CONMED Corp
For the period ended Jun 30, 2025. Filed Jul 31, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 31, 2025
CNMD$51.50-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0000816956-25-000011
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-31.
0000816956-25-000028
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 89 previous paragraphs and 93 current paragraphs.
60 unchanged; 27 reworded; 6 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
•$2.5 million and $2.9 million of consulting fees related to operational optimization during the three and six months ended June 30, 2025, respectively; and
Current report
Other Expense
Current report
Other expense during the three and six months ended June 30, 2025 was related to costs associated with our eighth amended and restated senior credit agreement entered into June 10, 2025, as further described in Note 10. These costs included $0.4 million related to a loss on early extinguishment and third party fees.
Current report
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA permanently extends and modifies significant provisions of the Tax Cuts and Jobs Act. Key modifications expected to impact the Company’s effective tax rate and cash tax position include the increased business interest expense limitation and the reduced federal research credit benefit effective in 2025 and changes to the international tax provisions effective in 2026. The Company is evaluating the impact of the OBBBA on the consolidated condensed financial statements.
Current report
•A decrease in cash flows from inventory as we increased inventory to mitigate supply chain challenges;
Current report
•During the six months ended June 30, 2025, we had net payments on our term loan of $29.6 million, inclusive of a $25.2 million impact on both borrowings and repayments between independent counterparties associated with the eighth amended and restated senior credit agreement.
Removed paragraphs (2)
Previous report
•During the three months ended March 31, 2025, we repaid $14.6 million on our term loan.
Previous report
•During the three months ended March 31, 2025, we had net cash proceeds of $0.5 million related to stock issued under employee plans compared to $1.1 million in the same period a year ago.
Reworded paragraphs (27)
Previous wording
A significant amount of our products are used in surgical procedures with approximately 86% of our revenues derived from the sale of single-use products. Our capital equipment offerings also facilitate the ongoing sale of related single-use products and accessories, thus providing us with a recurring revenue stream. We manufacture substantially all of our products in facilities located in the United States and Mexico. We market our products both domestically and internationally directly to customers and through distributors. International sales approximated 43% and 44% of our consolidated net sales during the three months ended March 31, 2025 and 2024, respectively.
Current wording
A significant amount of our products are used in surgical procedures with approximately 87% of our revenues derived from the sale of single-use products. Our capital equipment offerings also facilitate the ongoing sale of related single-use products and accessories, thus providing us with a recurring revenue stream. We manufacture substantially all of our products in facilities located in the United States and Mexico. We market our products both domestically and internationally directly to customers and through distributors. International sales approximated 44% of our consolidated net sales during both the six months ended June 30, 2025 and 2024.
Previous wording
The Company has been and continues to be impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs caused by inflationary pressures and ongoing supply chain challenges. We work with suppliers to mitigate these impacts; however, we expect these challenges to continue through 2025. This will likely impact our results of operations and we therefore have engaged a consulting firm to evaluate and propose improvements in our supply chain and manufacturing operations. In addition, our results of operations are expected to be impacted if additional tariffs are placed on imported goods to the United States as well as exporting of products to other countries. See "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 for more information.
Current wording
The Company has been and continues to be impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs caused by inflationary pressures and ongoing supply chain challenges. We work with suppliers to mitigate these impacts; however, we expect these challenges to continue through 2025. This will likely impact our results of operations and we therefore have engaged a consulting firm to evaluate and propose improvements in our supply chain and manufacturing operations. In addition, our results of operations are being impacted by tariffs placed on imported goods to the United States as well as exporting of products to other countries. We are actively working to mitigate this impact. See "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 for more information.
Previous wording
The Company has not been materially impacted by the conflicts in Ukraine and the Middle East. The Company has no direct operations in these regions with our business limited to selling to third party distributors. Total revenues and accounts receivable associated with sales to third party distributors in these regions are not material to the consolidated condensed financial statements. We will continue to monitor and adjust our business strategy in response to the conflicts in these regions.
