Executive Summary

Q1 2025 delivered balanced growth and clean beats: revenue $321.3M (+2.9% reported; +3.8% cc) vs S&P Global consensus $313.4M, and adjusted EPS $0.95 vs $0.81; management raised FY revenue and adjusted EPS guidance on improved FX and operational execution . Values retrieved from S&P Global.*
Mix and execution aided profitability: adjusted gross margin expanded 80 bps YoY to 56.4% despite ongoing supply chain work; management outlined a quarter-by-quarter GM cadence (Q2 mid-56s, Q3 mid-55s, Q4 ~57%) .
Orthopedics growth (cc +3.9%) was led by double-digit Foot & Ankle and strong BioBrace adoption; General Surgery (cc +3.8%) continued double-digit demand in AirSeal and smoke evacuation; domestic +4.2% outpaced international +1.2% reported (+3.4% cc) .
Guide raised: FY25 revenue to $1.350–$1.378B (prior $1.344–$1.372B) and adjusted EPS to $4.45–$4.60 (prior $4.25–$4.40); Q2 revenue guided to $335–$340M and Q2 adjusted EPS to $1.10–$1.15. Tariff impact (not included) estimated at ~$0.14 EPS headwind in 2H (Q3 ~$0.02; Q4 ~$0.12) .
Stock-relevant catalysts: raised FY guide, visible GM cadence, and continued AirSeal/BioBrace momentum versus a manageable tariff overhang and ongoing supply-chain normalization .

What Went Well and What Went Wrong

What Went Well
- Broad-based growth and beats: revenue $321.3M and adjusted EPS $0.95 exceeded Street; FX headwind improved to 50–70 bps (from 100–120 bps), enabling a guidance raise . Values retrieved from S&P Global.*
- Segment momentum: Orthopedics (cc +3.9%) led by double-digit Foot & Ankle; General Surgery (cc +3.8%) with continued double-digit demand in AirSeal and smoke evacuation .
- Management tone: “good start to 2025,” confidence in achieving full-year guidance; CEO highlighted strengthening operations to support growth platforms (AirSeal, Buffalo Filter, BioBrace, Foot & Ankle) .
What Went Wrong
- GAAP EPS compression: GAAP diluted EPS fell to $0.19 (vs $0.63 YoY) due to executive transition costs and other adjustments despite strong adjusted EPS performance .
- Supply chain still not “where we need to be”: SKU backorders are declining, but management expects full normalization later in 2025; Orthopedics U.S. performance pressured by supply challenges .
- Tariff overhang: updated framework suggests ~$0.14 EPS headwind in 2H25 (not in guidance), largely China-sourced; mitigation requires logistics re-routing and longer-dated vendor/site changes .

Financial Results

Core P&L – Sequential trend (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$316.7	$345.9	$321.3
GAAP Diluted EPS	$1.57	$1.08	$0.19
Adjusted Diluted EPS	$1.05	$1.34	$0.95
Gross Margin % (GAAP)	56.5%	57.3%	55.3%
Adjusted Gross Margin %	56.5%	57.6%	56.4%
EBITDA ($M)	$83.7	$70.5	$34.2
Adjusted EBITDA ($M)	$64.6	$80.0	$61.3
Adjusted EBITDA Margin %	20.4%	23.1%	19.1%

Year-over-Year comparison (Q1 2025 vs Q1 2024)

Metric	Q1 2024	Q1 2025
Revenue ($M)	$312.3	$321.3
GAAP Diluted EPS	$0.63	$0.19
Adjusted Diluted EPS	$0.79	$0.95
Gross Margin % (GAAP)	55.1%	55.3%
Adjusted Gross Margin %	55.6%	56.4%
EBITDA ($M)	$53.1	$34.2
Adjusted EBITDA ($M)	$56.3	$61.3

Consensus comparison (Q1 2025)

