Fed governors may dissent against Powell amid Trump pressure - WSJ’s Timiraos
Introduction & Market Context
CONMED Corporation (NYSE:CNMD) presented its first quarter 2025 earnings results on April 30, revealing modest revenue growth but a significant decline in GAAP earnings. The medical technology company, which operates in both orthopedic and general surgery markets, continues to navigate a challenging environment marked by currency headwinds and tariff impacts.
The company’s stock closed at $51.17 on the day of the presentation, down 4.24%, reflecting investor concerns about the mixed results. CONMED shares are currently trading closer to their 52-week low of $46 than their high of $78.58, suggesting ongoing market skepticism despite management’s optimistic outlook on long-term growth.
Quarterly Performance Highlights
CONMED reported worldwide revenue of $321.3 million for Q1 2025, representing a 2.9% increase year-over-year as reported and 3.8% growth in constant currency. The company’s performance showed a stark contrast between GAAP and non-GAAP earnings per share results.
As shown in the following detailed financial breakdown:
GAAP earnings per share fell dramatically to $0.19, a 69.3% decrease compared to $0.63 in the prior year period. However, non-GAAP EPS rose 20.1% to $0.95 from $0.79 year-over-year, suggesting significant one-time charges or adjustments affecting reported earnings.
The revenue mix continues to favor single-use products, which accounted for 86% ($276.3 million) of total revenue and grew 5.4% in constant currency. In contrast, capital products, representing 14% ($45.0 million) of revenue, declined by 4.7%, highlighting the company’s increasing reliance on recurring revenue streams.
Geographically, domestic revenue reached $183.8 million (57% of total) with 4.2% constant currency growth, while international revenue totaled $137.5 million (43%) with 3.4% growth. By business segment, General Surgery contributed $183.0 million while Orthopedic Surgery generated $138.3 million.
Strategic Market Positioning
CONMED operates in several large and attractive markets across both its Orthopedics and General Surgery segments. The company’s presentation highlighted its strategic positioning in these markets, emphasizing the value of gaining market share in each segment.
The Orthopedics segment, which derives 62% of its revenue internationally and features 79% recurring single-use revenue, targets several substantial markets as illustrated in this breakdown:
Similarly, the General Surgery segment, which is more domestically focused with 71% of revenue from the US and has an even higher proportion of recurring revenue at 92%, competes in multiple billion-dollar markets:
This market positioning demonstrates CONMED’s strategy of targeting high-value segments where even small market share gains can translate to significant revenue opportunities. The company’s emphasis on recurring revenue through single-use products provides a more stable revenue base compared to capital equipment sales.
Strategic Initiatives
CONMED outlined several key focus areas driving its strategic direction, including product innovations and operational improvements. The company is particularly focused on strengthening its AirSeal clinical insufflation technology, which is experiencing double-digit demand in 2025 and has shown clinical benefits in reducing hospital length of stay.
Other strategic priorities include:
Notably, the company is working to improve its operational efficiency by engaging a top-tier consulting company and strengthening its supply chain. This focus on operational improvements appears to be a response to the supply chain challenges mentioned in previous earnings reports, which had led to downward revisions in guidance during 2024.
CONMED also highlighted its progress in reducing leverage, with a ratio of 3.2 as of March 31, 2025, and expectations to bring this below 3.0 by year-end, indicating a focus on strengthening the balance sheet.
Forward-Looking Statements
CONMED provided updated financial guidance for 2025, projecting revenue between $1,350.0 million and $1,378.0 million, representing approximately 4-6% constant currency growth. The adjusted earnings outlook shows the impact of both currency headwinds and tariffs on the company’s bottom line:
The guidance reveals that foreign currency impact is expected to reduce EPS by $0.10-$0.15, while tariffs could subtract an additional $0.14. Despite these headwinds, CONMED still projects 3-7% growth in adjusted EPS for the full year.
This cautiously optimistic outlook suggests management believes its strategic initiatives and market positioning will help overcome external challenges, though the projected growth rates are more modest than those seen in previous years.
Environmental, Social, and Governance Focus
CONMED also emphasized its commitment to environmental, social, and governance (ESG) initiatives, highlighting several programs across these areas:
The company’s 98% employee participation rate in the Gallup Q12 Employee Engagement Survey suggests strong internal engagement, while its environmental initiatives include recycling programs and developing capabilities to measure greenhouse gas emissions. These ESG efforts align with increasing investor focus on sustainability and corporate responsibility.
Market Reaction and Outlook
The market’s initial reaction to CONMED’s Q1 results was negative, with shares falling 4.24% on the day of the presentation. The significant gap between GAAP and non-GAAP earnings performance likely contributed to investor concerns, as did the relatively modest revenue growth compared to previous expectations.
Looking ahead, CONMED faces both opportunities and challenges. The company’s strong position in large, attractive markets and focus on recurring revenue provide a solid foundation for growth. However, external factors such as currency fluctuations, tariffs, and potential ongoing supply chain issues could continue to pressure margins and earnings.
The company’s strategic focus on operational improvements and key growth areas like AirSeal, Buffalo Filter, and the Foot & Ankle segment will be critical in determining whether CONMED can accelerate growth and improve profitability in the remainder of 2025 and beyond.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.