Current wording
The Company has not been materially impacted by the conflicts in Ukraine and the Middle East. The Company has no direct operations in these regions with our business limited to selling to third party distributors. Total revenues and accounts receivable associated with sales to third party distributors in these regions are not material to the consolidated condensed financial statements. We will continue to monitor and adjust, if necessary, our business strategy in response to the conflicts in these regions.
Previous wording
The following table presents net sales by product line for the three months ended March 31, 2025 and 2024:
Current wording
The following table presents net sales by product line for the three and six months ended June 30, 2025 and 2024:
Previous wording
Net sales increased 2.9% in the three months ended March 31, 2025 compared to the same period a year ago. The increase during the three months ended March 31, 2025 was due to growth in both the orthopedic surgery and general surgery product lines.
Current wording
Net sales increased 3.1% and 3.0% in the three and six months ended June 30, 2025, respectively, compared to the same period a year ago. The increases during the three and six months ended June 30, 2025 were due to growth in both the orthopedic surgery and general surgery single-use product lines offset by lower capital sales as we continue to work through supply chain and manufacturing operation improvements.
Previous wording
•Orthopedic surgery sales increased 2.5% in the three months ended March 31, 2025 primarily due to growth in our procedure specific, foot and ankle and BioBrace® product offerings.
Current wording
•Orthopedic surgery sales increased 0.9% and 1.7% in the three and six months ended June 30, 2025, respectively, primarily due to growth in our procedure specific, foot and ankle and BioBrace® product offerings.
Previous wording
•General surgery sales increased 3.2% in the three months ended March 31, 2025 primarily due to growth in our AirSeal®, Buffalo Filter® and biliary product offerings.
Current wording
•General surgery sales increased 4.7% and 4.0% in the three and six months ended June 30, 2025, respectively, primarily due to growth in our AirSeal®, Buffalo Filter® and biliary product offerings.
Previous wording
Cost of sales increased to $143.5 million in the three months ended March 31, 2025 as compared to $140.3 million in the three months ended March 31, 2024. Gross profit margins increased 20 basis points to 55.3% in the three months ended March 31, 2025 as compared to 55.1% in the three months ended March 31, 2024.
Current wording
Cost of sales increased to $154.0 million in the three months ended June 30, 2025 as compared to $148.4 million in the three months ended June 30, 2024 and increased to $297.5 million in the six months ended June 30, 2025 as compared to $288.7 million in the six months ended June 30, 2024. Gross profit margins decreased 30 basis points to 55.0% in the three months ended June 30, 2025 as compared to 55.3% in the three months ended June 30, 2024. Gross profit margins were 55.2% in both the six months ended June 30, 2025 and 2024.
Previous wording
The 20 basis point increase in gross profit margins during the three months ended March 31, 2025 was mainly due to favorable product mix. During the three months ended March 31, 2025 we incurred costs of $3.4 million for the engagement of a consulting firm to evaluate and propose improvements to our supply chain and manufacturing operations. During the three months ended March 31, 2024, we wrote off $1.4 million in inventory, tooling and equipment related to the cancellation of a planned new product line and incurred $0.2 million in severance costs related to the elimination of certain positions.
Current wording
During the three and six months ended June 30, 2025 we incurred costs of $5.1 million and $8.5 million, respectively, for the engagement of a consulting firm to evaluate and propose improvements to our supply chain and manufacturing operations. During the six months ended June 30, 2024, we wrote off $1.4 million in inventory, tooling and equipment related to the cancellation of a planned new product line. The 30 basis point decrease in gross profit margins during the three months ended June 30, 2025 was mainly due to these charges. Offsetting such charges was favorable product mix.
