CONMED Corp Q3 FY2025 earnings call

• Pat Beyer recognized the global team's dedication. - Reviewed third quarter results with total sales, earnings, and segment performance. - Highlighted platforms like BioBrace, Foot and Ankle, Buffalo Filter, and AirSeal. - Initiated comprehensive strategic review of portfolio and operations, engaging consultants. - Transitioning cash return to shareholders from dividends to share repurchases with a $150 million share repurchase program authorized.

Total sales were approximately $338 million, representing 6.7% year-over-year growth and 6.3% constant currency growth. General surgery grew 6.9% globally on a constant currency basis, and orthopedics delivered 5.3% constant currency growth globally. Adjusted net income for the quarter was $33.4 million, up 2.2% year-over-year. BioBrace in orthopedics saw growth from expanding clinical adoption, Foot and Ankle franchise has growth opportunity, Buffalo Filter in general surgery has sustained momentum from legislative mandates, and AirSeal continues as a foundational pillar with clinical benefits resonating with surgeons.

• Q4 revenue guided between $363 million and $370 million, full year 2025 revenue $1.365 billion to $1.372 billion. - Adjusted gross margin in Q4 expected in mid-55% range, inclusive of ~150 basis points headwind from new tariffs. - Q4 adjusted EPS expected between $1.30 and $1.35, full year $4.48 to $4.53.

• Tariffs as a headwind to gross margin. - Supply chain issues affecting orthopedics segment, with ongoing efforts to improve but not yet resolved. - Uncertainties related to the outcome of the strategic review of portfolio and operations.

Q: Can you talk more about the shift in capital allocation strategy from dividends to share repurchases?

A: Todd Garner said they worked with banking partners, looked at peer set, and since reaching 3.0 leverage ratio earlier than expected, they shifted to return cash to shareholders via share repurchases to fit in with peer set.

Q: Any early thoughts on 2026?

A: Todd Garner said they will guide 2026 at appropriate time when year starts and has nothing to call out currently.

Q: On tariffs, any incremental headwind?

A: Todd Garner explained tariffs go into manufacturing variances, deferred, and Q3 and Q4 projections were consistent with earlier forecasts.

Q: Thoughts on AirSeal adoption in ASCs and international markets?

A: Pat Beyer said Xis in ASCs and international markets can benefit from AirSeal's clinical benefits like shorter length of stay and reduction of pain.

Q: Supply chain initiatives and plans for 2026?

A: Pat Beyer said they made progress in Q3 with record manufacturing volumes and reducing critical SKUs, expect continued progress in Q4 working on systems enhancements in procurement, planning, and production.

Q: U.S. AirSeal non-robotic laparoscopic opportunity and robotic attachments?

A: Pat Beyer said in international space, AirSeal is being used with non-DV5 robots, and in U.S. non-robotic laparoscopic procedures, commercial teams are driving into that area.

Q: Orthopedics growth in U.S. and internationally?

A: Pat Beyer said BioBrace's success and improving reduction in back order and service levels are drivers, with continued progress expected in Q4.

Q: Capital environment and margin outlook?

A: Pat Beyer said healthy capital market with hospitals investing in surgical equipment, and Todd Garner said they will give 2026 guidance at Q4 call regarding margin expansion and savings.