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CONMED Corp (CNMD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered modest top-line growth with revenue at $337.9M (+6.7% YoY; -1.3% QoQ), and adjusted EPS of $1.08 (+2.9% YoY; -6.1% QoQ); both revenue and EPS slightly exceeded Street consensus, while GAAP EPS fell to $0.09 due to sizable non-GAAP adjustments .
  • Management narrowed FY25 revenue guidance to $1.365–$1.372B and adjusted EPS to $4.48–$4.53, and introduced Q4 guidance: revenue $363–$370M, adjusted EPS $1.30–$1.35; tariffs are expected to impact Q4 EPS by ~$0.07 .
  • Capital allocation pivot: dividend suspended; $150M share repurchase authorized with at least $25M of buybacks annually beginning in 2026—management cites reaching 3.0x leverage as the key threshold for this change .
  • Operating themes: supply chain execution improved (record ortho manufacturing volumes, backorders reduced); adjusted gross margin 56.1% (ahead of projection) despite 20 bps tariff headwind and Q1 inventory variances flowing through Q3; QoQ mix and tariffs weighed on margins sequentially .
  • Near-term stock reaction catalysts: clearer Q4 guide with tariff quantification, capital return shift to buybacks, and improving orthopedics supply chain trajectory .

What Went Well and What Went Wrong

What Went Well

  • Orthopedics and General Surgery grew 5.3% and 6.9% in constant currency, respectively; international General Surgery +9.2% cc, highlighting strength in Buffalo Filter and AirSeal .
  • Adjusted gross margin was 56.1% vs expectation, aided by favorable mix; adjusted EPS of $1.08 and revenue both slightly above consensus .
  • Strategic capital return shift: “The Board has authorized a new $150 million share repurchase program… Today we are suspending the dividend and you should expect at least $25 million of share repurchases annually going forward” — CEO Pat Beyer .

What Went Wrong

  • GAAP profitability compressed: GAAP EPS fell to $0.09 vs $1.57 a year ago, reflecting product rationalization and consulting costs, among other items .
  • Sequential revenue and adjusted EPS declined vs Q2 (Rev: $337.9M vs $342.3M; Adj EPS: $1.08 vs $1.15) as tariffs and prior-period manufacturing variances weighed on margins .
  • Tariffs remain a headwind: ~$0.02 EPS impact in Q3 and ~$0.07 expected in Q4; adjusted gross margin YoY -40 bps, including ~20 bps from new tariffs .

Financial Results

Headline P&L vs Prior Year and Prior Quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$316.7 $342.3 $337.9
GAAP Diluted EPS ($)$1.57 $0.69 $0.09
Adjusted Diluted EPS ($)$1.05 $1.15 $1.08
GAAP Gross Margin (%)56.5% 55.0% 49.2%
Adjusted Gross Margin (%)56.5% 56.5% 56.1%

Segment and Product Mix (Q3 2025 vs Q3 2024)

Segment/ProductQ3 2024 ($M)Q3 2025 ($M)YoY As Rep.YoY Constant Currency
Orthopedic Surgery$130.5 $138.2 +5.9% +5.3%
General Surgery$186.2 $199.7 +7.3% +6.9%
Single-use Products$270.8 $289.2 +6.8% +6.3%
Capital Products$45.9 $48.7 +6.3% +6.0%
Domestic Revenue$183.2 $194.0 +5.9% +5.9%
International Revenue$133.5 $143.9 +7.8% +6.8%

KPIs and Balance Sheet Progress (Sequential)

KPIQ2 2025Q3 2025
Cash Balance ($M)$33.9 $38.9
Cash from Operations ($M)$29.1 $53.7
Capital Expenditures ($M)$5.7 $5.2
AR Days62 60
Inventory Days212 191
Long-term Debt ($M)$881.1 $853.0
Leverage Ratio (x)3.1x 3.0x

Results vs Consensus (Q3 2025)

MetricConsensusActualSurprise
Revenue ($USD)$334.8M*$337.9M +$3.2M
Primary EPS ($)$1.052*$1.08 +$0.028

Values with asterisks (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)FY 2025$1.356B–$1.378B $1.365B–$1.372B Narrowed
Adjusted EPS ($)FY 2025$4.40–$4.55 $4.48–$4.53 Narrowed/Raised bottom end
Revenue ($USD)Q4 2025N/A$363M–$370M New Q4 guide
Adjusted EPS ($)Q4 2025N/A$1.30–$1.35 New Q4 guide
Adjusted Gross Margin (%)Q4 2025Approaching 57% without tariffs (prior trajectory) Mid-55% with ~150 bps tariff headwind Lower vs pre-tariff view
Capital Return PolicyOngoingQuarterly dividend (~$25M/yr historically) Dividend suspended; $150M buyback; ≥$25M/yr repurchases from 2026 Reallocated to buybacks