Metric	Consensus	Actual
Revenue ($M)	$313.4*	$321.3
Adjusted EPS	$0.812*	$0.95

Values retrieved from S&P Global.*

Segment and mix

Sales ($M)	Q3 2024	Q4 2024	Q1 2025
Orthopedic Surgery	$130.5	$139.0	$138.3
General Surgery	$186.2	$206.9	$183.0
Single-use Products	$270.8	$297.3	$276.3
Capital Products	$45.9	$48.6	$45.0
Domestic	$183.2	$203.3	$183.8
International	$133.5	$142.6	$137.5

Operating KPIs and balance sheet

KPI	Q4 2024	Q1 2025
Cash and Equivalents ($M)	$24.5	$35.5
Cash from Operations ($M)	$43.3	$41.5
Capital Expenditures ($M)	$4.0	$3.8
AR Days	62	62
Inventory Days	211	222
Long-term Debt ($M)	$905.1	$891.4
Leverage Ratio (x)	3.35x	3.2x

Non-GAAP adjustments of note in Q1: executive transition costs, contingent consideration fair value adjustments, operational consulting fees, legal matters, and a small gain on sale of a product line -.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue (reported)	FY 2025	$1.344–$1.372B	$1.350–$1.378B	Raised
Adjusted Diluted EPS	FY 2025	$4.25–$4.40	$4.45–$4.60	Raised
FX Headwind to Revenue	FY 2025	~100–120 bps	~50–70 bps	Less negative
Q2 Revenue (reported)	Q2 2025	—	$335–$340M	New
Q2 Adjusted EPS	Q2 2025	—	$1.10–$1.15	New
Gross Margin cadence	2025	~flat vs 2024 (context)	Q2 mid-56s; Q3 mid-55s; Q4 ~57%	Elaborated
Adjusted Interest Expense	FY 2025	$27.5–$28.0M	Not updated (context only)	Maintained
Adjusted ETR	FY 2025	Mid-24%	Not updated (Q1 actual 23.1%)	Maintained
Tariffs (EPS impact)	2H 2025	Excluded	Excluded; est. -$0.14 (Q3 ~$0.02; Q4 ~$0.12)	Disclosure refined
Dividend	Regular	$0.20 declared 2/24/25, payable 4/4/25	—	Confirmed

Note: Management emphasized tariff impact is excluded from guidance and is subject to change; Mexico production is USMCA-compliant and exempt under current view .

Earnings Call Themes & Trends

Topic	Q3 2024 (prior-2)	Q4 2024 (prior-1)	Q1 2025 (current)	Trend
Supply chain and operations	In-line quarter; ongoing operational recovery; hurricanes Helene/Milton disruption acknowledged -	Still below potential in Orthopedics; engaged top-tier consultants; expect 2025 to be a “construction” year for ops -	SKUs on backorder declining; not fully normalized; expect better position by year-end	Gradual improvement; normalization by late 2025
Gross margin trajectory	56.5% GM in Q3; adjusted GM 56.5% -	2025 GM likely similar to 2024; mix tailwind but FX and ops work offset near-term	GM cadence: Q2 mid-56s, Q3 mid-55s, Q4 ~57%	Clear intra-year roadmap
Tariffs/macro	Not detailed	Quantified worst-case tariff math; excluded from 2025 guide	Tariff EPS headwind ~$0.14 in 2H; mitigation via logistics, potential pricing, vendor/site changes	Better quantified; mitigation plan forming
Product performance (AirSeal)	Franchise momentum sustained	“Record year,” double-digit growth; durable outlook	Double-digit demand; DV5-specific SKU grew double digits; working to clarify attach rates	Continues to outperform
BioBrace & Foot & Ankle	—	Positive momentum; key growth driver	Double-digit Foot & Ankle; 14 publications, 9 studies; new 510(k) delivery device cleared in Apr	Strengthening clinical and commercial
Regional trends	Q3 domestic +7.4%, international -0.4% reported	Q4 domestic +6.8%, international +4.4%	Q1 domestic +4.2%, international +1.2% reported (+3.4% cc)	Steady domestic outperformance
Legal/regulatory	—	Ongoing legal matters as adjusting items	Legal matters remain in adjustments	Continued but contained

