CONMED Corp
For the period ended Dec 31, 2024. Filed Feb 18, 2025.
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FY2024 · Filed Feb 18, 2025
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CONMED CORPORATION
By: /s/ Patrick J. Beyer
Patrick J. Beyer
(President and Chief Executive Officer)
Date:
February 18, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date |
|---|---|---|
| /s/ PATRICK J. BEYER | President and | |
| Patrick J. Beyer | Chief Executive Officer | February 18, 2025 |
| (Principal Executive Officer) | ||
| /s/ TODD W. GARNER | Executive Vice President, Finance and | |
| Todd W. Garner | Chief Financial Officer | February 18, 2025 |
| (Principal Financial and Principal Accounting Officer) | ||
| /s/ MARTHA GOLDBERG ARONSON | ||
| Martha Goldberg Aronson | Chair of the Board | February 18, 2025 |
| /s/ DAVID BRONSON | ||
| David Bronson | Director | February 18, 2025 |
| /s/ BRIAN P. CONCANNON | ||
| Brian P. Concannon | Director | February 18, 2025 |
| /s/ LAVERNE COUNCIL | ||
| Laverne Council | Director | February 18, 2025 |
| /s/ CHARLES M. FARKAS | ||
| Charles M. Farkas | Director | February 18, 2025 |
| /s/ BARBARA SCHWARZENTRAUB | ||
| Barbara Schwarzentraub | Director | February 18, 2025 |
| /s/ JOHN L. WORKMAN | ||
| John L. Workman | Director | February 18, 2025 |
Exhibit Index
| Exhibit No. | Description | |
| 2.1 | - | Agreement and Plan of Merger, dated May 21, 2020, by and between CONMED Corporation, a New York corporation, and CONMED Corporation, a Delaware corporation (Incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2020). |
| 3.1 | - | By-laws of CONMED Corporation, a Delaware corporation (Incorporated by reference to Exhibit 3.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2020). |
| 3.2 | - | Amended and Restated Certificate of Incorporation of CONMED Corporation (Incorporated by reference to Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2023). |
| 4.1* | - | Description of the Common Stock of CONMED Corporation, a Delaware corporation. |
| 10.1 | - | Guarantee and Collateral Agreement, dated August 28, 2002, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002). |
| 10.2 | - | First Amendment to Guarantee and Collateral Agreement, dated June 30, 2003, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank and the several banks and other financial institutions or entities from time to time parties thereto (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003). |
| 10.3 | - | Second Amendment to Guarantee and Collateral Agreement, dated April 13, 2006, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank and the several banks and other financial institutions or entities from time to time parties thereto (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 19, 2006). |
| 10.4 | - | Third Amendment to Guarantee and Collateral Agreement, dated as of January 17, 2013, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank (Incorporated by reference to Exhibit 4.6 of the Company's Annual Report on Form 10-K for the year ended December 31, 2012). |
| 10.5 | - | Fourth Amendment to Guarantee and Collateral Agreement, dated as of January 4, 2016, made by CONMED Corporation and certain of its subsidiaries in favor of JP Morgan Chase Bank (Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2016). |
| 10.6 | - | Fifth Amendment to Guarantee and Collateral Agreement, dated as of July 16, 2021, made by CONMED Corporation and certain of its subsidiaries in favor of JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 16, 2021). |
| 10.7 | - | Seventh Amended and Restated Credit Agreement, dated as of July 16, 2021, among CONMED Corporation, the foreign subsidiary borrowers from time to time party thereto, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 16, 2021). |
| 10.8 | - | First Amendment, dated June 6, 2022, to the Seventh Amended and Restated Credit Agreement, dated as of July 16, 2021, among CONMED Corporation, the foreign subsidiary borrowers from time to time party thereto, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.25 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.9 | - | Second Amendment, dated August 1, 2022, to the Seventh Amended and Restated Credit Agreement, dated as of July 16, 2021, among CONMED Corporation, the foreign subsidiary borrowers from time to time party thereto, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2022). |
| 10.10 | - | Third Amendment, dated December 20, 2022, to the Seventh Amended and Restated Credit Agreement, dated as of July 16, 2021, among CONMED Corporation, the foreign subsidiary borrowers from time to time party thereto, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 27, 2022). |
| 10.11 | - | Fourth Amendment, dated July 19, 2024, to the Seventh Amended and Restated Credit Agreement, dated as of July 16, 2021, among CONMED Corporation, the foreign subsidiary borrowers from time to time party thereto, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024). |
| 10.12 | - | Indenture, dated as of January 29, 2019, by and between CONMED Corporation and MUFG Union Bank, N.A., as trustee (Incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.13 | - | Supplemental Indenture, dated as of June 6, 2022, to the Indenture, dated January 29, 2019, by and between CONMED Corporation and U.S. Bank Trust Company, National Association, as successor to MUFG Union Bank, N.A. as trustee (Incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.14 | - | Base Notes Hedge Transaction Confirmation, dated as of January 24, 2019, between CONMED Corporation and Barclays Bank PLC (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.15 | - | Base Notes Hedge Transaction Confirmation, dated as of January 24, 2019, between CONMED Corporation and Bank of America, N.A (Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.16 | - | Base Notes Hedge Transaction Confirmation, dated as of January 24, 2019, between CONMED Corporation and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.17 | - | Base Notes Hedge Transaction Confirmation, dated as of January 24, 2019, between CONMED Corporation and J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National Association, London Branch (Incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.18 | - | Base Warrant Transaction Confirmation, dated as of January 24, 2019, between CONMED Corporation and Barclays Bank PLC (Incorporated by reference to Exhibit 10.5 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.19 | - | Base Warrant Transaction Confirmation, dated as of January 24, 2019, between CONMED Corporation and Bank of America, N.A (Incorporated by reference to Exhibit 10.6 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.20 | - | Base Warrant Transaction Confirmation, dated as of January 24, 2019, between CONMED Corporation and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.7 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.21 | - | Base Warrant Transaction Confirmation, dated as of January 24, 2019, between CONMED Corporation and J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National Association, London Branch (Incorporated by reference to Exhibit 10.8 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.22 | - | Additional Notes Hedge Transaction Confirmation, dated as of January 25, 2019, between CONMED Corporation and Barclays Bank PLC (Incorporated by reference to Exhibit 10.9 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.23 | - | Additional Notes Hedge Transaction Confirmation, dated as of January 25, 2019, between CONMED Corporation and Bank of America, N.A. (Incorporated by reference to Exhibit 10.10 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.24 | - | Additional Notes Hedge Transaction Confirmation, dated as of January 25, 2019, between CONMED Corporation and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.11 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.25 | - | Additional Notes Hedge Transaction Confirmation, dated as of January 25, 2019, between CONMED Corporation and J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National Association, London Branch (Incorporated by reference to Exhibit 10.12 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.26 | - | Additional Warrant Transaction Confirmation, dated as of January 25, 2019, between CONMED Corporation and Barclays Bank PLC (Incorporated by reference to Exhibit 10.13 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.27 | - | Additional Warrant Transaction Confirmation, dated as of January 25, 2019, between CONMED Corporation and Bank of America, N.A. (Incorporated by reference to Exhibit 10.14 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.28 | - | Additional Warrant Transaction Confirmation, dated as of January 25, 2019, between CONMED Corporation and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.15 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.29 | - | Additional Warrant Transaction Confirmation, dated as of January 25, 2019, between CONMED Corporation and J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National Association, London Branch (Incorporated by reference to Exhibit 10.16 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019). |
| 10.30 | - | Indenture, dated as of June 6, 2022, by and between CONMED Corporation and U.S. Bank Trust Company, National Association, as trustee (Incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.31 | - | Base Note Hedge Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and Barclays Bank PLC, through its agent Barclays Capital Inc. (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.32 | - | Base Note Hedge Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and Bank of America, N.A. (Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.33 | - | Base Note Hedge Transaction Confirmation, dated as of June 1, 2022, among CONMED Corporation, Jefferies International Limited and Jefferies LLC, as agent (Incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.34 | - | Base Note Hedge Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and JPMorgan Chase Bank, National Association (Incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.35 | - | Base Note Hedge Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and Nomura Global Financial Products Inc., through its agent Nomura Securities International, Inc. (Incorporated by reference to Exhibit 10.5 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.36 | - | Base Note Hedge Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.6 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.37 | - | Base Warrant Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and Barclays Bank PLC, through its agent Barclays Capital Inc. (Incorporated by reference to Exhibit 10.7 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.38 | - | Base Warrant Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and Bank of America, N.A. (Incorporated by reference to Exhibit 10.8 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.39 | - | Base Warrant Transaction Confirmation, dated as of June 1, 2022, among CONMED Corporation, Jefferies International Limited and Jefferies LLC, as agent (Incorporated by reference to Exhibit 10.9 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.40 | - | Base Warrant Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and JPMorgan Chase Bank, National Association (Incorporated by reference to Exhibit 10.10 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.41 | - | Base Warrant Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and Nomura Global Financial Products Inc., through its agent Nomura Securities International, Inc. (Incorporated by reference to Exhibit 10.11 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.42 | - | Base Warrant Transaction Confirmation, dated as of June 1, 2022, between CONMED Corporation and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.12 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.43 | - | Additional Note Hedge Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and Barclays Bank PLC, through its agent Barclays Capital Inc. (Incorporated by reference to Exhibit 10.13 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.44 | - | Additional Note Hedge Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and Bank of America, N.A. (Incorporated by reference to Exhibit 10.14 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.45 | - | Additional Note Hedge Transaction Confirmation, dated as of June 2, 2022, among CONMED Corporation, Jefferies International Limited and Jefferies LLC, as agent (Incorporated by reference to Exhibit 10.15 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.46 | - | Additional Note Hedge Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and JPMorgan Chase Bank, National Association (Incorporated by reference to Exhibit 10.16 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.47 | - | Additional Hedge Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and Nomura Global Financial Products Inc., through its agent Nomura Securities International, Inc. (Incorporated by reference to Exhibit 10.17 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.48 | - | Additional Note Hedge Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.18 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.49 | - | Additional Warrant Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and Barclays Bank PLC, through its agent Barclays Capital Inc. (Incorporated by reference to Exhibit 10.19 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.50 | - | Additional Warrant Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and Bank of America, N.A. (Incorporated by reference to Exhibit 10.20 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.51 | - | Additional Warrant Transaction Confirmation, dated as of June 2, 2022, among CONMED Corporation, Jefferies International Limited and Jefferies LLC, as agent (Incorporated by reference to Exhibit 10.21 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.52 | - | Additional Warrant Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and JPMorgan Chase Bank, National Association (Incorporated by reference to Exhibit 10.22 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.53 | - | Additional Warrant Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and Nomura Global Financial Products Inc., through its agent Nomura Securities International, Inc. (Incorporated by reference to Exhibit 10.23 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.54 | - | Additional Warrant Transaction Confirmation, dated as of June 2, 2022, between CONMED Corporation and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.24 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2022). |
| 10.55 | - | Sports Medicine Joint Development and Distribution Agreement by and between Musculoskeletal Transplant Foundation, Inc. and CONMED Corporation dated as of January 3, 2012 (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated January 3, 2012). |
| 10.56 | - | Securities Purchase Agreement, dated as of December 13, 2018, by and between CONMED Corporation and Filtration Group FGC LLC (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 13, 2018). |
| 10.57 | - | Agreement and Plan of Merger, dated as of May 4, 2022, by and among CONMED Corporation, Odyssey Merger Sub, Inc., In2Bones Global, Inc. and Sheryl Moroschak, solely in her capacity as representative of In2Bones’ equity holders (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2022). |
| 10.58 | - | Agreement and Plan of Merger, dated as of August 1, 2022, by and among CONMED Corporation, Prometheus Merger Sub, Inc., Biorez, Inc. and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as representative, agent and attorney-in-fact of Biorez’s securityholders (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2022). |
| 10.59 | - | 2006 Stock Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on August 8, 2006). |
| 10.60 | - | Amended and Restated 1999 Long Term Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on November 3, 2009). |
| 10.61 | - | Amended and Restated Long Term Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on July 27, 2012). |
| 10.62 | - | Amended and Restated 2015 Long-Term Incentive Plan (Incorporated by reference to Exhibit 4.3 of the Company's Registration Statement on Form S-8 on October 23, 2015). |
| 10.63 | - | 2018 Long-Term Incentive Plan (incorporated by reference to Exhibit 4.3 of the Registrants Form S-8 filed on November 5, 2018). |
| 10.64 | - | 2002 Employee Stock Purchase Plan (Incorporated by reference to the Company’s Definitive Proxy Statement for the 2002 Annual Meeting filed with the Securities and Exchange Commission on April 17, 2002). |
| 10.65 | - | Amendment to CONMED Corporation 2002 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005). |
| 10.66 | - | CONMED Corporation Amended and Restated 2020 Employee Stock Purchase Plan (incorporated by reference to Exhibit E of the Registrant’s Proxy Statement on Schedule 14A filed on April 10, 2020). |
| 10.67 | - | Amended and Restated 2007 Non-Employee Director Equity Compensation Plan of CONMED Corporation (Incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 on August 3, 2010). |
| 10.68 | - | Amended and Restated 2016 Non-Employee Director Equity Compensation Plan (Incorporated by reference to Exhibit 4.3 of the Company's Registration Statement on Form S-8 on October 28, 2016). |
| 10.69 | - | Amended and Restated 2020 Non-Employee Director Equity Compensation Plan of CONMED Corporation (incorporated by reference to Exhibit D of the Registrant’s Proxy Statement on Schedule 14A filed on April 10, 2020). |
| 10.70 | - | CONMED Corporation Executive Severance Plan (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2015). |
| 10.71 | - | CONMED Corporation Executive Bonus Plan (Incorporated by reference to Exhibit A of the Registrant's Proxy Statement on Schedule 14A filed on April 13, 2017). |
| 10.72+ | - | Employment Agreement between the Company and Curt R. Hartman, dated November 9, 2014 (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 10, 2014). |
| 10.73+ | - | Amendment Number 1 to Employment Agreement between CONMED Corporation and Curt R. Hartman dated December 28, 2020 (Incorporated by reference to Exhibit 10.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 2020). |
| 10.74+ | - | Letter Agreement, by and between CONMED and Curt R. Hartman, dated October 30, 2024. (Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2024). |
| 10.75+ | - | Employment Agreement between the Company and Patrick Beyer, dated April 25, 2019 (Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019). |
| 10.76+ | - | Amendment Number 1 to Service Agreement, by and between CONMED U.K. Limited and Pat Beyer, dated April 24, 2024 (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2024). |
| 10.77+ | - | Amendment Number 2 to Service Agreement, by and between CONMED U.K. Limited and Pat Beyer, dated October 30, 2024 (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 30, 2024). |
| 10.78+ | - | Offer Letter from CONMED Corporation to Todd W. Garner dated January 2, 2018. (Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 2, 2018). |
| 10.79+ | - | Amendment Number 1 to Offer Letter from CONMED Corporation to Todd W. Garner dated December 28, 2020 (Incorporated by reference to Exhibit 10.27 on the Company's Annual Report on Form 10-K for the year ended December 31, 2020). |
| 10.80+ | - | Letter Agreement, by and between CONMED and Heather Cohen, dated April 19, 2024 (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 24, 2024). |
| 14 | - | Code of Ethics. The CONMED code of ethics may be accessed via the Company’s website at https://www.conmed.com/en-us/corporate-footer/policies |
| 19* | - | Insider Trading Policy |
| 21* | - | Subsidiaries of the Registrant. |
| 23* | - | Consent of Independent Registered Public Accounting Firm. |
| 31.1* | - | Certification of Patrick J. Beyer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* | - | Certification of Todd W. Garner. pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1* | - | Certifications of Patrick J. Beyer and Todd W. Garner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 97 | - | Policy for the Recovery of Erroneously Awarded Incentive-Based Compensation (Incorporated by reference to Exhibit 97 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023) |
| 101.INS* | - | XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH* | - | XBRL Taxonomy Extension Schema Document |
| 101.CAL* | - | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* | - | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | - | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | - | XBRL Taxonomy Extension Presentation Linkbase Document |
| 104* | - | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101) |
| * | Filed herewith | |
| + | Management contract or compensatory plan or arrangement |
MANAGEMENT’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
The management of CONMED Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management assessed the effectiveness of CONMED’s internal control over financial reporting as of December 31, 2024. In making its assessment, management utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control-Integrated Framework”, released in 2013. Management has concluded that based on its assessment, CONMED’s internal control over financial reporting was effective as of December 31, 2024. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
/s/ Patrick J. Beyer
Patrick J. Beyer
President and
Chief Executive Officer
/s/ Todd W. Garner
Todd W. Garner
Executive Vice President, Finance and
Chief Financial Officer
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of CONMED Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of CONMED Corporation and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible instruments in 2022.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Contingent Consideration from the Biorez and In2Bones Acquisitions
As described in Notes 1 and 16 to the consolidated financial statements, as of December 31, 2024, the fair value of the contingent consideration liabilities from the Biorez, Inc. (Biorez) and In2Bones Global, Inc. (In2Bones) acquisitions are $61.0 million and $11.2 million, respectively. The contingent consideration was recorded at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value. Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized as income or expense within selling and administrative expense in the consolidated statements of comprehensive income (loss). The fair value of contingent consideration is measured using projected payment dates, discount rates, revenue volatilities and projected revenues.
The principal considerations for our determination that performing procedures relating to the valuation of contingent consideration from the Biorez and In2Bones acquisitions is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the contingent consideration liabilities; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to discount rates, revenue volatilities, and projected revenues; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of the contingent consideration. These procedures also included, among others (i) reading the purchase agreements and (ii) testing management’s process for developing the fair value estimate of the contingent consideration liabilities. Testing management’s process included (i) evaluating the appropriateness of the valuation methods used by management; (ii) testing the completeness and accuracy of the underlying data used in the valuation methods; and (iii) evaluating the reasonableness of the significant assumptions related to discount rates, revenue volatilities and projected revenues. Evaluating the reasonableness of the projected revenues involved considering (i) the past performance of the acquired businesses; (ii) the consistency with external market and industry data; and (iii) whether the projected revenues were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the appropriateness of the valuation methods and (ii) the reasonableness of the assumptions related to discount rates and revenue volatilities.
/s/PricewaterhouseCoopers LLP
Fairport, New York
February 18, 2025
We have served as the Company’s auditor since 1982.
