CONMED's 2014-first-quarter earnings of $0.49 rose 8.9% and beat
the Zacks Consensus Estimate by $0.02. However, revenues continue
to fall (2.7%) due to weaker sales of capital products . The
company expects y-o-y rise in revenues and earnings for 2014 based
on continued higher single use products sales and improved capital
products sales. However, CONMED competes in the orthopedic surgery
market against much larger companies amid a still weak capital
purchasing environment. Lower healthcare spending in the global
market is also a matter of concern. As such, we maintain our
Neutral recommendation with a target of $47.00.
Headquartered in Utica, N.Y., CONMED Corporation (CNMD) is a
major medical products manufacturer specializing in surgical
instruments and devices. Approximately 60% of the company's
revenues are derived from products designed for the orthopedic
surgery markets of arthroscopy and powered surgical instruments.
CONMED markets its arthroscopy, multi-specialty endoscopic medical
video systems, and powered surgical instruments through its
The company also sells products for general and other surgical
specialties such as electrosurgery systems for all types of
surgery, and endosurgery instruments for minimally invasive
laparoscopic surgery. Patient Care products, including ECG
electrodes for heart monitoring and pulse oximetry for blood
oxygenation monitoring, are provided for various clinical
Approximately 80% of CONMED's revenues are recurring, derived
from the sale of disposable single-use products. Capital equipment
(less than 20% of sales) such as powered drills and saws for
surgery, electrosurgical generators, video-imaging cameras, fluid
control systems, and surgical hand-pieces are marketed to
facilitate the sale of the disposable products.
CONMED has 3,600 employees and several manufacturing facilities.
The company distributes its products globally through its own sales
network in the U.S. and internationally. It also distributes its
products through specialty distributors in certain international
markets. International revenues contributed roughly 50% of total
sales in 2012.
Effective Jan 1, 2013, the company combined its various segments
to form three categories viz. orthopedic surgery (54.1% of total
sales in the first nine months of 2013), general surgery (37.5%)
and surgical visualization (8.4%). The reshuffling became necessary
after the acquisition of Viking, which the company acquired in
The orthopedic surgery product line includes CONMED's sports
medicine instrumentation and small bone, large bone and specialty
powered surgical instruments. General surgery consists of a
complete line of endo-mechanical instrumentation for minimally
invasive laparoscopic and gastrointestinal procedures, a line of
cardiac monitoring products as well as electrosurgical generators
and related instruments. The surgical visualization business
includes all of CONMED's 2D and 3D imaging devices.
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