CNMD Q2 Deep Dive: Product Growth and Supply Chain Progress Offset Margin Pressure

Medical tech company CONMED (NYSE:CNMD) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 3.1% year on year to $342.3 million. The company expects the full year’s revenue to be around $1.37 billion, close to analysts’ estimates. Its non-GAAP profit of $1.15 per share was 2.4% above analysts’ consensus estimates.

Is now the time to buy CNMD? Find out in our full research report (it’s free).

StockStory’s Take

CONMED’s second quarter saw a positive market response, as the company’s revenue and non-GAAP profit exceeded Wall Street’s expectations. Management highlighted worldwide general surgery growth, led by its AirSeal and Buffalo Filter platforms, as the main drivers of performance. CEO Patrick Beyer underscored the impact of supply chain improvements and strong demand for new products like BioBrace in orthopedics. Despite ongoing cost pressures, the company’s operational enhancements and product momentum contributed to outperformance, with Beyer stating, “Our supply chain initiatives can accelerate growth in orthopedics as we move into 2026.”

Looking ahead, CONMED’s modest increase to full-year revenue guidance reflects confidence in its core growth drivers, but the company lowered its profit outlook due to ongoing margin challenges. Management pointed to expanding legislation supporting Buffalo Filter’s growth, continued adoption of AirSeal, and new product launches in orthopedics as key factors for future performance. CFO Todd Garner noted, “We expect gradual, hopefully steady improvement as we work through the rest of the year,” while also cautioning that tariffs and FX headwinds remain persistent obstacles.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strong general surgery sales, legislative tailwinds for Buffalo Filter, and progress in product innovation, while also acknowledging margin pressures and supply chain recovery.

• General surgery momentum: AirSeal drove general surgery growth, particularly with increased adoption in robotic and complex laparoscopic procedures. The platform now accounts for a large share of recurring revenue, supported by continued placements and expanding use in non-robotic surgeries.
• Legislative support for Buffalo Filter: New smoke-free operating room laws in the U.S. and internationally fueled double-digit growth for Buffalo Filter, with management projecting long-term market expansion as more states implement regulations. The recent launch of the PlumeSafe PX5 product targets ambulatory and outpatient settings.
• Orthopedics stabilizing post-supply chain issues: Orthopedic sales growth was led by BioBrace, which is now used across over 50 procedures. FDA clearance for the BioBrace RC device is expected to increase adoption, especially in rotator cuff repair. Foot & Ankle products delivered double-digit growth for the third straight quarter, benefiting from resolved supply chain disruptions.
• Operational efficiency focus: Management emphasized ongoing supply chain improvements, including procurement and production enhancements, with a top consulting firm engaged to drive $20 million in annual savings. These initiatives aim to turn the supply chain into a competitive advantage.
• Portfolio optimization and financial flexibility: The company is actively reviewing its product portfolio to prioritize higher-margin, high-growth opportunities. Management is also maintaining a focus on debt reduction, expecting the leverage ratio to fall below 3.0 by year-end.

Drivers of Future Performance

CONMED’s outlook is shaped by its core product growth, legislative trends, and operational execution, while navigating margin headwinds from tariffs and currency fluctuations.

• Growth from core platforms: Management expects AirSeal and Buffalo Filter to continue driving sales, supported by new product launches and increasing clinical adoption—especially as more states mandate smoke evacuation in operating rooms.
• Supply chain and margin pressures: While operational improvements are expected to boost efficiency and product availability, management acknowledged ongoing margin headwinds from tariffs and FX, and guided for gross margins to remain similar to last year despite these pressures.
• Portfolio and debt strategy: The company is prioritizing higher-growth, higher-margin products and maintaining a disciplined approach to capital allocation, with a goal of reducing leverage and enabling future investment in innovation.

Catalysts in Upcoming Quarters

In coming quarters, the StockStory team will be tracking (1) continued adoption and legislative support for Buffalo Filter, (2) progress on resolving supply chain constraints to restore growth in orthopedics, and (3) the impact of operational efficiency initiatives on margins. We’ll also watch for new product launches and the pace of debt reduction as indicators of execution.

CONMED currently trades at $54.01, up from $50.22 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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