CONSOLIDATED BALANCE SHEETS
December 31, 2024 and 2023
(In thousands except share and per share amounts)
| 2024 | 2023 | |
|---|---|---|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $24,459 | $24,296 |
| Accounts receivable, less allowance for doubtful | ||
| accounts of $5,739 in 2024 and $6,034 in 2023 | 237,733 | 242,279 |
| Inventories | 346,719 | 318,324 |
| Prepaid expenses and other current assets | 31,096 | 30,750 |
| Total current assets | 640,007 | 615,649 |
| Property, plant and equipment, net | 115,793 | 120,722 |
| Deferred income taxes | 11,069 | 11,211 |
| Goodwill | 805,358 | 806,844 |
| Other intangible assets, net | 617,663 | 649,484 |
| Other assets | 116,357 | 96,111 |
| Total assets | $2,306,247 | $2,300,021 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Current portion of long-term debt | $715 | $708 |
| Accounts payable | 102,248 | 88,224 |
| Accrued compensation and benefits | 65,368 | 70,069 |
| Other current liabilities | 109,799 | 151,728 |
| Total current liabilities | 278,130 | 310,729 |
| Long-term debt | 905,066 | 973,140 |
| Deferred income taxes | 74,076 | 60,902 |
| Other long-term liabilities | 86,294 | 121,028 |
| Total liabilities | 1,343,566 | 1,465,799 |
| Commitments and contingencies (Note 14) | ||
| Shareholders' equity: | ||
| Preferred stock, par value $.01 per share; authorized | ||
| 500,000 shares, none issued or outstanding | — | — |
| authorized; 31,299,194 issued in 2024 and 2023, respectively | 313 | 313 |
| Paid-in capital | 476,575 | 446,535 |
| Retained earnings | 560,277 | 452,531 |
| Accumulated other comprehensive loss | (58,857) | (50,170) |
| Less: Treasury stock, at cost; | ||
| 397,860 and 534,000 shares in | ||
| 2024 and 2023, respectively | (15,627) | (14,987) |
| Total shareholders' equity | 962,681 | 834,222 |
| Total liabilities and shareholders' equity | $2,306,247 | $2,300,021 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands except per share amounts)
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Net sales | $1,307,015 | $1,244,744 | $1,045,472 |
| Cost of sales | 573,983 | 568,499 | 474,227 |
| Gross profit | 733,032 | 676,245 | 571,245 |
| Selling and administrative expense | 478,280 | 503,040 | 454,039 |
| Research and development expense | 54,426 | 52,602 | 47,152 |
| Operating expenses | 532,706 | 555,642 | 501,191 |
| Income from operations | 200,326 | 120,603 | 70,054 |
| Interest expense | 37,297 | 39,775 | 28,905 |
| Other expense | — | — | 112,011 |
| Income (loss) before income taxes | 163,029 | 80,828 | (70,862) |
| Provision for income taxes | 30,606 | 16,369 | 9,720 |
| Net income (loss) | $132,423 | $64,459 | $(80,582) |
| Per share data: | |||
| Basic | $4.29 | $2.10 | $(2.68) |
| Diluted | $4.25 | $2.04 | $(2.68) |
| Other comprehensive income (loss), before income tax: | |||
| Cash flow hedging | $5,517 | $(3,141) | $(1,530) |
| Pension liability | 2,489 | 6,576 | 7,817 |
| Foreign currency translation adjustments | (14,753) | 5,085 | (8,418) |
| Other comprehensive income (loss), before income tax | $(6,747) | $8,520 | $(2,131) |
| Provision for income taxes related to items in other comprehensive income (loss) | 1,940 | 832 | 1,524 |
| Other comprehensive income (loss), net of income tax | $(8,687) | $7,688 | $(3,655) |
| Comprehensive income (loss) | $123,736 | $72,147 | $(84,237) |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
| Common Stock · Paid-inCapital · RetainedEarnings · AccumulatedOtherComprehensiveLoss · TreasuryStock · Shareholders’Equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Shares · Amount | |||||||||
| Balance at December 31, 2021 | 31,299 | $313 | $396,771 | $496,605 | $(54,203) | $(54,051) | $785,435 | ||
| Common stock issued under employee plans | 3,385 | 5,385 | 8,770 | ||||||
| Stock-based compensation | 21,729 | 21,729 | |||||||
| Dividends on common stock ($.80 per share) | (24,183) | (24,183) | |||||||
| Shares issued for the settlement of convertible notes | (25,890) | 25,890 | — | ||||||
| Convertible notes premium on extinguishment | 103,125 | 103,125 | |||||||
| Settlement of convertible notes hedge transactions | 118,912 | 118,912 | |||||||
| Settlement of warrants | (96,758) | (96,758) | |||||||
| Issuance of convertible notes hedge transactions, net of tax | (142,128) | (142,128) | |||||||
| Issuance of warrants | 72,000 | 72,000 | |||||||
| Comprehensive income (loss): | |||||||||
| Cash flow hedging loss, net | (1,159) | ||||||||
| Pension liability, net | 5,922 | ||||||||
| Foreign currency translation adjustments | (8,418) | ||||||||
| Net income (loss) | (80,582) | ||||||||
| Total comprehensive income (loss) | (84,237) | ||||||||
| Cumulative effect of change in accounting principle(1) | (37,911) | 20,791 | (17,120) | ||||||
| Balance at December 31, 2022 | 31,299 | $313 | $413,235 | $412,631 | $(57,858) | $(22,776) | $745,545 | ||
| Common stock issued under employee plans | 9,043 | 7,789 | 16,832 | ||||||
| Stock-based compensation | 24,257 | 24,257 | |||||||
| Dividends on common stock ($.80 per share) | (24,559) | (24,559) | |||||||
| Comprehensive income (loss): | |||||||||
| Cash flow hedging loss, net | (2,380) | ||||||||
| Pension liability, net | 4,983 | ||||||||
| Foreign currency translation adjustments | 5,085 | ||||||||
| Net income | 64,459 | ||||||||
| Total comprehensive income | 72,147 | ||||||||
| Balance at December 31, 2023 | 31,299 | $313 | $446,535 | $452,531 | $(50,170) | $(14,987) | $834,222 | ||
| Common stock issued under employee plans | (1,329) | 5,171 | 3,842 | ||||||
| Stock-based compensation | 25,558 | 25,558 | |||||||
| Dividends on common stock ($.80 per share) | (24,677) | (24,677) | |||||||
| Settlement of convertible notes hedge transactions | 10,980 | (10,980) | — | ||||||
| Settlement of convertible notes | (5,169) | 5,169 | — | ||||||
| Comprehensive income (loss): | |||||||||
| Cash flow hedging gain, net | 4,180 | ||||||||
| Pension liability, net | 1,886 | ||||||||
| Foreign currency translation adjustments | (14,753) | ||||||||
| Net income | 132,423 | ||||||||
| Total comprehensive income | 123,736 | ||||||||
| Balance at December 31, 2024 | 31,299 | $313 | $476,575 | $560,277 | $(58,857) | $(15,627) | $962,681 | ||
| (1)We recorded the cumulative impact of adopting ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity in 2022. | |||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Cash flows from operating activities: | |||
| Net income (loss) | $132,423 | $64,459 | $(80,582) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
| Depreciation | 16,605 | 16,200 | 16,055 |
| Amortization of deferred debt issuance costs | 5,700 | 6,058 | 4,910 |
| Amortization | 55,252 | 55,674 | 53,464 |
| Stock-based compensation | 25,558 | 24,257 | 21,729 |
| Deferred income taxes | 12,202 | 700 | (6,042) |
| Non-cash adjustments to fair value of contingent consideration liability | (41,048) | (2,421) | 2,518 |
| Loss on early extinguishment of debt | — | — | 3,426 |
| Loss on convertible notes conversion premium | — | — | 103,125 |
| Loss on convertible notes hedge transactions settlement | — | — | 5,460 |
| Increase (decrease) in cash flows from changes in assets and | |||
| liabilities, net of acquired assets: | |||
| Accounts receivable | (1,619) | (47,068) | (5,203) |
| Inventories | (31,633) | 14,071 | (78,564) |
| Accounts payable | 14,713 | 14,849 | 13,302 |
| Income taxes | (193) | (3,921) | 6,726 |
| Accrued compensation and benefits | (2,834) | 14,425 | (8,968) |
| Other assets | (13,910) | (21,845) | (17,735) |
| Other liabilities | (4,248) | (10,090) | (256) |
| Net cash provided by operating activities | 166,968 | 125,348 | 33,365 |
| Cash flows from investing activities: | |||
| Purchases of property, plant and equipment | (13,084) | (19,032) | (21,785) |
| Payments related to business acquisitions, net of cash acquired | — | — | (227,744) |
| Other | — | (1,000) | — |
| Net cash used in investing activities | (13,084) | (20,032) | (249,529) |
| Cash flows from financing activities: | |||
| Payments on term loan | — | (20,000) | (92,981) |
| Payments on revolving line of credit | (753,000) | (760,000) | (530,000) |
| Proceeds from revolving line of credit | 751,000 | 692,000 | 460,000 |
| Payments to redeem convertible notes | (70,000) | — | (275,000) |
| Proceeds from convertible notes | — | — | 800,000 |
| Payments related to contingent consideration | (56,879) | (13,867) | (798) |
| Payments related to debt issuance costs | (303) | — | (21,830) |
| Dividends paid on common stock | (24,651) | (24,502) | (23,960) |
| Purchases of convertible notes hedges | — | — | (187,600) |
| Proceeds from issuance of warrants | — | — | 72,000 |
| Proceeds from settlement of convertible notes hedge transactions | — | — | 86,228 |
| Payment for settlement of warrants | — | — | (69,534) |
| Other, net | 2,833 | 15,937 | 8,475 |
| Net cash provided by (used in) financing activities | (151,000) | (110,432) | 225,000 |
| Effect of exchange rate changes on cash and cash equivalents | (2,721) | 470 | (741) |
| Net increase (decrease) in cash and cash equivalents | 163 | (4,646) | 8,095 |
| Cash and cash equivalents at beginning of year | 24,296 | 28,942 | 20,847 |
| Cash and cash equivalents at end of year | $24,459 | $24,296 | $28,942 |
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Non-cash investing and financing activities: | |||
| Contingent consideration | $— | $— | $183,914 |
| Dividends payable | 6,180 | 6,153 | 6,098 |
| Supplemental disclosures of cash flow information: | |||
| Cash paid during the year for: | |||
| Interest | $32,654 | $33,687 | $26,081 |
| Income taxes | 15,221 | 19,879 | 9,074 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except per share amounts)
Note 1 -Operations and Significant Accounting Policies
Organization and operations
CONMED Corporation (“CONMED”, the “Company”, “we” or “us”) is a medical technology company that provides devices and equipment for surgical procedures. The Company’s products are used by surgeons and other healthcare professionals in a variety of specialties including orthopedics, general surgery, gynecology, thoracic surgery and gastroenterology.
Principles of consolidation
The consolidated financial statements include the accounts of CONMED Corporation and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments which affect the reported amounts of assets, liabilities, related disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. While there has been uncertainty and disruption in the global economy and financial markets, we are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of February 18, 2025, the date of issuance of this Annual Report on Form 10-K. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Cash and cash equivalents
We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Inventories
Inventories are valued at the lower of cost and net realizable value determined on the FIFO (first-in, first-out) cost method.
