Corasantis Gone, Acquisition Off the Agenda for ConMed

ConMed Corporation’s financial results for the second quarter have been accompanied with the announcement that the Corasanti family’s reign is coming to an end.

Background

The corridors of power at ConMed have been a troubled place for some time, with that unhelpful combination of shareholder unrest, boardroom reshuffles and murmurings about acquisition. The company must therefore be breathing something of a sigh of relief at quarterly figures that don’t look too bad, coupled with a few changes at the top that should be viewed positively by the markets.

Numbers first then; ConMed’s sales slipped by 2.5% compared with a year ago, which sounds a bit scary until one looks under a few rocks. It seems the main culprit is a slump in Surgical Visualization capital sales, explained away as customers holding off purchasing until the new IM8000 Surgical Video system comes on stream later this year. That said, what might worry the markets is a reduced forecast for total annual revenues from the earlier $770-780 million projection to $735-740 million based on the assessment that both the IM8000 and the Edge Ablation system might take a little longer to start showing up in the numbers than had been thought.

Meanwhile the company is pointing to its track record of growing earnings and margins through continued operational performance, with adjusted earnings per share improving 9.3% and adjusted EBITDA margin expanding 50 basis points compared to the second quarter of 2013. In the face of a revenue drop, this is likely to be attributable to continued the on-going consolidation of certain administrative functions and manufacturing activities.

Speaking of changes, it looks like the end of the road for the influence of the Corasanti family with the company announcing the appointment of ex-Stryker CFO and interim CEO Curt Hartman as its own interim CEO, taking the reigns from Joe Corasanti who is also stepping down as President and board member. And finally, after 44 years, ConMed founder Eugene Corasanti has decided to retire from the Board and as an employee, effective immediately.

As to the murmurings about future strategic direction from its shareholders, ConMed clearly took that one on the chin with a now-concluded comprehensive review of its strategic alternatives. That review clearly included consideration of selling the shop entirely, an option that has seemingly been ditched in favour of a renewed focus on further developing and executing the company’s strategic plan to grow revenues and margins.

All the news hasn’t gone down very well in the markets however as the share price, no doubt spooked by the sales drop and the removal of the acquisition option, fell almost 10% on the day of the press announcement.

Source: ConMed Corporation, Globe Newswire

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