cnmd-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended			Commission File Number
March 31, 2021			001-39218

CONMED CORPORATION

(Exact name of the registrant as specified in its charter)


Delaware			16-0977505
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

11311 Concept Blvd	Largo,	Florida	33773
(Address of principal executive offices)			(Zip Code)

(727) 392-6464

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	CNMD	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares outstanding of registrant's common stock, as of April 26, 2021 is 29,092,141 shares.

CONMED CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2021


PART I FINANCIAL INFORMATION
Item Number		Page

Item 1.	Financial Statements (unaudited)

	– Consolidated Condensed Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020	1

	– Consolidated Condensed Balance Sheets as of March 31, 2021 and December 31, 2020	2

	– Consolidated Condensed Statements of Shareholders' Equity for the three months ended March 31, 2021 and 2020	3

	– Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2021 and 2020	4

	– Notes to Consolidated Condensed Financial Statements	5


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 6.	Exhibits	26


Signatures		27

Table of Contents

PART I FINANCIAL INFORMATION

Item 1.

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands except per share amounts)


	Three Months Ended
	March 31,
	2021		2020
Net sales	$	232,677	$	214,010

Cost of sales	104,228		94,851

Gross profit	128,449		119,159

Selling and administrative expense	98,340		95,867

Research and development expense	10,027		10,120

Operating expenses	108,367		105,987

Income from operations	20,082		13,172

Interest expense	10,351		9,592

Other expense	—		89

Income before income taxes	9,731		3,491

Benefit from income taxes	(129)		(2,436)

Net income	$	9,860	$	5,927

Comprehensive income (loss)	$	10,743	$	(1,121)


Per share data:

Net income
Basic	$	0.34	$	0.21
Diluted	0.31		0.20

Weighted average common shares
Basic	28,972		28,478
Diluted	31,378		29,707

See notes to consolidated condensed financial statements.

Table of Contents

CONMED CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited, in thousands except share and per share amounts)


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	36,769	$	27,356
Accounts receivable, net	163,954		177,152
Inventories	205,797		194,868
Prepaid expenses and other current assets	17,849		17,278
Total current assets	424,369		416,654
Property, plant and equipment, net	109,379		111,407
Goodwill	618,104		618,440
Other intangible assets, net	493,905		501,537
Other assets	100,855		103,635
Total assets	$	1,746,612	$	1,751,673




LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	20,076	$	18,415
Accounts payable	55,780		53,310
Accrued compensation and benefits	40,908		50,171
Other current liabilities	65,391		68,305
Total current liabilities	182,155		190,201

Long-term debt	725,320		735,221
Deferred income taxes	56,593		57,875
Other long-term liabilities	56,974		59,338
Total liabilities	1,021,042		1,042,635

Commitments and contingencies

Shareholders' equity:
Preferred stock, par value $0.01 per share;
authorized 500,000 shares; none outstanding	—		—
Common stock, par value $0.01 per share; 100,000,000 shares authorized; 31,299,194 shares issued in 2021 and 2020, respectively	313		313
Paid-in capital	388,959		382,628
Retained earnings	461,464		457,417
Accumulated other comprehensive loss	(62,798)		(63,681)
Less: 2,222,233 and 2,410,045 shares of common stock in treasury, at cost in 2021 and 2020, respectively	(62,368)		(67,639)
Total shareholders’ equity	725,570		709,038
Total liabilities and shareholders’ equity	$	1,746,612	$	1,751,673

See notes to consolidated condensed financial statements.

Table of Contents

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited, in thousands except per share amounts)


	Common Stock			Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2020	31,299	$	313	$	382,628	$	457,417	$	(63,681)	$	(67,639)	$	709,038
Common stock issued under employee plans				2,944						5,271		8,215
Stock-based compensation				3,387								3,387
Dividends on common stock ($0.20 per share)						(5,813)						(5,813)



Comprehensive income (loss):
Cash flow hedging gain, net								3,926
Pension liability, net								631
Foreign currency translation adjustments								(3,674)
Net income						9,860
Total comprehensive income												10,743
Balance at March 31, 2021	31,299	$	313	$	388,959	$	461,464	$	(62,798)	$	(62,368)	$	725,570


	Common Stock			Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2019	31,299	$	313	$	379,324	$	470,844	$	(59,277)	$	(80,737)	$	710,467
Common stock issued under employee plans				(7,736)						2,696		(5,040)
Stock-based compensation				3,032								3,032
Dividends on common stock ($0.20 per share)						(5,703)						(5,703)
Comprehensive income (loss):
Cash flow hedging gain, net								2,405
Pension liability, net								535
Foreign currency translation adjustments								(9,988)
Net income						5,927
Total comprehensive loss												(1,121)

Balance at March 31, 2020	31,299	$	313	$	374,620	$	471,068	$	(66,325)	$	(78,041)	$	701,635

See notes to consolidated condensed financial statements.

Table of Contents

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Three Months Ended
	March 31,
	2021		2020
Cash flows from operating activities:
Net income	$	9,860	$	5,927
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	4,757		4,646
Amortization of debt discount	2,503		2,264
Amortization of deferred debt issuance costs	1,058		819
Amortization	13,519		13,776
Stock-based compensation	3,387		3,032

Deferred income taxes	(2,688)		(2,742)

Increase (decrease) in cash flows from changes in assets and liabilities:
Accounts receivable	11,957		19,057
Inventories	(11,638)		(12,313)
Accounts payable	2,804		1,705
Accrued compensation and benefits	(8,955)		(18,397)
Other assets	(6,002)		(7,260)
Other liabilities	1,782		(6,793)
Net cash provided by operating activities	22,344		3,721

Cash flows from investing activities:

Purchases of property, plant and equipment	(3,109)		(

SEC Form 10-Q filed by CONMED Corporation