CONMED Corporation (NYSE:CNMD) Q4 2022 Earnings Call Transcript

Rick Wise: Okay. Maybe, Curt, you could talk in a little more detail about general surgery. Obviously, in terms of the performance, I mean U.S., OUS both were pressured a little more than the ortho side. Maybe help us understand some of the moving pieces there? And just again, how do you break it out between the warehouse issues something environmental or capital? And maybe I’m thinking about it wrong, but if I say to myself, if the smoke business which is such a significant chunk now it’s growing at 20%-plus, which thank you for sharing that again. Gosh, you must be feeling some real pressure elsewhere. And so where is that — what kind of recovery or improvement have you assumed in giving us the 2023 guidance? Thank you. When you look at CONMED in total, about 55% of our revenue comes out of General Surgery.

So every product we sell outside of the two acquisitions goes through that warehouse. So the impact of the warehouse slowdown is proportionately going to be larger on revenue for General Surgery. General Surgery also has a mix of products that go through the large packhouse, especially in our AET business, the GI business. And so as you slow down those large orders moving through the pack houses, it’s going to have a more material impact on general surgery. And I would assign a warehouse slowdown then takes your sales force out of its offensive mode. And they playing defense trying to move product around across their territory with the available product to ensure customers have what they need, when they need it. And when you’re doing that, you’re certainly not in offense, you’re not in a position to look for new business, you’re not in a position to try to grow your existing customer base.

And I think that’s all a ramifications of the warehouse issues. I personally feel like the fourth quarter was a good surgical procedure quarter. I feel like there were subtle gains in staffing that are starting to show in the environment. That’s not to say there are pockets where there are still issues with surgical procedure volumes and staffing levels. But generally those two things are both improving or certainly what we saw in the fourth quarter. Feel very good about our General Surgery and our Orthopedic business today. And it’s unfortunate that this is clouding the outcomes of those businesses. Because I think we have very good portfolios and very good commercial teams that are very focused on their customers.

Todd Garner: Rick, I want to make it — I just want to make a clarifying comment just so nobody’s confused. When you refer to the 20% plus growth, that is of course our expectation on an annual basis for the combined Buffalo Filter and Airseal product line. And that is in our deck, you’re correct, we continue to expect that. That’s a key part of our growth drivers. But it’s on the growth driver’s deck. It’s forward-looking. I want to be clear, those product lines combined did not grow 20% in Q4. Because of the warehouse issue. So I want to make sure nobody’s confused by that. But we continue to expect moving forward that they will be above that 20% growth mark.

Rick Wise: I’m glad you clarified it. Thank you.

Operator: And thank you. And one moment for our next question. And our next question comes from Matt O’Brien from Piper Sandler. Your line is now open.

Matt O’Brien: Thanks for taking my questions. Could you hear me, okay?

Curt Hartman: We can.