Previous wording
Selling and administrative expense increased to $148.8 million in the three months ended March 31, 2025 as compared to $123.4 million in the three months ended March 31, 2024. Selling and administrative expense as a percentage of net sales increased 680 basis points to 46.3% in the three months ended March 31, 2025 as compared to 39.5% in the three months ended March 31, 2024. The increase in selling and administrative expense for the three months ended March 31, 2025 was primarily driven by:
Current wording
Selling and administrative expense increased to $136.0 million in the three months ended June 30, 2025 as compared to $122.5 million in the three months ended June 30, 2024 and increased to $284.9 million in the six months ended June 30, 2025 as compared to $245.9 million in the six months ended June 30, 2024. Selling and administrative expense as a percentage of net sales increased 280 basis points to 39.7% in the three months ended June 30, 2025 as compared to 36.9% in the three months ended June 30, 2024 and increased 470 basis points to 42.9% in the six months ended June 30, 2025 as compared to 38.2% in the six months ended June 30, 2024. The increases in selling and administrative expense as a percentage of sales for the three and six months ended June 30, 2025 were primarily driven by:
Previous wording
•$12.2 million of cash and stock-based compensation costs related to advisory services provided by our former Chief Executive Officer in the three months ended March 31, 2025; and
Current wording
•$12.2 million of cash and stock-based compensation costs related to advisory services provided by our former Chief Executive Officer in the six months ended June 30, 2025;
Previous wording
•an increase of $10.5 million in costs related to fair value adjustments to contingent consideration ($4.0 million of expense for the three months ended March 31, 2025 compared to $6.5 million of income in the three months ended March 31, 2024), see Note 6.
Current wording
•$(1.8) million and $2.1 million in (income) expense related to fair value adjustments to contingent consideration in the three and six months ended June 30, 2025, respectively, compared to income of $(8.7) million and $(15.2) million in the three and six months ended June 30, 2024, respectively, see Note 6.
Previous wording
Salesforce and commissions, marketing, general & administrative costs and amortization expense in the three months ended March 31, 2025 were in line with the three months ended March 31, 2024 as a percentage of sales.
Current wording
Salesforce and commissions, marketing, general & administrative costs and amortization expense in the three and six months ended June 30, 2025 were in line with the three and six months ended June 30, 2024 as a percentage of sales.
Previous wording
Research and development expense decreased to $12.9 million in the three months ended March 31, 2025 as compared to $13.6 million in the three months ended March 31, 2024. As a percentage of net sales, research and development expense decreased 40 basis points to 4.0% in the three months ended March 31, 2025 as compared to 4.4% in the three months ended March 31, 2024. Spend as a percentage of sales was mainly driven by the timing of research and development projects.
Current wording
Research and development expense was $14.1 million in both the three months ended June 30, 2025 and 2024 and decreased to $27.1 million in the six months ended June 30, 2025 as compared to $27.7 million in the six months ended June 30, 2024. As a percentage of net sales, research and development expense decreased 10 basis points to 4.1% in the three months ended June 30, 2025 as compared to 4.2% in the three months ended June 30, 2024 and decreased to 4.1% in the six months ended June 30, 2025 as compared to 4.3% in the six months ended June 30, 2024. Spend as a percentage of sales was mainly driven by the timing of research and development projects.
Previous wording
Interest expense decreased to $8.3 million in the three months ended March 31, 2025 from $9.6 million in the three months ended March 31, 2024. The weighted average interest rates on our borrowings decreased to 2.90% in the three months ended March 31, 2025 as compared to 3.18% in the three months ended March 31, 2024. The decrease in interest expense in the three months ended March 31, 2025 was driven by lower weighted average borrowings outstanding and lower weighted average interest rates during 2025.
Current wording
Interest expense decreased to $7.8 million in the three months ended June 30, 2025 from $9.6 million in the three months ended June 30, 2024 and decreased to $16.1 million in the six months ended June 30, 2025 from $19.2 million in the six months ended June 30, 2024. The weighted average interest rates on our borrowings decreased to 2.80% in the three months ended June 30, 2025 as compared to 3.22% in the three months ended June 30, 2024 and decreased to 2.85% in the six months ended June 30, 2025 as compared to 3.20% in the six months ended June 30, 2024. The decrease in interest expense in the three and six months ended June 30, 2025 was driven by lower weighted average borrowings outstanding and lower weighted average interest rates during 2025.
