CONMED (CNMD)

Medical tech company CONMED (NYSE:CNMD) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 6.7% year on year to $337.9 million. The company expects the full year’s revenue to be around $1.37 billion, close to analysts’ estimates. Its non-GAAP profit of $1.08 per share was 2.7% 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 $1.35 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.

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, CONMED grew its sales at a decent 9% compounded annual growth rate. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. CONMED’s recent performance shows its demand has slowed as its annualized revenue growth of 7.4% over the last two years was below its five-year trend.

We can dig further into 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 8.2% 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 6.7%, and its $337.9 million of revenue exceeded Wall Street’s estimates by 1%.

Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months, a slight deceleration versus the last two years. Still, this projection is above the sector average and suggests the market sees some success for its newer products and services.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

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 1 percentage points over the last five years, but it rose by 2.9 percentage points on a two-year basis. Still, shareholders will want to see CONMED become more profitable in the future.

In Q3, CONMED generated an operating margin profit margin of 3.5%, down 17.2 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

CONMED’s EPS grew at an astounding 15.3% compounded annual growth rate over the last five years, higher than its 9% 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 Q3, CONMED reported adjusted EPS of $1.08, up from $1.05 in the same quarter last year. This print beat analysts’ estimates by 2.7%. Over the next 12 months, Wall Street expects CONMED’s full-year EPS of $4.52 to grow 3.3%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and 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 8.1% over the last five years, slightly better than the broader healthcare sector.

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 5.5%, 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. Unfortunately, CONMED’s ROIC has stayed the same over the last few years. If the company wants to become an investable business, it must improve its returns by generating more profitable growth.

CONMED reported $83.4 million of cash and $881.8 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $275.6 million of EBITDA over the last 12 months, we view CONMED’s 2.9× net-debt-to-EBITDA ratio as safe. We also see its $32.57 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see CONMED narrowly top analysts’ constant currency revenue expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 5.6% to $46.91 immediately following the results.

Updated: December 4, 2025 at 10:51 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in CONMED.

CONMED isn’t a terrible business, but it doesn’t pass our bar. Although its revenue growth was decent 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 mediocre ROIC lags the market and is a headwind for its stock price.

CONMED’s P/E ratio based on the next 12 months is 9.5x. While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $54 on the company (compared to the current share price of $44.22).

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.