) posted adjusted earnings per share of 47 cents for the second
quarter of 2014, up 9.3% from 43 cents recorded in the same quarter
of 2013. However, earnings fell short of the Zacks Consensus
Estimate by a penny. Adjusted net earnings improved 8.7% to $12.9
million from $11.9 million in the same quarter of 2013.
Conmed Corporation - Quarterly EPS (BNRI) |
Revenues in the quarter dipped 2.5% (2.3% on a constant currency
basis) to $188.2 million and also missed the Zacks Consensus
Estimate of $190 million. The decrease can be attributed to weaker
sales of General Surgery devices, Surgical Visualization capital
products and the discontinuance of the Cascade PRP product line.
Geographically, domestic revenues came in at $87.7 million,
accounting for 46.6% of total revenues. International revenues in
the quarter totaled $100.4 million, accounting for 53.4% of total
In terms of product category, CONMED generated revenues of $150.2
million and $38.0 million from single-use and capital products,
respectively. Both, single-use and capital products revenues
reflected a decline of 2.3% and 3.1%, respectively, from the
Revenues from the
business edged up 0.6% (or 0.8% in constant currency) to $102.4
million. Meanwhile, revenues from
were down 3.4% (or 3.2% in constant currency) to $70.7 million.
slipped 16.1% both in reported and constant currency to $15.1
Expenses and Margins
Gross profit declined 1.8% to $101.0 million in the reported
quarter. However, adjusted gross margin expanded 20 basis points
(bps) to 54.4% from 54.2% in the year-ago quarter.
Selling and administrative expenses fell 4.1% to $74.0 million
while research and development expenses increased 4.0% to $6.9
Adjusted operating earnings increased 4.1% to $20.1 million and
adjusted margin expanded 70 basis bps to 10.7% from 10.0% in the
second quarter of 2013. Adjusted EBITDA edged up 0.4% to $32.8
million in the quarter while adjusted EBITDA margin rose 50 bps to
17.4% from 16.9% in the same period a year ago.
CONMED exited the quarter with cash and cash equivalents of $60.4
million as of Jun 30, 2014, up 11.0% from $54.4 million as of Dec
31, 2013. Long-term debt (inclusive of current portion) increased
14.1% to $246.0 million from $215.6 million as of Dec 31, 2013.
Consequently, the long-term-debt-to-capitalization ratio rose 280
bps to 29.0% from 26.2% as of Dec 31, 2013.
CONMED lowered its adjusted earnings and revenue guidance for
full-year 2014. Adjusted earnings per share are expected in the
range of $1.85-$1.95 compared to the prior range of $1.90-$2.00.
The Zacks Consensus Estimate of $1.93 lies within the guided range.
According to management, new products such as the IM 800 surgical
visualization system and the Edge Ablation system, expected to be
launched in the second half of 2014, should boost revenues.
However, it may take more time than the final six months of the
year for the products to reach their potential.
Consequently, CONMED lowered its revenues guidance to the range of
$735 to $745 million from the prior range of $770 to $780 million
for full-year 2014. The Zacks Consensus Estimate for the same is
currently pegged higher at $770 million.
CONMED's second-quarter earnings and revenue miss as well as a
slashed guidance for the full year raises concern. Additionally,
the company faces near-term challenges such as forestalled customer
orders, ineffective supply by its contract suppliers and weak
single-use product sales.
Moreover, lower level of healthcare utilization in the U.S. and the
current capital spending environment continues to dampen sales of
medtech companies. Nevertheless, CONMED is slated to launch several
new products in the second half of 2014 which should drive revenues
and restore our confidence in the stock to some extent.
Currently, CONMED carries a Zacks Rank #3 (Hold). Better-ranked
stocks in the medical/dental supplies industry include
Bio-Reference Laboratories Inc.
The Cooper Companies Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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CONMED CORP (CNMD): Free Stock Analysis Report
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