Previous wording
Income tax expense has been recorded at an effective tax rate of 21.3% for the three months ended March 31, 2025 compared to 22.5% for the three months ended March 31, 2024. The lower effective tax rate for the three months ended March 31, 2025 was primarily the result of recording discrete benefits related to changes in unrecognized tax benefits. The three months ended March 31, 2025 included discrete income tax benefit related to acquired federal research credits which decreased the effective tax rate by 8.9% and discrete income tax expense from stock option exercises which increased the effective tax rate by 2.2%. The three months ended March 31, 2024 included discrete income tax benefit related to acquired federal research credits which reduced the effective tax rate by 1.4% and discrete income tax expense from stock options which increased the effective tax rate by 0.4%. A reconciliation of the United States statutory income tax rate to our effective tax rate is included in our Annual Report on Form 10-K for the year ended December 31, 2024 under Note 9 to the consolidated financial statements.
Current wording
Income tax expense has been recorded at an effective tax rate of 28.4% for the three months ended June 30, 2025 compared to 20.1% for the three months ended June 30, 2024. Income tax expense has been recorded at an effective tax rate of 27.0% for the six months ended June 30, 2025 compared to 21.1% for the six months ended June 30, 2024. The higher effective tax rates for the three and six months ended June 30, 2025 was primarily the result of year to date expense related to the fair value adjustments to contingent consideration which is not deductible for federal tax as compared to the effective tax rates for the three and six months ended June 30, 2024 which included year to date income related to the fair value adjustments to contingent consideration which is not subject to federal tax. A reconciliation of the United States statutory income tax rate to our effective tax rate is included in our Annual Report on Form 10-K for the year ended December 31, 2024 under Note 9 to the consolidated financial statements.
Previous wording
Our liquidity needs arise primarily from capital investments, working capital requirements and payments on indebtedness under the seventh amended and restated senior credit agreement. We have historically met these liquidity requirements with funds generated from operations, borrowings under our revolving credit facility and issuances of debt in the capital markets. In addition, we have historically used term borrowings, including borrowings under the seventh amended and restated senior credit agreement and borrowings under separate loan facilities, in the case of real property purchases, to finance our acquisitions, including payments of contingent consideration. We also have the ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering.
Current wording
Our liquidity needs arise primarily from capital investments, working capital requirements and payments on indebtedness under the eighth amended and restated senior credit agreement. We have historically met these liquidity requirements with funds generated from operations, borrowings under our revolving credit facility and issuances of debt in the capital markets. In addition, we have historically used term borrowings, including borrowings under the eighth amended and restated senior credit agreement and borrowings under separate loan facilities, in the case of real property purchases, to finance our acquisitions, including payments of contingent consideration. We also have the ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering.
Previous wording
Our net working capital position was $355.9 million at March 31, 2025. Net cash provided by operating activities was $41.5 million in the three months ended March 31, 2025 compared to net cash provided by operating activities of $29.1 million in the three months ended March 31, 2024, generated on net income of $6.0 million and $19.7 million for the three months ended March 31, 2025 and 2024, respectively. Significant changes in assets and liabilities affecting operating cash flows in the three months ended March 31, 2025 include the following:
Current wording
Our net working capital position was $362.9 million at June 30, 2025. Net cash provided by operating activities was $70.7 million in the six months ended June 30, 2025 compared to net cash provided by operating activities of $72.4 million in the six months ended June 30, 2024, generated on net income of $27.5 million and $49.7 million for the six months ended June 30, 2025 and 2024, respectively. Significant changes in assets and liabilities affecting operating cash flows in the six months ended June 30, 2025 include the following:
Previous wording
•Accrued compensation and benefits resulted in a lower use of cash in the three months ended March 31, 2025 compared to the same period a year ago as a result of lower incentive compensation payments.
Current wording
•An increase in cash flows from accrued compensation and benefits as a result of lower incentive compensation payments in the six months ended June 30, 2025 compared to the same period a year ago.
Previous wording
Net cash used in investing activities in the three months ended March 31, 2025 increased $0.9 million from the same period a year ago. Capital expenditures were $3.8 million in the three months ended March 31, 2025 compared to $2.0 million in the same period a year ago.
