ConMed (CNMD) Q4 2025: Ortho Sales Surge 12% as Supply Chain Progress Unlocks Growth
ConMed’s fourth quarter marked a decisive turn as orthopedic sales accelerated and supply chain headwinds eased, restoring commercial momentum in key growth platforms. The exit from gastroenterology products sharpened portfolio focus, while investments in innovation and operational discipline set the stage for above-market growth targets in 2026. With leverage now below three times and a new CFO search underway, leadership is signaling a commitment to both organic and acquisition-driven expansion.
Summary
- Ortho Outperformance: Supply chain stabilization and BioBrace traction led to a sharp rebound in orthopedic sales.
- Portfolio Realignment: Gastroenterology exit and targeted R&D investment focus resources on high-margin, high-growth platforms.
- 2026 Growth Ambition: Management is prioritizing innovation, operational agility, and disciplined capital deployment to drive sustained gains.
Performance Analysis
ConMed delivered a robust quarter, with total sales up 7.9% and orthopedic growth reaching 12.1%—a direct result of improved supply chain execution and commercial focus. The sports medicine segment, anchored by BioBrace, soft tissue repair technology, saw accelerating adoption, while general surgery posted steady gains globally but lagged in the U.S. due to deliberate product exits and OEM deprioritization.
International sales growth outpaced the U.S., reflecting both distributor momentum and the rollout of new products (notably the AIM meniscal repair program in Europe). Gross margin pressure from tariffs was partially offset by favorable mix and cost actions, with adjusted gross margin up over the full year despite a Q4 dip. Operating cash flow remained strong, supporting both increased R&D and the initiation of a $150 million share buyback after the dividend suspension.
- Ortho Momentum Restored: Backorder levels hit three-year lows, enabling the sales force to return to proactive growth efforts.
- General Surgery Mixed: U.S. declines masked international strength; smoke evacuation and AirSeal met guidance but portfolio pruning weighed on headline results.
- Cash and Leverage: Year-end cash improved, leverage dropped to 2.9x, and free cash flow is projected to remain healthy in 2026.
Segment divergence was shaped by deliberate strategy—orthopedics is now positioned as the primary growth engine, with general surgery’s role narrowing to core innovation platforms.
Executive Commentary
"We win where innovation and minimally invasive surgery converge in robotic and laparoscopic surgery and smoke evacuation and in orthopedic soft tissue repair. These are high growth, high margin markets where we are uniquely positioned to lead with our differentiated products and strong commercial teams."
Pat Beyer, President and Chief Executive Officer
"The 2026 plan is built to strengthen the portfolio by increasing the focus and investments on our key growth drivers. As Pat said, our financial strength, our operational progress, and the potential of our growth platforms give us confidence in the path forward."
Todd Garner, Executive Vice President and Chief Financial Officer
Strategic Positioning
1. Orthopedic Supply Chain Turnaround
Resolving multi-year supply chain constraints in sports medicine was a critical unlock. ConMed invested in people, planning, and infrastructure, engaging external consultants and building operational depth. By Q4, backorders and SKU shortages hit multi-year lows, allowing the sales team to shift from reactive to proactive selling. This operational reset underpins management’s confidence in sustaining above-market orthopedic growth.
2. Portfolio Focus and Gastroenterology Exit
Exiting the gastroenterology business line marks a significant sharpening of strategic focus. The move, while dilutive in the near term, is expected to improve consolidated gross margins by 80 basis points and frees up capital and talent for core platforms. Management signaled that portfolio management will remain ongoing, but no further major exits are anticipated at this time.
3. Innovation Investment in High-Growth Platforms
R&D spending is set to increase in 2026, targeting platforms with proven momentum: AirSeal (insufflation for robotic/laparoscopic surgery), Buffalo Filter (surgical smoke evacuation), and BioBrace (soft tissue repair). Each has demonstrated robust clinical adoption, with AirSeal now used in 1.6 million procedures and BioBrace expanding across 70+ procedures. The company’s 268-patient BioBrace clinical trial is on track for completion in 2026, potentially reinforcing clinical and commercial differentiation.
