), a medical technologies and surgical devices company, reported
fourth-quarter 2012 adjusted earnings (excluding one-time
expenses) of 52 cents per share, beating the Zacks Consensus
Estimate of 50 cents. The company also surpassed the year-ago
earnings of 46 cents a share, up 13.0%.
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Adjusted earnings exclude one-time items such as severance and
relocation costs of $4 million, before taxes associated with the
Viking acquisition, certain relocation and restructuring
activities. Also excluded were the integration charges related to
the buyout of a distributor and certain legal charges.
Profit in the reported quarter was $10.9 million (or 38 cents per
share) compared with a loss of $25.1 million (or a loss of 90
cents per share) in the year-ago quarter. In the prior-year
quarter, the company was affected by the impact of high non-cash
goodwill impairment charge (of $60.3 million) related to its
Patient Care business. Healthy sales growth across all segments
(except Patient Care) and margin expansion led to incremental
For the full year, adjusted earnings of $1.80 a share beat the
Zacks Consensus Estimate by a penny and was ahead of the year-ago
earnings of $1.50. Earnings met the top-end of the company's
guidance of $1.76 to $1.80 per share. According to management,
the company witnessed solid bottom-line growth along with strong
Revenues grew 8.4% (up 7.8% in terms of constant currency) year
over year to $201.2 million beating the Zacks Consensus Estimate
of $200 million. On an organic basis, revenues increased 3.3% in
the quarter. Sales were within the company's forecast range of
$199 million and $204 million. For the full year, revenues
increased 5.8% year over year to $767.1 million, marginally
topping the Zacks Consensus Estimate.
On a geographic basis, revenues from the international markets
(50.2% of total sales) grew 10.6% to $101.0 million in the fourth
quarter. On a positive note, the company's foreign exchange
hedging policy led to an increase in sales by $1.1 million in the
In addition, single-use products sales (79.7% of total sales)
grew 10.7% to $160.4 million, while capital offerings (20.3% of
total sales) slightly edged up 0.2% to $40.8 million in the
Revenues from the core Arthroscopy segment jumped 16.4% year over
year (up 15.6% in constant currency) to $86.6 million. Sales from
Powered Surgical Instruments and Electrosurgery increased 4.1%
and 1.6% year over year to $38.3 million and $26.1 million,
Revenues from the Endoscopic Technologies division and
Endosurgery grew 6.3% and 4.7% to $13.4 million and $19.9
million, respectively. However, revenues from Patient Care dipped
1.2% to $16.9 million.
Gross margin rose to 53.3% in the fourth quarter of 2012 from
52.0% in the year-ago quarter. Adjusted operating margin
increased 80 basis points to 11.5% of sales.
Selling and administrative charges were higher at 39.7% of sales
compared with 37.9% in the year-ago quarter, led by selling
expenses associated with the MTF allograft products. Research and
Development expenses, as a percentage of sales, were down at 3.4%
of sales versus 3.9% in the prior-year quarter.
CONMED exited the fourth quarter of 2012 with cash and cash
equivalents of $23.7 million, down 8.8% year over year. Long-term
debt (inclusive of current portion) increased 12.7% year over
year to $161.9 million. Operating cash flow stood at $33.9
million in the quarter, representing 16.9% of sales in the fourth
CONMED expects adjusted earnings in a range of 42 cents to 47
cents for the first quarter of 2013. Revenues are projected to
remain in the band of $192 million and $198 million. The current
Zacks Consensus Estimates for revenues and earnings per share in
2013 are $201 million and 44 cents, respectively.
The company reiterated its outlook for 2013. Revenues are
anticipated between $785 million and $795 million in 2013. CONMED
expects adjusted earnings to be in the band of $1.80 and $1.90
per share for 2013, reflecting 5% growth in earnings per share.
Earlier, the company anticipated 15% earnings growth but the
MedTech excise tax and foreign exchange fluctuations have
dampened earnings growth by 25 cents.
Adjusted earnings forecast for the first quarter and full year
2013 exclude one-time charges such as consolidation costs
associated with the merger of the Tampere, Finland facility into
the U.S. facilities and restructuring charges related to the
integration of the Viking acquisition.
The current Zacks Consensus Estimates for revenue and earnings
per share for full year 2013 are $791 million and $1.84,
CONMED is a medical products maker, specializing in surgical
instruments and devices. A large percentage of the company's
products are designed for minimally invasive surgery, a trend
that is extremely popular these days.
However, we remain concerned about poor capital product sales,
although improving, due to the ongoing dismal macroeconomic
conditions. Moreover, CONMED operates in a highly-competitive
orthopedic surgery market against much larger, more
The company carries a Zacks Rank #3 (Hold). While we remain on
the sidelines regarding CONMED, Medical/Dental Supply company -
Medical Action Industries Inc.
) carrying a Zacks Rank #1 (Strong Buy) is worth a look. Other
companies, such as
Becton, Dickinson and Company
The Cooper Companies Inc.
) with a Zacks Rank #2 (Buy) can also be considered for