We write-off excess and obsolete inventory resulting from the inability to sell our products at prices in excess of current carrying costs. We make estimates regarding the future recoverability of the costs of our products and record a provision for excess and obsolete inventories based on historical experience and expected future trends.
Property, plant and equipment
Property, plant and equipment are stated at cost and depreciated using the straight-line method over the following estimated useful lives:
| Building and improvements | 12 to 40 years |
| Leasehold improvements | Shorter of life of asset or life of lease |
| Machinery and equipment | 2 to 15 years |
Leases
The Company leases various manufacturing facilities, office facilities and equipment under operating and finance leases. We determine if an arrangement is a lease at inception. Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. We use the implicit rate when readily determinable. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Certain of our leases include variable lease payments, mainly when a lease is tied to an index rate. These variable lease payments are recorded as expense in the period incurred and are not material.
The Company has lease agreements with lease and non-lease components, which we account for separately. For certain equipment leases, we apply a portfolio approach to efficiently account for the operating lease ROU assets and lease liabilities. We also elected the short-term lease exemption and do not recognize leases with terms less than one year on the balance sheet. The related short-term lease expense is not material.
Our leases have remaining lease terms ofone year to 12 years, some of which include options to extend the leases for up tofive years, and some of which include options to terminate the leases withinone year. We only account for such extensions or early terminations when it is reasonably certain we will exercise such options. Refer to Note 6 for further detail on leases.
The Company places certain of our capital equipment with customers on a loaned basis and at no charge in exchange for commitments to purchase related single-use products over time periods generally ranging from one to three years. Placed equipment is loaned and subject to return if minimum single-use purchases are not met. The Company accounts for these placements as operating leases but applies a practical expedient and does not separate the non-lease and lease components from the combined component. Accordingly, the Company accounts for the combined component as a single performance obligation with revenue recognized upon shipment of the related single-use products. The cost of the equipment is amortized over its estimated useful life which is generally five years.
Goodwill and other intangible assets
We have a history of growth through acquisitions. Assets and liabilities of acquired businesses are recorded at their estimated fair values as of the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Factors that contribute to the recognition of goodwill include synergies expected to increase net sales and profits; acquisition of a talented workforce; cost savings opportunities; the strategic benefit of expanding our presence in core and adjacent markets; and diversifying our product portfolio. Customer and distributor relationships, trademarks, tradenames, developed technology, patents and other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. Sales representation, marketing and promotional rights represent intangible assets created under our agreement with Musculoskeletal Transplant Foundation (“MTF”).
Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to at least annual impairment testing. It is our policy to perform our annual impairment testing in the fourth quarter. The identification and measurement of goodwill impairment involves the estimation of the fair value of our business. Estimates of fair value are based on the best information available as of the date of the assessment. We completed our goodwill impairment testing of our single reporting unit during the fourth quarter of 2024. We performed our impairment test utilizing the market capitalization approach to determine whether the fair value of a reporting unit is less than its carrying amount. Based upon our assessment, the fair value of our reporting unit continues to exceed carrying value.
Intangible assets with a finite life are amortized over the estimated useful life of the asset and are evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of an intangible asset subject to amortization is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. An impairment loss is recognized by reducing the carrying amount of the intangible asset to its current fair value.
For all other indefinite-lived intangible assets, we perform a qualitative impairment test. Based upon this assessment, we have determined that our indefinite-lived intangible assets are not impaired.
Other long-lived assets
We review other long-lived assets consisting of property, plant and equipment and field inventory for impairment whenever events or circumstances indicate that such carrying amounts may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value to its current fair value.
The Company maintains field inventory consisting of capital equipment for customer demonstration and evaluation purposes. Field inventory is generally not sold to customers but rather continues to be used over its useful life for demonstration, evaluation and loaner purposes. An annual wear and tear provision has been recorded on field inventory. The net book value of such equipment at December 31, 2024 and 2023 is $42.2 million and $43.4 million, respectively.
Contingent consideration
Certain acquisitions involve potential payments of future consideration that is contingent upon the acquired businesses reaching certain performance milestones. The Company records contingent consideration at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value. The fair value of contingent consideration is measured using projected payment dates, discount rates, revenue volatilities and projected revenues. Projected revenues are based on the Company’s most recent internal operational budgets and long-range strategic plans. The discount rate used is determined at the time of measurement in accordance with accepted valuation methodologies. Changes in projected revenues, revenue volatilities, discount rates, and projected payment dates may result in adjustments to the fair value measurements. Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized as income or expense within selling and administrative expense in the consolidated statements of comprehensive income (loss). Contingent consideration payments made soon after the acquisition date are classified as investing activities in the consolidated statements of cash flows. Contingent consideration payments not made soon after the acquisition date that are related to the acquisition date fair value are reported as financing activities in the consolidated statements of cash flows, and amounts paid in excess of the original acquisition date fair value are reported as operating activities in the consolidated statements of cash flows.
Pension Plan
We sponsor a defined benefit pension plan (the “pension plan”) that was frozen in 2009. It covered substantially all our United States based employees at the time it was frozen. In conjunction with the pension plan, we recorded a pension benefit obligation totaling $69.2 million as of December 31, 2024. In accounting for this pension plan, we are required to make a number of assumptions, including the discount rate and mortality. The discount rate represents the interest rate used in estimating the present value of projected cash flows to settle the Company’s pension obligations. The discount rate assumption is determined by using a full yield curve approach, which involves applying the specific spot rates along the yield curve used in the determination of the benefit obligation that correlates to the relevant projected cash flows. The mortality assumptions are based on the Pri-2012 Mortality Tables using the MP-2021 mortality improvement scale.
Translation of foreign currency financial statements
Assets and liabilities of foreign subsidiaries have been translated into United States dollars at the applicable rates of exchange in effect at the end of the period reported. Revenues and expenses have been translated at the applicable weighted average rates of exchange in effect during the period reported. Translation adjustments are reflected in accumulated other comprehensive loss. Transaction gains and losses are included in net income (loss).
Foreign exchange and hedging activity
We manage our foreign currency transaction risks through the use of forward contracts to hedge forecasted cash flows associated with foreign currency transaction exposures. We account for these forward contracts as cash flow hedges. To the extent these forward contracts meet hedge accounting criteria, changes in their fair value are not included in current earnings but are included in accumulated other comprehensive loss. These changes in fair value will be reclassified into earnings as a component of sales or cost of sales when the forecasted transaction occurs. These cash flows are recorded in operating activities in the consolidated statements of cash flows.
We also enter into forward contracts to exchange foreign currencies for United States dollars in order to hedge our currency transaction exposures on intercompany receivables denominated in foreign currencies. These forward contracts settle each month at month-end, at which time we enter into new forward contracts. We have not designated these forward contracts as hedges and have not applied hedge accounting to them. We record these forward contracts at fair value with resulting gains and losses included in selling and administrative expense in the consolidated statements of comprehensive income (loss).
Income taxes
Deferred income tax assets and liabilities are based on the difference between the financial statement and tax basis of assets and liabilities and operating loss and tax credit carryforwards as measured by the enacted tax rates that are anticipated to be in effect in the respective jurisdictions when these differences reverse. The deferred income tax provision generally represents the net change in the assets and liabilities for deferred income taxes. A valuation allowance is established when it is necessary to reduce deferred income tax assets to amounts for which realization is likely. In assessing the need for a valuation allowance, we estimate future taxable income, considering the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards following tax law ordering rules. Valuation allowances related to deferred tax assets may be impacted by changes to tax laws, changes to statutory tax rates, reversal of temporary differences and ongoing and future taxable income levels.
Deferred income taxes are not provided on the unremitted earnings of certain subsidiaries outside of the United States earned after December 31, 2017 as it is expected that these earnings are permanently reinvested. Such earnings may become taxable upon a repatriation of assets from a subsidiary or the sale or liquidation of a subsidiary. Deferred income taxes are provided when the Company no longer considers subsidiary earnings to be permanently invested, such as in situations where the Company’s subsidiaries plan to make future dividend distributions.
Revenue recognition
The Company recognizes revenue when we have satisfied a performance obligation by transferring a promised good or service (that is an asset) to a customer. An asset is transferred when the customer obtains control of that asset. The following policies apply to our major categories of revenue transactions:
Revenue is recognized when product is shipped at which point the performance obligation is satisfied and the customer obtains control of the product.
We place certain of our capital equipment with customers on a loaned basis and at no charge in exchange for commitments to purchase related single-use products over time periods generally ranging from one to three years. In these circumstances, no revenue is recognized upon capital equipment shipment as the equipment is loaned and subject to return if certain minimum single-use purchases are not met. Revenue is recognized upon the sale and shipment of the related single-use products. The cost of the equipment is amortized over its estimated useful life which is generally five years.
We recognize revenues in accordance with the terms of our agreement with MTF on a net basis as our role is that of an agent earning a commission or fee. MTF is responsible for the sourcing, processing and distribution of allograft tissue for sports medicine procedures while the Company represents, markets and promotes MTF’s sports medicine allograft tissues to customers. The Company is paid a fee by MTF which is calculated as a percentage of the net amounts invoiced by MTF to customers for sports medicine allograft tissues. The Company accounts for the services provided to MTF as a series of distinct performance obligations and each service is recognized over time as MTF simultaneously receives and consumes the benefit.
Product returns are only accepted at the discretion of the Company and in accordance with our “Returned Goods Policy”. Historically, the level of product returns has not been significant. We accrue for sales returns, rebates and allowances based upon an analysis of historical customer returns and credits, rebates, discounts and current market conditions.
Our terms of sale to customers generally do not include any obligations to perform future services. Limited warranties are provided for capital equipment sales and provisions for warranty are provided at the time of product sale based upon an analysis of historical data.
Amounts billed to customers related to shipping and handling have been included in net sales. Shipping and handling costs included in selling and administrative expense were $27.0 million, $26.3 million and $21.7 million for 2024, 2023 and 2022, respectively.
We sell to a diversified base of customers around the world and, therefore, believe there is no material concentration of credit risk.