Management Commentary

“We had a good start to 2025, which positions us well to achieve our full-year guidance.” – Patrick J. Beyer, President & CEO .
“Adjusted gross margin for the first quarter was 56.4%, which is 80 basis points higher than the prior year quarter… we expect at least $20 million of annual savings [from supply chain improvements]… benefits won’t really materialize until calendar 2026.” – Todd Garner, CFO .
“AirSeal and smoke evacuation [saw] double-digit demand… AirSeal has been clinically proven to reduce both length of stay and postoperative pain.” – Patrick J. Beyer .
“BioBrace… being used clinically in over 50 procedures… 14 peer-reviewed publications… 9 clinical studies underway… large randomized prospective study (268 patients).” – Patrick J. Beyer .
“It has become clear that product coming from our plant in Mexico will be exempt from tariffs… we estimate approximately $5.5 million of supply chain exposure in 2025… approximately $0.14 of EPS with $0.02 hitting Q3 and $0.12 hitting Q4.” – Todd Garner .

Q&A Highlights

Why guide didn’t rise more despite a beat: Management kept constant-currency growth view at 4–6% and raised only for FX improvement, preferring not to “get ahead” after Q1; no signs of hospital budget softness flagged .
Tariff math and mitigation: Mexico shipments exempt under USMCA; primary exposure is China; mitigation includes re-routing logistics (avoid U.S. when shipping OUS), potential pricing where industry-wide, and longer-term vendor/site changes in a regulated environment .
Supply chain progress: Focus on procurement, planning, and production; several implant portfolios off backorder; expecting better position by year-end .
AirSeal and DV5: Continued adoption across robotic and laparoscopy; DV5-only SKU grew double digits; attachment rates being studied but not quantified yet .
Growth algorithm post-normalization: Portfolio viewed as a 4–9% top-line grower with potential to drive adjusted EPS growth at ~2x revenue over time; supply chain normalization key to move toward upper end .

Estimates Context

Q1 2025 vs S&P Global consensus: Revenue $321.3M vs $313.4M*; Adjusted EPS $0.95 vs $0.812*; both beats, consistent with improved FX and resilient demand in key platforms (AirSeal, BioBrace) . Values retrieved from S&P Global.*
FY 2025 estimates likely to move up modestly on the EPS raise to $4.45–$4.60 and clearer GM cadence, partially offset by tariff uncertainty excluded from guidance -.

Key Takeaways for Investors

Quality beat-and-raise: Revenue and adjusted EPS upside with a prudent FY raise anchored in better FX and execution; near-term narrative: delivery against laid-out GM cadence and Q2 guide ($335–$340M revenue; $1.10–$1.15 EPS) .
Growth engines intact: AirSeal and smoke evacuation with double-digit demand; Foot & Ankle and BioBrace continue to scale on growing clinical evidence and new delivery device clearance .
Operations trending better but still a 2025 project: Expect back-half GM uptrend; major savings ($20M annual) slated for 2026 as improvements flow through inventory accounting .
Tariffs manageable but a watch item: ~$0.14 EPS headwind concentrated in Q4 under current assumptions; mitigation underway; not included in guidance .
Cash engine steady: Strong operating cash flow and deleveraging continue; leverage improved to 3.2x; long-term plan remains to grow EPS at ~2x revenue growth - .
Mix tailwind persists: Despite FX and ops headwinds, structural mix supports margin resilience with a clearer intra-year trajectory (Q4 highest) .
Capital and dividend discipline: Modest capex; regular $0.20 dividend maintained; opportunistic M&A balanced against deleveraging priorities .

CONMED Corp (CNMD)·Q1 2025 Earnings Summary