CONMED (CNMD)

Medical tech company CONMED (NYSE:CNMD) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 7.9% year on year to $373.2 million. On the other hand, the company’s full-year revenue guidance of $1.36 billion at the midpoint came in 0.7% below analysts’ estimates. Its non-GAAP profit of $1.43 per share was 8% above analysts’ consensus estimates.

Company Overview

With over five decades of experience in surgical innovation since its founding in 1970, CONMED (NYSE:CNMD) develops and manufactures medical devices and equipment for surgical procedures, specializing in orthopedic and general surgery products.

The surgical equipment and consumables industry provides tools, devices, and disposable products essential for surgeries and medical procedures. These companies therefore benefit from relatively consistent demand, driven by the ongoing need for medical interventions, recurring revenue from consumables, and long-term contracts with hospitals and healthcare providers. However, the high costs of R&D and regulatory compliance, coupled with intense competition and pricing pressures from cost-conscious customers, can constrain profitability. Over the next few years, tailwinds include aging populations, which tend to need surgical interventions at higher rates. The increasing integration of AI and robotics into surgical procedures could also create opportunities for differentiation and innovation. However, the industry faces headwinds including potential supply chain vulnerabilities, evolving regulatory requirements, and more widespread efforts to make healthcare less costly.

CONMED's competitors in the orthopedic space include Smith & Nephew, Arthrex, Stryker Corporation, Johnson & Johnson's DePuy Mitek, and Zimmer Biomet. In general surgery products, the company competes with Medtronic, Johnson & Johnson's Ethicon Endo-Surgery, Stryker Endoscopy, Olympus, and Boston Scientific.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $1.37 billion in revenue over the past 12 months, CONMED is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, CONMED’s 9.8% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. CONMED’s recent performance shows its demand has slowed as its annualized revenue growth of 5.1% over the last two years was below its five-year trend.

We can better understand the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 5.2% year-on-year growth. Because this number aligns with its normal revenue growth, we can see that CONMED has properly hedged its foreign currency exposure.

This quarter, CONMED reported year-on-year revenue growth of 7.9%, and its $373.2 million of revenue exceeded Wall Street’s estimates by 1.7%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds.

CONMED has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 10.1%, higher than the broader healthcare sector.

Analyzing the trend in its profitability, CONMED’s operating margin decreased by 3.4 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 2.2 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, CONMED generated an operating margin profit margin of 9.8%, down 5.4 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

CONMED’s EPS grew at an astounding 16.4% compounded annual growth rate over the last five years, higher than its 9.8% annualized revenue growth. However, we take this with a grain of salt because its operating margin didn’t improve and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.

In Q4, CONMED reported adjusted EPS of $1.43, up from $1.34 in the same quarter last year. This print beat analysts’ estimates by 8%. Over the next 12 months, Wall Street expects CONMED’s full-year EPS of $4.61 to shrink by 7.3%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

CONMED has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 8.5% over the last five years, slightly better than the broader healthcare sector.

Taking a step back, we can see that CONMED’s margin expanded by 1.9 percentage points during that time. This shows the company is heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

CONMED historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.7%, somewhat low compared to the best healthcare companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, CONMED’s ROIC averaged 2.4 percentage point increases each year. This is a good sign, and we hope the company can continue improving.

We enjoyed seeing CONMED beat analysts’ constant currency revenue expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock traded up 5.4% to $40.74 immediately after reporting.

Updated: January 28, 2026 at 4:33 PM EST

When considering an investment in CONMED, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

CONMED isn’t a terrible business, but it isn’t one of our picks. Although its revenue growth was good over the last five years, it’s expected to deteriorate over the next 12 months and its subscale operations give it fewer distribution channels than its larger rivals. And while the company’s astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its declining operating margin shows the business has become less efficient.

CONMED’s P/E ratio based on the next 12 months is 9.1x. While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $48.40 on the company (compared to the current share price of $40.74).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.