We assess the risk of loss on accounts receivable and adjust the allowance for doubtful accounts based on this risk assessment. We do so by applying historical loss rates to our accounts receivable aging schedule to estimate expected credit losses. We further adjusted expected credit losses for specifically identified and forecasted credit losses. Historically, losses on accounts receivable have not been material. Management believes that the allowance for doubtful accounts is adequate to provide for probable losses resulting from accounts receivable.
We sell extended warranties to customers that are typically for a period of one to three years. The related revenue is recorded as a contract liability and recognized over the life of the contract on a straight-line basis, which is reflective of our obligation to stand ready to provide repair services.
Please refer to Note 11 for further detail on revenue.
Earnings (loss) per share
Basic earnings (loss) per share (“basic EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the reporting period. Diluted earnings (loss) per share (“diluted EPS”) gives effect to all dilutive potential shares. As the Company was in a net loss position for the year ended December 31, 2022, there were no dilutive potential shares included in the computation of diluted shares outstanding. The following table sets forth the computation of basic and diluted earnings (loss) per share at December 31, 2024, 2023 and 2022, respectively:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Net income (loss) | $132,423 | $64,459 | $(80,582) |
| Basic-weighted average shares outstanding | 30,846 | 30,668 | 30,040 |
| Stock Compensation | 304 | 727 | — |
| Warrants | — | 11 | — |
| Convertible notes | — | 142 | — |
| Diluted-weighted average shares outstanding | 31,150 | 31,548 | 30,040 |
| Net income (loss) (per share) | |||
| Basic | $4.29 | $2.10 | $(2.68) |
| Diluted | 4.25 | 2.04 | (2.68) |
The shares used in the calculation of diluted EPS exclude stock options to purchase shares and stock appreciation rights where the exercise price was greater than the average market price of common shares for the year and the effect of the inclusion would be anti-dilutive. Such shares aggregated approximately 3.2 million and 1.7 million at December 31, 2024 and 2023, respectively. As the Company was in a net loss position for the year ended December 31, 2022, there wereno anti-dilutive shares. Effective with our adoption of Accounting Standard Update ("ASU") 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06") on January 1, 2022 (see Note 2), the Company began using the if-converted method to compute diluted EPS. Under the if-converted method, in the calculation of diluted EPS, the numerator is adjusted for interest expense applicable to the convertible notes (net of tax) and the denominator is adjusted to include additional common shares assuming the principal portion of the notes and the conversion premium are settled in common shares, when permitted or required. Under the if-converted method, when convertible notes require the principal to be paid in cash, then only the conversion premium affects the calculation of diluted EPS.
Stock-based compensation
All share-based payments to employees, including grants of employee stock options, restricted stock units, performance share units and stock appreciation rights are recognized in the financial statements at their fair values. Compensation expense is generally recognized using a straight-line method over the vesting period. Compensation expense for performance share units is recognized using the graded vesting method.
We issue shares under our stock based compensation plans out of treasury stock whereby treasury stock is reduced by the weighted average cost of such treasury stock. To the extent there is a difference between the cost of the treasury stock and the exercise price of shares issued under stock based compensation plans, we record gains to paid in capital; losses are recorded to paid in capital to the extent any gain was previously recorded, otherwise the loss is recorded to retained earnings.
Accumulated other comprehensive loss
Accumulated other comprehensive loss consists of the following:
| Cash FlowHedgingGain (Loss) | PensionLiability | Foreign Currency TranslationAdjustments | AccumulatedOtherComprehensive Loss | |
|---|---|---|---|---|
| Balance, December 31, 2021 | $3,656 | $(29,671) | $(28,188) | $(54,203) |
| Other comprehensive income (loss) before reclassifications, net of tax | 10,981 | 3,961 | (8,418) | 6,524 |
| Amounts reclassified from accumulated other comprehensive income (loss) before tax(a) | (16,024) | 2,589 | — | (13,435) |
| Income tax | 3,884 | (628) | — | 3,256 |
| Net current-period other comprehensive income (loss) | (1,159) | 5,922 | (8,418) | (3,655) |
| Balance, December 31, 2022 | $2,497 | $(23,749) | $(36,606) | $(57,858) |
| Other comprehensive income (loss) before reclassifications, net of tax | 4,158 | 3,370 | 5,085 | 12,613 |
| Amounts reclassified from accumulated other comprehensive income (loss) before tax(a) | (8,630) | 2,129 | — | (6,501) |
| Income tax | 2,092 | (516) | — | 1,576 |
| Net current-period other comprehensive income (loss) | (2,380) | 4,983 | 5,085 | 7,688 |
| Balance, December 31, 2023 | $117 | $(18,766) | $(31,521) | $(50,170) |
| Other comprehensive income (loss) before reclassifications, net of tax | 8,279 | 681 | (14,753) | (5,793) |
| Amounts reclassified from accumulated other comprehensive income (loss) before tax(a) | (5,410) | 1,591 | — | (3,819) |
| Income tax | 1,311 | (386) | — | 925 |
| Net current-period other comprehensive income (loss) | 4,180 | 1,886 | (14,753) | (8,687) |
| Balance, December 31, 2024 | $4,297 | $(16,880) | $(46,274) | $(58,857) |
(a) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income (loss) components are included in sales or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 16 and Note 13, respectively, for further details.
Note 2 -New Accounting Pronouncements
Recently Adopted Accounting Standards
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose significant segment expenses and other segment items on an annual and interim basis, and provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. The ASU does not change how a public entity identifies its operating segments, aggregates them or applies the quantitative threshold to determine its reportable segments. The new disclosure requirements are also applicable to entities that account and report as a single operating segment entity. This ASU is effective for our December 31, 2024 Form 10-K and will become effective for interim periods within 2025. This ASU only impacted our disclosures with no impact to the consolidated financial statements. Refer to Note 12 for the disclosures related to our single operating segment.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06"), which simplifies the accounting for convertible instruments by removing certain separation models requiring separate accounting for embedded conversion features which will result in more convertible debt instruments accounted for as a single liability. The ASU eliminates certain settlement conditions that are required for equity classification to qualify for the derivative scope exception. The ASU addresses how convertible instruments are accounted for in the calculation of diluted earnings per share by using the if-converted method. The Company adopted this standard on January 1, 2022 using the modified retrospective method.
Recently Issued Accounting Standards, Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The standard requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes on an annual and interim basis. Any relevant expense caption presented on the face of the income statement within continuing operations are required to be disaggregated by the following natural expense categories: (1) purchases of inventory, (2) employee compensation, (3), depreciation, and (4) intangible asset amortization. This ASU can be adopted prospectively or retrospectively and is effective for annual periods beginning after December, 15 2026 and interim periods within fiscal years beginning after December 15, 2027. We expect this ASU to only impact our disclosures with no impact to the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation in specified categories as well as information on income taxes paid. This ASU is effective for annual periods beginning after December 15, 2024 and early adoption is permitted. This ASU should be applied on a prospective basis with retrospective application permitted. We expect this ASU to only impact our disclosures with no impact to the consolidated financial statements.
Note 3 –Business Acquisitions
On June 13, 2022, we acquired In2Bones Global, Inc. ("In2Bones") and all of its stock (the "In2Bones Acquisition") for an aggregate upfront payment of $145.2 million in cash. In addition, there are potential earn-out payments to In2Bones’ equity holders in an amount up to $110.0 million based on the achievement of certain revenue targets for In2Bones products during the sixteen (16) successive quarters commencing on July 1, 2022. In2Bones was a global developer, manufacturer and distributor of medical devices for the treatment of disorders and injuries of the lower (foot and ankle) extremities. The In2Bones Acquisition was funded through a combination of cash on hand and long-term borrowings as further described in Note 8. Proforma information for In2Bones is immaterial for disclosure for the years ended December 31, 2023 and 2022. Purchase accounting has been completed for the In2Bones Acquisition.
On August 9, 2022, we acquired Biorez, Inc. ("Biorez") and all of its stock (the "Biorez Acquisition") for an aggregate upfront payment of $85.5 million in cash. We paid $84.5 million as of December 31, 2024, with a $1.0 million holdback, pursuant to the merger agreement for the Biorez Acquisition. In addition, there are potential earn-out payments to Biorez’ equity holders in an amount up to $165.0 million based on the achievement of certain revenue targets for Biorez products during the sixteen (16) successive quarters commencing on October 1, 2022. Biorez was a medical device start-up focused on advancing the healing of soft tissue using its proprietary BioBrace® implant technology. The Biorez Acquisition was funded through a combination of cash on hand and long-term borrowings. Proforma information for Biorez is immaterial for disclosure for the years ended December 31, 2023 and 2022. Purchase accounting has been completed for the Biorez Acquisition.
We incurred costs for the amortization of inventory step-up to fair value of $8.6 million and $4.5 million during the years ended December 31, 2023 and 2022, respectively, related to the In2Bones acquisition, which are included in cost of sales. Inventory step-up to fair value for the In2Bones acquisition was fully amortized as of December 31, 2023. During 2023, we recognized $0.8 million in integration costs and professional fees related to the In2Bones and Biorez acquisitions that were included in selling and administrative expense. During 2022, we recognized $10.1 million in consulting fees, legal fees and other integration related costs associated with the acquisitions of In2Bones and Biorez, which were included in selling and administrative expense.
