financial Officer
727-214-2975
ToddGarner@conmed.com

Source: CONMED Corporation