What Triggered the Rally: CONMED Corporation (NASDAQ: CNMD) stock rose 6.6% on January 23rd, 2019 after the company has beaten the analysts’ expectation for the fourth quarter of FY 18 due to booming sales from its general surgery and orthopedics group. During the fourth quarter, the net income of $15.7 million decreased about 66% from the fourth quarter of 2017. The adjusted net income increased 8.3% to $21.2 million year-over-year. For 2018, CONMED delivered 8.4% constant currency adjusted growth on the topline and 15.3% adjusted diluted net earnings per share growth on the bottom-line.
Positive Pipeline: Meanwhile, the acquisition of Buffalo Filter remains on track to close during the first quarter of 2019. The company is excited about both the near and long-term opportunities in smoke evacuation market and the company believe Buffalo Filter’s product portfolio, combined with CONMED’s existing channels, will allow the company to quickly grow and gain share in this expanding market.
Segment Performance: CNMD in the fourth quarter of FY 18 has reported the adjusted earnings per share of 73 cents, beating the analysts’ estimates for the adjusted earnings per share of 72 cents. The company had reported the adjusted revenue growth of 8.9 percent to $242.4 million in the fourth quarter of FY 18. On an adjusted basis, domestic sales grew 12.9% year over year. International sales, which represented 48.4% of total revenue, grew 7.3% compared to the fourth quarter of 2017 on a reported basis. Foreign currency exchange rates, including the effects of the FX hedging program, had a negative impact of $1.6 million on the fourth quarter sales. In constant currency, international sales grew 8.7% versus the prior-year period. Worldwide Orthopedics revenue increased 4.6% in the fourth quarter. Domestic Orthopedics revenue grew 6.7%, posting a fifth consecutive quarter of growth. Internationally, Orthopedics revenue increased 3.3%. Worldwide General Surgery revenue grew 18.4% in the fourth quarter, driven by strong performances across the product portfolio. Domestically, fourth quarter General Surgery sales increased 17.2%, and internationally General Surgery sales increased 20.6%.
Guidance: For FY19, CNMD expects full-year the constant-currency sales growth to be in the range of 5.0% to 6.0%. Based on recent exchange rates, the negative impact to 2019 sales from foreign exchange is expected to be approximately 100 basis points. The Company also projects full-year 2019 adjusted diluted net earnings per share in the range of $2.42 to $2.47. This represents growth over 2018 of approximately 11% to 13%. The adjusted diluted net earnings per share estimates for 2019 is estimated in the range of $18 to $20 million.