Note 4 -Inventories
Inventories consist of the following at December 31:
| 2024 | 2023 | |
|---|---|---|
| Raw materials | $114,728 | $107,262 |
| Work in process | 31,300 | 29,463 |
| Finished goods | 200,691 | 181,599 |
| $346,719 | $318,324 |
Note 5 -Property, Plant and Equipment
Property, plant and equipment consist of the following at December 31:
| 2024 | 2023 | |
|---|---|---|
| Land | $4,027 | $4,027 |
| Building and improvements | 100,937 | 100,299 |
| Machinery and equipment | 295,839 | 283,470 |
| Construction in progress | 20,409 | 25,088 |
| 421,212 | 412,884 | |
| Less: Accumulated depreciation | (305,419) | (292,162) |
| $115,793 | $120,722 |
Internal-use software, included in gross machinery and equipment at December 31, 2024 and 2023 was $50.3 million and $50.0 million, respectively, with related accumulated depreciation of $48.1 million and $47.1 million, respectively. Internal use software depreciation expense was $1.4 million, $1.7 million and $2.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Note 6 -Leases
Lease costs for the years ended December 31, consist of the following:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Operating lease cost: | |||
| Straight-line lease cost | $8,933 | $8,118 | $7,685 |
| Right-of-use asset impairment cost | 606 | — | — |
| Total operating lease cost | 9,539 | 8,118 | 7,685 |
| Finance lease cost: | |||
| Depreciation | 380 | 344 | 396 |
| Interest on lease liabilities | 101 | 55 | 17 |
| Total finance lease cost | 481 | 399 | 413 |
| Total lease cost | $10,020 | $8,517 | $8,098 |
Supplemental balance sheet information related to leases as of December 31, is as follows:
| 2024 | 2023 | |
|---|---|---|
| Operating leases | ||
| Other assets | $39,839 | $16,606 |
| Other current liabilities | $8,093 | $7,509 |
| Other long-term liabilities | 33,282 | 9,897 |
| Total operating lease liabilities | $41,375 | $17,406 |
| Finance leases | ||
| Property, plant and equipment, gross | $3,015 | $3,901 |
| Accumulated depreciation | (676) | (1,304) |
| Property, plant and equipment, net | $2,339 | $2,597 |
| Current portion of long-term debt | $715 | $708 |
| Long-term debt | 1,159 | 1,657 |
| Total finance lease liabilities | $1,874 | $2,365 |
| Weighted average remaining lease term (in years) | ||
| Operating leases | 7.48 years | 4.93 years |
| Finance leases | 2.88 years | 3.76 years |
| Weighted average discount rate | ||
| Operating leases | 5.65% | 5.56% |
| Finance leases | 4.86% | 4.79% |
Supplemental cash flow information related to leases for the years ended December 31, was as follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Cash paid for amounts included in the measurement of lease liabilities: | |||
| Operating cash flows from operating leases | $8,532 | $8,178 | $7,383 |
| Financing cash flows from finance leases | 725 | 436 | 313 |
| Right-of-use assets obtained in exchange for lease obligations: | |||
| Operating leases | 32,235 | 5,864 | 5,167 |
| Finance leases | 128 | 2,523 | — |
Maturities of lease liabilities as of December 31, 2024 are as follows:
| Finance Lease · Operating Lease | ||
|---|---|---|
| 2025 | $715 | $8,093 |
| 2026 | 712 | 7,153 |
| 2027 | 472 | 6,515 |
| 2028 | 97 | 5,718 |
| 2029 | 4 | 5,147 |
| Thereafter | 2 | 19,083 |
| Total lease payments | 2,002 | 51,709 |
| Less imputed interest | (128) | (10,334) |
| Total lease liabilities | $1,874 | $41,375 |
As of December 31, 2024, we had a $10.3 million operating lease that had not yet commenced and we have not entered into any finance leases that have not yet commenced.
Note 7 –Goodwill and Other Intangible Assets
The changes in the net carrying amount of goodwill for the years ended December 31, are as follows:
| 2024 | 2023 | |
|---|---|---|
| Balance as of January 1, | $806,844 | $815,429 |
| Foreign currency translation and other adjustments | (1,486) | (8,585) |
| Balance as of December 31, | $805,358 | $806,844 |
The 2023 change in goodwill includes an immaterial correction of $9.0 million to record deferred tax assets associated with the deductibility of contingent consideration related to purchase accounting from 2022.
Total accumulated goodwill impairment losses aggregated $107.0 million at December 31, 2024 and 2023, respectively.
Other intangible assets consist of the following:
| December 31, 2024 · December 31, 2023 | |||||
|---|---|---|---|---|---|
| Weighted Average Amortization Period (Years) | GrossCarryingAmount | AccumulatedAmortization | GrossCarryingAmount | AccumulatedAmortization | |
| Intangible assets with definite lives: | 22 | ||||
| Customer and distributor relationships | 24 | $369,774 | $(205,013) | $369,930 | $(188,486) |
| Sales representation, marketing and promotional rights | 25 | 149,376 | (78,000) | 149,376 | (72,000) |
| Patents and other intangible assets | 16 | 85,392 | (55,802) | 82,594 | (54,120) |
| Developed technology | 18 | 320,204 | (54,812) | 320,204 | (44,558) |
| Intangible assets with indefinite lives: | |||||
| Trademarks and tradenames | 86,544 | — | 86,544 | — | |
| $1,011,290 | $(393,627) | $1,008,648 | $(359,164) | ||
Amortization expense related to intangible assets which are subject to amortization totaled $34.7 million, $35.2 million and $33.7 million for the years ending December 31, 2024, 2023 and 2022, respectively, and is included as a reduction of revenue (for amortization related to our sales representation, marketing and promotional rights) and in selling and administrative expense (for all other intangible assets) in the consolidated statements of comprehensive income (loss).
The estimated amortization expense related to intangible assets at December 31, 2024 for each of the five succeeding years is as follows:
| Amortization included in expense · Amortization recorded as a reduction of revenue · Total | |||
|---|---|---|---|
| 2025 | $29,492 | $6,000 | $35,492 |
| 2026 | 29,636 | 6,000 | 35,636 |
| 2027 | 30,693 | 6,000 | 36,693 |
| 2028 | 33,822 | 6,000 | 39,822 |
| 2029 | 33,037 | 6,000 | 39,037 |
Note 8 -Long-Term Debt
Long-term debt consists of the following at December 31:
| 2024 | 2023 | |
|---|---|---|
| Revolving line of credit | $— | $2,000 |
| Term loan, net of deferred debt issuance costs of $354 and $524 in 2024 and 2023, respectively | 114,234 | 114,064 |
| 2.625% convertible notes | — | 70,000 |
| 2.250% convertible notes, net of deferred debt issuance costs of $10,327 and $14,581 in 2024 and 2023, respectively | 789,673 | 785,419 |
| Finance leases | 1,874 | 2,365 |
| Total debt | 905,781 | 973,848 |
| Less: Current portion | 715 | 708 |
| Total long-term debt | $905,066 | $973,140 |
Seventh Amended and Restated Senior Credit Agreement
On July 16, 2021, we entered into a seventh amended and restated senior credit agreement consisting of: (a) a $233.5 million term loan facility and (b) a $585.0 million revolving credit facility. The revolving credit facility will terminate and the loans outstanding under the term loan facility will expire on July 16, 2026. The term loan was payable in quarterly installments increasing over the term of the facility. During 2022, we made a $90.0 million prepayment on the term loan facility resulting in the elimination of such quarterly payments with the remaining balance due upon the expiration of the term loan facility. The $90.0 million prepayment was accounted for as an extinguishment and resulted in a write-off to other expense of unamortized debt issuance costs of $0.5 million. Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement. On July 19, 2024, we amended our seventh amended and restated senior credit agreement to exclude from the calculation of consolidated fixed charges the $70.0 million payment we made in February 2024 of our then-outstanding 2.625% Notes. Interest rates are at the Term Secured Overnight Financing Rate plus 0.114% ("Adjusted Term SOFR") (4.489% at December 31, 2024) plus an interest rate margin of 1.125% (5.614% at December 31, 2024). For borrowings where we elect to use the alternate base rate, the initial base rate is the greatest of (i) the Prime Rate, (ii) the Federal Funds Rate plus 0.50% or (iii) the one-month Adjusted Term SOFR plus 1.00%, plus, in each case, an interest rate margin.
There were $114.6 million in borrowings outstanding on the term loan facility as of December 31, 2024. There wereno borrowings outstanding under the revolving credit facility as of December 31, 2024. Our available borrowings on the revolving credit facility at December 31, 2024 were $583.4 million with approximately $1.6 million of the facility set aside for outstanding letters of credit. The carrying amounts of the term loan and revolving credit facility approximate fair value.
The seventh amended and restated senior credit agreement is collateralized by substantially all of our personal property and assets. The seventh amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and restrictions as of December 31, 2024. We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.
2.625% Convertible Notes
On January 29, 2019, we issued $345.0 million aggregate principal amount of 2.625% convertible notes ("2.625% Notes") that were due in 2024. Interest was payable semi-annually in arrears on February 1 and August 1 of each year, commencing August 1, 2019. The 2.625% Notes were scheduled to mature on February 1, 2024, unless earlier repurchased or converted.
The 2.625% Notes represented subordinated unsecured obligations and were convertible under certain circumstances, as defined in the indenture, into a combination of cash and CONMED common stock. The 2.625% Notes were converted at an initial conversion rate of 11.2608 shares of our common stock per $1,000 principal amount of 2.625% Notes (equivalent to an initial conversion price of approximately $88.80 per share of common stock). Holders of the 2.625% Notes could have converted the 2.625% Notes at their option at any time on or after November 1, 2023 through the second scheduled trading day preceding the maturity date. Holders of the 2.625% Notes also had the right to convert the 2.625% Notes prior to November 1, 2023, but only upon the occurrence of specified events. The conversion rate was subject to anti-dilution adjustments if certain events occurred. A portion of the net proceeds from the offering of the 2.625% Notes was used as part of the financing for the
Buffalo Filter acquisition and $21.0 million was used to pay the cost of certain convertible notes hedge transactions as further described below.
In June 2022, the Company repurchased and extinguished $275.0 million principal amount of the 2.625% Notes for aggregate consideration consisting of $275.0 million in cash and approximately 0.9 million shares of the Company's common stock. During the year ended December 31, 2022, the Company recorded a loss on extinguishment of $103.1 million to other expense based on the fair value of the shares of the Company’s common stock issued in connection with the extinguishment. This loss was not deductible for tax purposes. We also recorded a write-off to other expense of unamortized debt issuance costs related to the 2.625% Notes of $2.9 million. Concurrently, the Company entered into a Supplemental Indenture related to the remaining $70.0 million in 2.625% Notes, in which the Company irrevocably elected to settle the principal value of those 2.625% Notes in cash. In February 2024, the Company repaid the remaining $70.0 million then outstanding of the 2.625% Notes through borrowings on our revolving credit facility and issued 0.1 million shares of the Company's common stock.
