CNMD

• Strategic Portfolio & Organizational Updates

  • Completed the full planned exit from the GI product line in 2026
  • Added a new CFO (John) and two new experienced board members with specialized medical device innovation experience
  • Refinanced a portion of the company's existing debt
  • Undertook strategic commercial reorganization of the U.S. orthopedics business to position for future growth

• Core Growth Platform Progress

  • General surgery grew 5.3% year-over-year organically in Q2, with AirSeal (the core growth franchise) delivering sequential growth improvement for both capital and disposable products, and expanded compatibility with Intuitive's DV5 system
  • BioBrace RC (rotator cuff repair product) continues to see strong user uptake, high user retention, and durable repeat usage among adopting clinicians
  • AirSeal is already installed on multiple robotic surgery platforms globally, including in U.S. ASC settings

• Financial & Operational Accomplishments

  • Q2 2026 financial performance exceeded management's internal expectations
  • Received a one-time tariff refund related to 2025 duties, which drove an upward adjustment to full year EPS guidance
  • International segment delivered stronger-than-expected across-the-board growth in Q2, following a slower Q1 performance

• Full year 2026 net sales: Updated guidance includes GI revenue of $20 million to $22 million, an upward revision from the prior guidance range of $14.5 million to $17.5 million. Foreign exchange is now expected to deliver a $7 million to $7.5 million tailwind to GAAP results, an upward revision from the prior $4.4 million to $7.4 million expected tailwind.
• Organic constant currency net sales growth: The 2026 guidance range was narrowed to 5% to 6%, down from the prior 5% to 6.5% range; the low end of 5% growth was reaffirmed, and the downward adjustment to the high end reflects a more measured outlook for sequential improvement in the second half of 2026.
• Non-GAAP adjusted diluted EPS: 2026 guidance was raised to $4.48 to $4.60, from the prior $4.30 to $4.45, driven by better-than-expected Q2 results, a smaller-than-expected headwind from the GI exit, and share repurchase activity, partially offset by higher expected interest expense and a higher expected effective tax rate.
• 2026 key modeling assumptions: Adjusted gross margin is expected to be 57.5% to 58% (inclusive of tariff benefits); adjusted interest expense is now expected to be ~$33 million, up from the prior $25 million to $27 million expectation; adjusted effective tax rate is expected to be 25%, up from the prior 24.5% assumption; full year free cash flow is expected to be ~$115 million, down from the prior ~$125 million expectation; the company plans to allocate ~$61.8 million to share repurchases in 2026.
• Q3 2026 specific guidance: GAAP net sales expected to be $334 million to $339 million; organic constant currency growth expected to be 6.4% to 7.6%; adjusted EPS expected to be $0.98 to $1.03.

Segment-level absolute and percentage revenue contribution data is not provided in the transcript. High-level segment performance details include: General Surgery delivered 5.3% year-over-year organic growth in Q2 2026, with the AirSeal franchise as the top contributor to this growth, with both capital and disposable product lines growing sequentially. Orthopedics (ORSO) delivered 6.8% global year-over-year growth in Q2 2026; international orthopedics grew 10.8%, while U.S. domestic orthopedics was roughly flat, impacted by strategic commercial reorganization actions. International business across all segments saw stronger-than-expected Q2 2026 growth, driven by core growth platforms AirSeal, BioBrace, and smoke evacuation, following a slower Q1 2026 performance for the international segment. The GI product line is being exited in 2026, with full year 2026 GI revenue now expected to be $20M to $22M, up from prior guidance of $14.5M to $17.5M.

• Quarterly international revenue can be more volatile than domestic revenue due to ordering dynamics with distributors and supply chain chain challenges that can create quarter-over-quarter fluctuations.
• Higher-than-expected interest expenses and a higher effective tax rate partially offset positive EPS drivers from better operational results and the tariff refund.
• Working capital and inventory levels have pulled full year 2026 free cash flow guidance down by $10 million compared to prior expectations, requiring focused optimization efforts.
• U.S. orthopedic growth paused in Q2 2026 due to internal strategic commercial reorganization, though management expects growth to resume in subsequent quarters.

Q: What drove AirSeal growth below expectations, and is the long-term growth outlook now high single-digit instead of low double-digit? / A: Management clarified AirSeal was the top contributor to Q2 general surgery growth, with sequential improvement in growth trends for both capital and disposable lines. Management reaffirmed AirSeal's long-term growth trajectory remains between high single-digit and low double-digit, with expected further sequential improvements in the second half of 2026.

Q: How has ConMed's strategy for shareholder value changed following the addition of a new CFO and new board members? / A: Strategy remains focused on core high-growth areas: minimally invasive robotic/laparoscopic surgery, smoke evacuation, and orthopedic soft tissue repair. The new leadership and board members add deep medical device innovation industry experience, and the strong balance sheet supports both organic innovation investment and strategic M&A to drive growth.

Q: What explains the gap between Q2's EPS beat (including a $0.21 tariff benefit) and the $0.18 net increase to the low end of full-year EPS guidance? / A: The EPS bridge is: $0.21 from the tariff refund, plus $0.08 from better-than-expected Q2 operational results, plus $0.05 from a smaller GI exit headwind, plus $0.02 from share repurchase activity. This is offset by a $0.15 increase in expected interest expense and a $0.03 increase to the expected tax rate; the delta is not related to AirSeal performance.

Q: Why did you lower the high end of the 2026 organic sales growth guidance? / A: After Q2 organic growth of 6%, the prior top-end guidance required very steep acceleration in the second half of the year. Management lowered the top end by $6 million to reflect a more measured growth outlook, while reaffirming confidence in hitting at least 5% full year organic growth as originally expected.

Q: Are you seeing any negative volume impacts from lower ACA exchange enrollments or plan trade-downs, and what is your surgical volume outlook for H2 2026? / A: Management reports no changes to overall procedure or patient volumes for the procedures ConMed supports, and expects healthy surgical volume trends to continue unchanged through the second half of 2026.