Current wording
Net cash used in investing activities in the six months ended June 30, 2025 increased $3.0 million from the same period a year ago. Capital expenditures were $9.5 million in the six months ended June 30, 2025 compared to $5.6 million in the same period a year ago.
Previous wording
Net cash used in financing activities in the three months ended March 31, 2025 was $28.4 million compared to net cash used in financing activities of $17.0 million during 2024. Below is a summary of the significant financing activities impacting the change during the three months ended March 31, 2025 compared to 2024:
Current wording
Net cash used in financing activities in the six months ended June 30, 2025 was $54.9 million compared to net cash used in financing activities of $61.1 million during 2024. Below is a summary of the significant financing activities impacting the change during the six months ended June 30, 2025 compared to 2024:
Previous wording
•During the three months ended March 31, 2025, we paid $7.2 million in contingent consideration related to the Biorez acquisition compared to $26.9 million related to the Biorez and In2Bones acquisitions in the same period a year ago.
Current wording
•During the six months ended June 30, 2025, we paid $14.1 million in contingent consideration related to the Biorez acquisition compared to $39.4 million related to the Biorez and In2Bones acquisitions in the same period a year ago.
Previous wording
•During the three months ended March 31, 2024, we repaid the remaining $70.0 million outstanding on the 2.625% Notes.
Current wording
•During the six months ended June 30, 2024, we repaid the remaining $70.0 million outstanding on the 2.625% Notes.
Previous wording
•During the three months ended March 31, 2024, we had net proceeds on our revolving line of credit of $86.0 million.
Current wording
•During the six months ended June 30, 2025, we had net borrowings on our revolving line of credit of $4.0 million, inclusive of the impact of the eighth amended and restated senior credit agreement, compared to $60.0 million in net borrowings during the six months ended June 30, 2024.
Previous wording
Our cash balances and cash flows generated from operations may be used to fund strategic investments, business acquisitions, including contingent consideration payments, working capital needs, research and development, common stock repurchases and payments of dividends to our shareholders. Management believes that cash flow from operations, including cash and cash equivalents on hand and available borrowing capacity under our seventh amended and restated senior credit agreement, will be adequate to meet our anticipated operating working capital requirements, debt service, funding of capital expenditures, dividend payments and common stock repurchases in the foreseeable future. In addition, management believes we could access capital markets, as necessary, to fund future business acquisitions.
Current wording
Our cash balances and cash flows generated from operations may be used to fund strategic investments, business acquisitions, including contingent consideration payments, working capital needs, research and development, common stock repurchases and payments of dividends to our shareholders. Management believes that cash flow from operations, including cash and cash equivalents on hand and available borrowing capacity under our eighth amended and restated senior credit agreement, will be adequate to meet our anticipated operating working capital requirements, debt service, funding of capital expenditures, dividend payments and common stock repurchases in the foreseeable future. In addition, management believes we could access capital markets, as necessary, to fund future business acquisitions.
Previous wording
There were $100.0 million in borrowings outstanding on the term loan facility as of March 31, 2025. There were no borrowings outstanding under the revolving credit facility as of March 31, 2025. Our available borrowings on the revolving credit facility at March 31, 2025 were $583.4 million with approximately $1.6 million of the facility set aside for outstanding letters of credit.
Current wording
There were $85.0 million in borrowings outstanding on the term loan facility as of June 30, 2025. There were $4.0 million in borrowings outstanding under the revolving credit facility as of June 30, 2025. Our available borrowings on the revolving credit facility at June 30, 2025 were $644.4 million with approximately $1.6 million of the facility set aside for outstanding letters of credit.
Previous wording
The seventh amended and restated senior credit agreement is collateralized by substantially all of our personal property and assets. The seventh amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and restrictions as of March 31, 2025. We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.
Current wording
The eighth amended and restated senior credit agreement is collateralized by substantially all of our personal property and assets. The eighth amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and restrictions as of June 30, 2025. We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.