For the years ended December 31, 2024, 2023 and 2022, we recorded interest expense on the 2.625% Notes of $0.2 million, $1.8 million and $4.8 million, respectively, at the contractual coupon rate of 2.625%.
2.250% Convertible Notes
On June 6, 2022, we issued $800.0 million aggregate principal amount of 2.250% convertible notes (the "2.250% Notes"). Interest is payable semi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2022. The 2.250% Notes will mature on June 15, 2027, unless earlier repurchased or converted. The 2.250% Notes represent subordinated unsecured obligations and are convertible under certain circumstances, as defined in the indenture, into a combination of cash and CONMED common stock, with the principal required to be paid in cash. The 2.250% Notes may be converted at an initial conversion rate of 6.8810 shares of our common stock per $1,000 principal amount of the 2.250% Notes (equivalent to an initial conversion price of approximately $145.33 per share of common stock). Holders of the 2.250% Notes may convert the 2.250% Notes at their option at any time on or after March 15, 2027 through the second scheduled trading day preceding the maturity date. Holders of the 2.250% Notes will also have the right to convert the 2.250% Notes prior to March 15, 2027, but only upon the occurrence of specified events. The conversion rate is subject to anti-dilution adjustments if certain events occur. A portion of these proceeds were used to repurchase and extinguish a portion of the 2.625% Notes, pay off our then outstanding balance on our revolving line of credit, pay down $90.0 million of our term loan and partially pay for the In2Bones Acquisition. In addition, approximately $115.6 million of the proceeds were used to pay the cost of certain convertible notes hedge transactions related to the 2.250% Notes.
For the year ended December 31, 2024, 2023, and 2022 we have recorded interest expense on the 2.250% Notes of $18.0 million, $18.0 million and $10.3 million, respectively, at the contractual coupon rate of 2.250%.
The estimated fair value of the 2.250% Notes was approximately $744.1 million as of December 31, 2024 based on a market approach which represents a Level 2 valuation in the fair value hierarchy. The estimated fair value was determined based on the estimated or actual bids and offers of the 2.250% Notes in an over-the-counter market transaction on the last business day of the year.
Convertible Notes Hedge Transactions
In connection with the offerings of the 2.625% and 2.250% Notes, we entered into convertible notes hedge transactions with a number of financial institutions (each, an “option counterparty”). The convertible notes hedge transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the respective Notes, the number of shares of our common stock underlying the 2.625% and 2.250% Notes. Concurrent with entering into the convertible notes hedge transactions, we also entered into separate warrant transactions with each option counterparty whereby we sold to such option counterparty warrants to purchase, subject to customary anti-dilution adjustments, the same number of shares of our common stock.
In connection with the repurchase and extinguishment of $275.0 million principal amount of the 2.625% Notes, the Company entered into agreements with the option counterparties to terminate a corresponding portion of the hedges on the 2.625% Notes. The transactions had a net fair value due the Company on execution date of $22.2 million which was recorded as an adjustment to Paid-in Capital. The Company recorded a $5.5 million charge to other expense as a result of a subsequent decline in fair value between execution date and settlement date with the Company receiving net cash of $16.7 million. The termination of the convertible notes hedge resulted in the release of the related deferred tax asset. In connection with the issuance of 2.250% Notes, the Company purchased hedges for $187.6 million ($142.1 million net of tax) and received proceeds from the issuance of warrants totaling $72.0 million, recorded to paid-in capital.
Upon maturity in February 2024 of the remaining 2.625% Notes and settlement of the related hedges, the Company received 0.1 million shares from the option counterparties.
The convertible notes hedge transactions are expected generally to reduce the potential dilution upon conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, in the event that the market price per share of our common stock, as measured under the terms of the convertible notes hedge transactions, is greater than the strike price of the convertible notes hedge transactions, which initially corresponds to the conversion price of the Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes. If, however, the market price per share of our common stock, as measured under the terms of the warrant transactions, exceeds the strike price ($251.53 for the 2.250% Notes) of the warrants, there would nevertheless be dilution to the extent that such market price exceeds the strike price of the warrants as noted in Note 1, unless we elect to settle the warrants in cash.
The scheduled maturities of long-term debt outstanding at December 31, 2024 are as follows:
| 2025 | $— |
| 2026 | 114,588 |
| 2027 | 800,000 |
| 2028 | — |
| 2029 | — |
The above amounts exclude deferred debt issuance costs and finance leases.
Note 9 -Income Taxes
The provision for income taxes for the years ended December 31, 2024, 2023 and 2022 consists of the following:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Current tax expense : | |||
| Federal | $4,084 | $2,066 | $98 |
| State | 2,875 | 3,826 | 1,582 |
| Foreign | 11,445 | 9,777 | 14,082 |
| 18,404 | 15,669 | 15,762 | |
| Deferred income tax expense (benefit): | |||
| Federal | 10,351 | 2,826 | (4,096) |
| State | 681 | (893) | (1,636) |
| Foreign | 1,170 | (1,233) | (310) |
| 12,202 | 700 | (6,042) | |
| Provision for income taxes | $30,606 | $16,369 | $9,720 |
A reconciliation between income taxes computed at the statutory federal rate and the provision for income taxes for the years ended December 31, 2024, 2023 and 2022 follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Tax provision at statutory rate based on income before income taxes | 21.0% | 21.0% | 21.0% |
| State income taxes, net of federal tax benefit | 1.6 | 2.9 | (1.4) |
| Foreign income taxes | 1.6 | 2.8 | (1.8) |
| Non-deductible/non-taxable items | 0.9 | 2.0 | (2.9) |
| US tax on worldwide earnings at different rates | (1.8) | (3.1) | (1.8) |
| Federal research credit | (1.5) | (3.0) | 2.4 |
| Contingent consideration | (4.6) | (1.8) | — |
| Valuation allowance | — | (0.5) | 2.5 |
| Stock-based compensation | 1.6 | — | 1.5 |
| Non-deductible premium on extinguishment and change in fair value of convertible notes | — | — | (32.2) |
| Other, net | — | — | (1.0) |
| 18.8% | 20.3% | (13.7)% |
The Company has elected to account for Global Intangible Low Tax Income ("GILTI") using the period cost method. The net impact of GILTI including the allowable GILTI deduction is presented in the rate reconciliation as a component of “US tax on worldwide earnings at different rates”.
The tax effects of the significant temporary differences which comprise the deferred income tax assets and liabilities at December 31, 2024 and 2023 are as follows:
| 2024 | 2023 | |
|---|---|---|
| Assets: | ||
| Inventory | $5,771 | $4,577 |
| Net operating losses | 1,700 | 2,809 |
| Capitalized research and development | 20,615 | 16,573 |
| Deferred compensation | 3,305 | 3,114 |
| Accounts receivable | 3,796 | 4,002 |
| Compensation and benefits | 14,754 | 18,234 |
| Accrued pension | 1,556 | 1,658 |
| Research and development credit | 2,972 | 13,090 |
| Interest limitation | 26,234 | 18,332 |
| Convertible notes hedge | 21,205 | 28,765 |
| Lease liabilities | 7,772 | 3,033 |
| Other | 4,482 | 6,290 |
| 114,162 | 120,477 | |
| Liabilities: | ||
| Goodwill and intangible assets | 155,931 | 153,692 |
| Depreciation | 1,120 | 2,248 |
| State taxes | 10,670 | 9,732 |
| Unremitted foreign earnings | 1,893 | 1,557 |
| Lease right-of-use assets | 7,555 | 2,939 |
| 177,169 | 170,168 | |
| Net liability | $(63,007) | $(49,691) |
Income (loss) before income taxes consists of the following U.S. and foreign income (loss):
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| U.S. income (loss) | $124,401 | $51,568 | $(96,114) |
| Foreign income | 38,628 | 29,260 | 25,252 |
| Total income (loss) | $163,029 | $80,828 | $(70,862) |
As of December 31, 2024, the amount of federal net operating loss carryforward was $1.2 million and begins to expire in 2027. As of December 31, 2024, the amount of federal research credit carryforward available was $3.0 million. These credits begin to expire in 2029.
We have accrued tax liabilities related to the amount of unremitted earnings at December 31, 2017 and certain subsequent unremitted earnings as these are not considered permanently reinvested. Deferred taxes have not been accrued on unremitted earnings subsequent to December 31, 2017 that are considered permanently reinvested. The amount of such untaxed foreign earnings for the periods occurring after December 2017 totaled $34.8 million. If we were to repatriate these funds, we would be required to accrue and pay taxes on such amounts. The Company has estimated foreign withholding taxes of $1.2 million would be due if these earnings were repatriated.
The Company is subject to taxation in the United States and various states and foreign jurisdictions. Taxing authority examinations can involve complex issues and may require an extended period of time to resolve. Our federal income tax returns have been examined by the Internal Revenue Service (“IRS”) for calendar years ending through 2022.
We recognize tax liabilities in accordance with the provisions for accounting for uncertainty in income taxes. Such guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
The following table summarizes the activity related to our unrecognized tax benefits for the years ending December 31,:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Balance as of January 1, | $1,704 | $200 | $200 |
| Increases for positions taken in prior periods | — | 1,504 | — |
| Decreases in unrecorded tax positions related to settlement with the taxing authorities | (350) | — | — |
| Decreases in unrecorded tax positions related to lapse of statute of limitations | (200) | — | — |
| Balance as of December 31, | $1,154 | $1,704 | $200 |
If the total unrecognized tax benefits of $1.2 million at December 31, 2024 were recognized, it would reduce our annual effective tax rate. The amount of interest accrued in 2022, 2023 and 2024 related to these unrecognized tax benefits was not material and is included in the provision for income taxes in the consolidated statements of comprehensive income (loss).
