CONMED Q2 Earnings and Revenues Beat Estimates, Gross Margin Expands

GAAP EPS for the quarter was 77 cents, up 11.6% from the year-ago period’s EPS of 69 cents.

CNMD's Organic Sales Gain Momentum

CNMD’s second-quarter revenues of $343.5 million increased 0.3% year over year and beat the consensus estimate by 1.9%. International strength and growth across the company’s key AirSeal, Buffalo Filter and BioBrace platforms supported the quarter.

Shares of CNMD gained 6.3 in today’s pre-market trading. In the year-to-date period, shares of the company gained 6.4% compared with the industry’s 3.3% growth. The S&P 500 increased 8.1% in the same time frame.

At constant currency, total revenues declined 0.5% year over year. However, excluding sales tied to CONMED’s strategic exit from certain gastroenterology product offerings, organic constant-currency revenues increased 6%.

Domestic sales totaled $175.4 million, down 8% on a reported basis. Excluding the GI exits, domestic organic revenues rose 2.5%. International sales reached $168.1 million, up 10.8% on a reported basis and 8.9% at constant currency. International organic constant-currency growth was 9.9%.

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CONMED's Orthopedic Revenues Increase

Orthopedic Surgery revenues totaled $152.3 million, up 8.2% year over year on a reported basis and 6.8% at constant currency. International orthopedic revenues advanced 10.8% at constant exchange rates, reflecting broad-based growth across major regions.

Domestic orthopedic sales were nearly flat and fell short of management’s expectations. Nonetheless, the company continued to strengthen its U.S. commercial organization. BioBrace was a major contributor, supported by adoption across orthopedic and foot-and-ankle procedures, particularly rotator cuff repair.

CNMD's General Surgery Business Improves

General Surgery revenues were $191.2 million, down 5.2% on a reported basis and 5.6% at constant currency. The decline reflected the impact of the GI portfolio exits. On an organic constant-currency basis, General Surgery sales increased 5.3%.

AirSeal and Buffalo Filter led the underlying growth. AirSeal sales increased across capital and single-use products and improved sequentially, but growth remained below management’s expectations. CONMED expects AirSeal trends to improve during the second half of 2026, but at a slower rate than previously assumed.

Direct smoke evacuation sales exceeded the company’s long-term expectation of high-single-digit to low-double-digit growth. This more than offset a modest decline in original equipment manufacturer smoke evacuation sales.

The company continues to prioritize its direct Buffalo Filter portfolio, which carries a stronger margin profile and brings CONMED closer to customers. Management also highlighted early commercial traction in Europe, Canada and Australia, along with expanding U.S. legislation requiring surgical smoke evacuation systems.

CONMED’s Margin Analysis

In the quarter under review, CNMD’s adjusted gross profit increased 5.6% year over year to $204.4 million. The adjusted gross margin expanded 300 basis points (bps) to 59.5%. The improvement included an $8.5 million benefit from tariff refunds, which contributed nearly 250 bps to the year-over-year expansion.

In the quarter under review, CNMD’s reported gross profit increased 4.9% year over year to $197.5 million. The gross margin expanded 250 bps to 57.5%.

Selling & administrative expenses increased 7% year over year to $145.6 million. Research and development expenses rose 9.6% year over year to $15.5 million. Total operating expenses of $161.1 million increased 7.3% on a year-over-year basis.

Total operating profit totaled $36.4 million, reflecting a 4.6% decrease from the year-ago quarter. The operating margin contracted 50 bps to 10.6%.

CNMD’s Financial Position

The company exited the second quarter with cash and cash equivalents of $37.3 million compared with $35 million a year ago.

Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $50.6 million compared with $70.7 million a year ago.

CONMED’s Guidance

CNMD has updated its outlook for 2026.

For 2026, total reported revenues are expected to be in the range of $1,358 million-$1,373 million compared with the previous guidance of $1,350 million-$1,375 million. This represents a reported revenue decline of 1.2-0.1% year over year.

Organic constant-currency revenue growth is expected to be 5-6% compared with the prior projection of 5-6.5%. The revised outlook reflects second-quarter performance and a more measured pace of sequential growth improvement in the second half of 2026.

The company now expects adjusted EPS for 2026 in the range of $4.48-$4.60, up from its previous guidance of $4.30-$4.45. The raised outlook reflects better-than-expected second-quarter results, a lower projected headwind from the GI product exits and a higher contribution from share repurchases. These benefits are expected to be partly offset by higher interest expenses and an increased tax-rate assumption.

CONMED expects third-quarter revenues to be in the range of $334 million-$339 million. Organic constant-currency growth is projected to be between 6.4% and 7.6%, excluding anticipated GI revenues of $3 million-$3.6 million and an approximately 10-basis-point foreign currency impact. Adjusted EPS is expected to be between 98 cents and $1.03.

Our Take on CNMD

CONMED exited the second quarter of 2026 with better-than-expected earnings and revenues. Organic constant-currency sales growth of 6% reflected gains across both Orthopedic Surgery and General Surgery, supported by continued momentum in AirSeal, Buffalo Filter and BioBrace. The completion of the GI portfolio exit should allow the company to sharpen its focus on these core growth platforms.

AirSeal continues to benefit from opportunities in robotic and laparoscopic procedures, although second-quarter growth was below management’s expectations. Buffalo Filter remains well positioned to gain from expanding smoke-evacuation legislation and international adoption, while BioBrace continues to see traction in rotator cuff repair and other orthopedic procedures. Improved supply-chain execution, including lower backorders and stronger service levels, should also support more consistent operating performance.

However, challenges remain. The GI exit continues to weigh on reported revenues, while AirSeal’s growth outlook for the second half is lower than previously assumed. Domestic orthopedic sales were nearly flat, and modest weakness in the OEM smoke-evacuation business also pressured General Surgery. Moreover, higher interest expenses following the debt refinancing may limit earnings growth. Despite these headwinds, CONMED raised its adjusted earnings outlook for 2026 and continues to expect organic constant-currency growth of 5-6%.

CONMED’s Zacks Rank & Stocks to Consider

CNMD currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space are McKesson MCK, Phibro Animal Health PAHC andCardinal Health CAH.

McKesson carries a Zacks Rank #2 (Buy) at present and has an estimated long-term growth rate of 13.7%. MCK’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.09%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

McKesson shares have gained 8.8% against the industry’s 12.7% decline in the year-to-date period.

Phibro Animal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 21.5%. PAHC’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 16.25%.

Phibro Animal Health stock has climbed 44.2% against the industry’s 17.1% decline in the year-to-date period.

Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 17%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 10.27%.

Cardinal Health’s shares have lost 2.6% compared with the industry’s 3.1% decline in the year-to-date period.

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