Conmed Beats Zacks Estimate – Analyst Blog

Conmed Corporation (CNMD) reported first quarter fiscal 2010 earnings per share of 28 cents, beating the Zacks Consensus Estimate of 26 cents and the year-ago earnings of 19 cents.

Sales

Total revenues in the first quarter increased 7.5% year over year to $176.4 million. Excluding a favorable foreign currency translation, net sales increased 2.7% year over year. Growth was witnessed across all major business segments.

Arthroscopy sales increased 13.0% year over year to $72.2 million. Powered Surgical Instruments sales increased 6.7% year over year to $35.0 million. Electrosurgery sales increased 3.1% year over year to $23.1 million.

Single-use and reposable revenues increased 8.9% year over year to $138.3 million. Capital equipment sales increased 2.7% year over year to $38.1 million.

Conmed registered an expansion of margins in the first quarter. Gross margin increased 550 basis points (bps) year over year to 52.0%. Selling and administrative expenses as a percentage of sales increased 230 bps year over year to 40.0%. Research and development expenses as a percentage of sales declined 80 bps year over year to 4.4%.

Higher gross margin was primarily responsible for a higher operating margin that increased 320 bps year over year to 7.7%.

Conmed ended the first quarter with cash and cash equivalents of roughly $10.0 million, registering a sequential decline of 1.3%. The company had an outstanding debt of approximately $209.1 million at the end of the first quarter.

Conmed has maintained its revenues and adjusted earnings per share guidance for fiscal 2010. For the year, the company expects total revenue in the range of $715 million to $725 million. Adjusted earnings per share should be in the range of $1.20 to $1.30.

Conmed has also provided guidance for the next quarter. For the second quarter, total revenue should range between $175 million and $180 million. Adjusted earnings per share should range between 25 and 30 cents.

Conmed is a major medical products manufacturer specializing in surgical instruments and devices. Its main competitors include Stryker Corporation (SYK) and Smith & Nephew (SNN).

Presently, we are ‘Neutral’ on Conmed.