4. Capital Allocation and Shareholder Returns
With leverage under 3x, ConMed has pivoted from dividends to buybacks, authorizing $150 million for repurchases and positioning this as a minimum, not a cap. Management is also actively evaluating tuck-in M&A, but remains disciplined, prioritizing fit with existing growth engines and financial prudence.
5. International Expansion and Commercial Leverage
International sales, up 15.4% in Q4, are benefiting from new product launches and distributor engagement. The AIM meniscal repair program’s European rollout and continued AirSeal penetration in both robotic and traditional laparoscopy highlight the potential for further global share gains.
Key Considerations
This quarter showcased the impact of operational discipline and portfolio clarity, but also surfaced key questions for 2026 execution.
Key Considerations:
- Ortho Growth Sustainability: Maintaining supply chain resilience and scaling BioBrace adoption will be key to sustaining recent momentum.
- Gross Margin Levers: Tariff headwinds persist, but product mix improvement and cost actions are expected to drive 50 to 100 basis points of margin expansion in 2026.
- General Surgery Trajectory: U.S. performance may remain muted as portfolio pruning continues, but international growth and innovation could offset domestic softness.
- Leadership Transition Risk: The CFO transition introduces some uncertainty, though management has emphasized continuity and a focus on shareholder value creation in the search for a new finance chief.
Risks
Tariff volatility remains a material drag on gross margins, with incremental headwinds of 100 to 110 basis points forecast for 2026. The supply chain, while improved, is not yet operating at a world-class level, leaving execution risk if disruptions recur. The CFO transition and ongoing portfolio management could introduce additional operational or strategic uncertainty. International expansion, while robust, may be subject to distributor inventory swings and regulatory variability.
Forward Outlook
For Q1 2026, ConMed guided to:
- Revenue between $308 million and $313 million
- Adjusted EPS of $0.80 to $0.83
For full-year 2026, management maintained guidance:
- Revenue between $1.345 billion and $1.375 billion (4.5% to 6% constant currency growth)
- Adjusted EPS of $4.30 to $4.45
- Gross margin improvement of 50 to 100 basis points despite tariff headwinds
- Free cash flow of approximately $125 million
Management highlighted several factors that will influence results:
- Tariffs and GI exit will weigh on near-term EPS, but underlying growth drivers are expected to offset these headwinds.
- Increased R&D and SG&A reflect a deliberate push to accelerate innovation and commercial execution.
Takeaways
ConMed’s Q4 performance marks a strategic inflection, with orthopedics regaining its growth engine status and portfolio discipline sharpening the company’s focus. The full-year outlook is underpinned by operational progress, but investors should monitor execution on supply chain, margin expansion, and the leadership transition.
- Orthopedics Reasserts Leadership: Supply chain normalization and BioBrace adoption drove outsized growth, setting a new baseline for the segment’s contribution.
- Portfolio and Margin Reset: The GI exit and targeted investments are expected to structurally improve margin profile and growth focus.
- 2026 Watchpoints: Sustained operational discipline, successful CFO transition, and continued innovation investment will be key to delivering on above-market growth ambitions.
Conclusion
ConMed’s fourth quarter and full-year results reflect a company in active transformation, leveraging operational improvements and strategic focus to reignite growth in its core markets. The next phase will test management’s ability to sustain gains, execute on innovation, and navigate leadership change.
Industry Read-Through
ConMed’s supply chain rebound and portfolio pruning echo broader medtech trends, as companies double down on high-margin, innovation-driven niches and exit non-core or low-growth assets. The robust international expansion and traction in surgical smoke evacuation signal rising global demand for advanced, regulation-driven solutions. Investors in the medical device sector should watch for similar moves among peers, especially as tariff and cost pressures force sharper resource allocation and operational discipline. Leadership transitions and capital allocation pivots—such as dividend suspensions in favor of buybacks—may become more prevalent as companies optimize for growth and shareholder returns in a complex macro environment.