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Supply chain/operationsIdentified improvement plan; $20M annual savings target; focus on procurement/planning/production; ortho backorders declining Record ortho manufacturing volumes; critical SKUs reduced; continued progress expected in Q4 Improving; not “done” yet; sequential progress
Tariffs/macroFY tariff estimate ~$0.14 (Q3 $0.02; Q4 $0.12); mitigations outlined Tariff impact confirmed: Q3 ~$0.02, Q4 ~$0.07; gross margin YoY impact ~20 bps Headwind moderating vs prior estimate; quantified in guidance
AirSeal adoption (robotic & laparoscopy)XI attachment rising to 35–40%; DV5 AirSeal usage ~10–20% of procedures; non-robotic laparoscopy growth targeted DV5 systems seeing ~80–90% procedure rates; AirSeal benefits reiterated; ASC and international Xi redeployment seen as opportunity Broadening use cases; international/ASC tailwinds
Smoke evacuation (Buffalo Filter)Legislative momentum: 19 U.S. states; new PX5 product launched Continued momentum from mandates and protocols; supports General Surgery growth Structural tailwind intact
BioBrace (Sports Med)52 procedures; RC delivery device cleared; double-digit demand 70+ procedures; expanded indications driving adoption Accelerating clinical adoption
Capital environmentQ2: tough comps; no broad demand slowdown Hospitals continue investing; healthy capital market; interest rates easing supportive Stable-to-improving
Balance sheet/leverageTargeting <3.0x by YE25; progress through debt reduction Achieved 3.0x; enabled pivot to buybacks Deleveraging achieved; flexibility increased
Legal/regulatoryOngoing royalty-related third-party services expenses Legal matters continued as adjustment line items Non-core, recurring adjustments

Management Commentary

  • Strategic focus: “Early findings confirmed that our strongest growth opportunities lie in our core markets: minimally invasive robotic and laparoscopic surgery, smoke evacuation, and the surgical treatment of orthopedic soft tissue repair… AirSeal, Buffalo Filter, and BioBrace… will be the cornerstone of our future investments” — CEO Pat Beyer .
  • Capital return: “The Board has authorized a new $150 million share repurchase program… Today we are suspending the dividend and you should expect at least $25 million of share repurchases annually going forward” — CEO Pat Beyer .
  • Margin/operations: “Adjusted gross margin for the third quarter was 56.1%, which was ahead of our projection due to positive sales mix… driven by Q1 manufacturing variances and ~20 bps headwind from new tariffs” — CFO Todd Garner .
  • FY/Q4 guide: “Q4 revenue $363–$370M… adjusted EPS $1.30–$1.35… FY adjusted EPS $4.48–$4.53… includes ~$0.07 EPS tariff impact in Q4” — CFO Todd Garner .

Q&A Highlights

  • Dividend suspension rationale: leverage at 3.0x achieved; align with peer capital return norms and repurchase undervalued shares; no change in M&A or debt priorities — CFO .
  • Tariff cadence clarified: impacts travel with inventory (~6-month deferral); Q3 ~$0.02, Q4 ~$0.07; consistent with prior disclosures — CFO .
  • AirSeal & DV5: Early AirSeal adoption constrained by hospital DV5 commitment volumes; AirSeal delivers reduced pain and shorter length of stay; post-commitment adoption trending 80–90% at sites — CEO .
  • Orthopedics supply chain: Record manufacturing volumes; critical SKU backorder reductions; expect further progress in Q4; share recapture likely to take “a quarter or two” post-availability — CEO .
  • Capital environment/margins: Healthy capital demand; “tens of millions” savings targeted over time offset by tariffs; 2026 guidance deferred to Q4 call — CFO .

Estimates Context

  • Q3 2025 results modestly exceeded consensus: revenue beat by ~$$3.2M and adjusted EPS beat by ~$$0.03; adjusted EBITDA was close to consensus (actual $65.6M vs consensus $66.7M) suggesting slight miss on EBITDA despite mix-aided gross margin .
  • With tariffs now quantified and FY guidance narrowed, sell-side estimates may modestly tighten around mid-55% Q4 adjusted gross margin and Q4 EPS range; buyback authorization could influence medium-term EPS forecasts through share count effects from 2026 .

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue and adjusted EPS slightly beat consensus; GAAP earnings compressed due to significant non-GAAP adjustments — focus on adjusted metrics for core trend tracking .
  • FY25 guidance narrowed with explicit tariff impact; Q4 margin/EPS parameters de-risk near-term expectations; watch execution vs mid-point .
  • Capital allocation pivot to buybacks is a near-term sentiment positive; leverage at 3.0x creates flexibility for repurchases starting 2026 .
  • Orthopedics supply chain recovery is the key operational driver into Q4/Q1; monitor backorder normalization and market share recapture cadence .
  • AirSeal/Buffalo Filter remain structural growth engines (robotic, laparoscopy, smoke legislation); BioBrace adoption broadening (70+ procedures) enhances Sports Med growth runway .
  • Tariffs remain a measurable headwind but are now better quantified; incremental mitigation (logistics, pricing) could reduce 2026 run-rate impact pending policy developments .
  • For trading: catalysts include Q4 execution vs guide, further supply chain wins in ortho, and clarity on 2026 outlook at the next call; sentiment supported by buyback authorization .