Note 10 -Shareholders’ Equity
On February 29, 2012, the Board of Directors adopted a cash dividend policy and declared an initial quarterly dividend of $0.15 per share. On October 28, 2013, the Board of Directors increased the quarterly dividend to $0.20 per share. The total dividend per share was $0.80 for each of 2024, 2023 and 2022. The fourth quarter dividend for 2024 was paid on January 3, 2025 to shareholders of record as of December 20, 2024. The total dividend payable was $6.2 million at both December 31, 2024 and 2023, and is included in other current liabilities in the consolidated balance sheet.
Our shareholders have authorized 500,000 shares of preferred stock, par value $.01 per share, which may be issued in one or more series by the Board of Directors without further action by the shareholders. As of December 31, 2024 and 2023, no preferred stock had been issued.
Our Board of Directors has authorized a $200.0 million share repurchase program. Through December 31, 2024, we have repurchased a total of 6.1 million shares of common stock aggregating $162.6 million under this authorization and have $37.4 million remaining available for share repurchases. The repurchase program calls for shares to be purchased in the open market or in private transactions from time to time. We may suspend or discontinue the share repurchase program at any time. During 2024, 2023, and 2022 we did not repurchase any shares.
We have reserved 6.0 million shares of common stock for issuance to employees and directors undertwo shareholder approved share-based compensation plans (the "Plans") of which approximately 2.2 million shares remain available for grant at December 31, 2024. The exercise price on all outstanding stock options and stock appreciation rights (“SARs”) is equal to the quoted fair market value of the stock at the date of grant. Restricted stock units (“RSUs”) are valued at the market value of the underlying stock on the date of grant. Performance stock units (“PSUs”) are valued using a Monte Carlo valuation model at the date of grant. Stock options, SARs and RSUs are generally non-transferable other than on death and generally become exercisable over a 4 to 5 year period from date of grant. PSUs are generally non-transferable other than on death and cliff vest after 3 years from date of grant. Stock options and SARs expire 10 years from date of grant. SARs are only settled in shares of the Company’s stock. The issuance of shares pursuant to the exercise of stock options and SARs and vesting of RSUs and PSUs are from the Company’s treasury stock.
Total pre-tax stock-based compensation expense recognized in the consolidated statements of comprehensive income (loss) was $25.6 million, $24.3 million and $21.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. These amounts are included in selling and administrative expense. Tax related benefits of $3.9 million, $4.0 million and $3.8 million were also recognized for the years ended December 31, 2024, 2023 and 2022, respectively. Cash received from the exercise of stock options was $3.4 million, $16.2 million and $8.9 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is reflected in cash flows from financing activities in the consolidated statements of cash flows.
The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options and SARs at the date of grant. Use of a valuation model requires management to make certain assumptions with respect to select model inputs. Expected volatilities are based upon historical volatility of the Company’s stock over a period equal to the expected life of each stock option and SAR grant. The risk-free interest rate is based on the stock option and SAR grant date for a traded U.S. Treasury bond with a maturity date closest to the expected life. The expected annual dividend yield is based on the Company's anticipated cash dividend payouts. The expected life represents the period of time that the stock options and SARs are expected to be outstanding based on a study of historical data of option holder exercise and termination behavior. Forfeitures are recognized as incurred.
The following table illustrates the assumptions used in estimating fair value in the years ended December 31, 2024, 2023 and 2022:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Grant date fair value of stock options and SARs | $33.04 | $40.18 | $49.88 |
| Expected stock price volatility | 43.01% | 41.84% | 38.45% |
| Risk-free interest rate | 4.21% | 4.14% | 1.68% |
| Expected annual dividend yield | 1.00% | 0.82% | 0.56% |
| Expected life of options and SARs (years) | 5.5 | 5.4 | 5.4 |
The following table illustrates the stock option and SAR activity for the year ended December 31, 2024:
| NumberofShares(in 000’s) | Weighted-AverageExercisePrice | |
|---|---|---|
| Outstanding at December 31, 2023 | 3,764 | $93.82 |
| Granted | 687 | $79.39 |
| Forfeited | (358) | $100.21 |
| Exercised | (223) | $52.98 |
| Outstanding at December 31, 2024 | 3,870 | $93.00 |
| Exercisable at December 31, 2024 | 2,280 | $86.40 |
| Stock options & SARs expected to vest | 1,590 | $102.46 |
The weighted average remaining contractual term for SARs and stock options outstanding and exercisable at December 31, 2024 was 5.9 years and 4.4 years, respectively. The aggregate intrinsic value of SARs and stock options outstanding and exercisable at December 31, 2024 were both $12.9 million. The aggregate intrinsic value of stock options and SARs exercised during the years ended December 31, 2024, 2023 and 2022 was $5.1 million, $12.9 million and $13.6 million, respectively.
The following table illustrates the RSU and PSU activity for the year ended December 31, 2024:
| NumberofShares(in 000’s) | Weighted-AverageGrant-DateFair Value | |
|---|---|---|
| Outstanding at December 31, 2023 | 67 | $129.32 |
| Granted | 91 | $95.80 |
| Vested | (16) | $114.17 |
| Forfeited | (12) | $107.81 |
| Outstanding at December 31, 2024 | 130 | $109.59 |
The weighted average fair value of RSU and PSU awards granted in the years ended December 31, 2024, 2023 and 2022 was $95.80, $127.59 and $136.35, respectively.
The total fair value of RSUs vested was $1.8 million, $2.4 million and $2.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.
As of December 31, 2024, there was $51.6 million of total unrecognized compensation cost related to nonvested stock options, SARs, PSUs and RSUs granted under the Plans which is expected to be recognized over a weighted average period of 2.95 years.
We offer to our employees a shareholder-approved Employee Stock Purchase Plan (the “Employee Plan”), under which we reserved 1.0 million shares of common stock for issuance to our employees. The Employee Plan provides employees with the opportunity to invest from 1% to 10% of their annual salary to purchase shares of CONMED common stock at a purchase price equal to 95% of the fair market value of the common stock on the exercise date. During 2024, we issued approximately 27,124 shares of common stock under the Employee Plan. No stock-based compensation expense has been recognized in the accompanying consolidated financial statements as a result of common stock issuances under the Employee Plan.
Note 11 -Revenues
The following tables present revenue disaggregated by product line and timing of revenue recognition for the years ended December 31, 2024, 2023 and 2022:
| 2024 | |||
|---|---|---|---|
| Orthopedic Surgery | General Surgery | Total | |
| Timing of Revenue Recognition | |||
| Goods transferred at a point in time | $502,336 | $754,070 | $1,256,406 |
| Services transferred over time | 41,652 | 8,957 | 50,609 |
| Total sales from contracts with customers | $543,988 | $763,027 | $1,307,015 |
| 2023 | |||
|---|---|---|---|
| Orthopedic Surgery | General Surgery | Total | |
| Timing of Revenue Recognition | |||
| Goods transferred at a point in time | $494,002 | $704,041 | $1,198,043 |
| Services transferred over time | 39,156 | 7,545 | 46,701 |
| Total sales from contracts with customers | $533,158 | $711,586 | $1,244,744 |
| 2022 | |||
|---|---|---|---|
| Orthopedic Surgery | General Surgery | Total | |
| Timing of Revenue Recognition | |||
| Goods transferred at a point in time | $422,648 | $577,625 | $1,000,273 |
| Services transferred over time | 38,880 | 6,319 | 45,199 |
| Total sales from contracts with customers | $461,528 | $583,944 | $1,045,472 |
Revenue disaggregated by primary geographic market where the products are sold is included in Note 12.
Contract liability balances related to the sale of extended warranties to customers are as follows:
| December 31, 2024 | December 31, 2023 | |
|---|---|---|
| Contract Liability | $18,424 | $17,962 |
Revenue recognized during years ended December 31, 2024, 2023 and 2022 from amounts included in contract liabilities at the beginning of the period were $13.9 million, $12.5 million and $11.5 million, respectively. There were no material contract assets as of December 31, 2024 and December 31, 2023.
Note 12 -Business Segment and Geographic Areas
We account and report for our business as a single operating segment entity engaged in the development, manufacturing and sale on a global basis of surgical devices and related equipment. The Company derives revenue globally and manages the business on a consolidated basis due to shared infrastructure and resources. Our chief operating decision maker ("CODM"), the President and Chief Executive Officer, evaluates the various global product portfolios on a net sales basis and evaluates profitability, investment, cash flow metrics and allocates resources on a consolidated worldwide basis.
Our product lines consist of orthopedic surgery and general surgery. Orthopedic surgery consists of sports medicine and lower extremities instrumentation and implants, small bone, large bone and specialty powered surgical instruments as well as imaging systems for use in minimally invasive surgical procedures and fees related to sales representation, promotion and marketing of sports medicine allograft tissue. General surgery consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures, smoke evacuation devices, a line of cardiac monitoring products as well as electrosurgical generators and related instruments. These product lines' net sales and primary geographic market where the products are sold, are as follows for the years ended December 31, 2024, 2023 and 2022:
| 2024 | |||
|---|---|---|---|
| Orthopedic Surgery | General Surgery | Total | |
| Primary Geographic Markets | |||
| United States | $210,670 | $537,554 | $748,224 |
| Europe, Middle East & Africa | 132,106 | 110,958 | 243,064 |
| Asia Pacific | 119,766 | 74,918 | 194,684 |
| Americas (excluding the United States) | 81,446 | 39,597 | 121,043 |
| Total sales from contracts with customers | $543,988 | $763,027 | $1,307,015 |
| 2023 | |||
|---|---|---|---|
| Orthopedic Surgery | General Surgery | Total | |
| Primary Geographic Markets | |||
| United States | $199,568 | $500,592 | $700,160 |
| Europe, Middle East & Africa | 127,637 | 98,616 | 226,253 |
| Asia Pacific | 123,043 | 74,358 | 197,401 |
| Americas (excluding the United States) | 82,910 | 38,020 | 120,930 |
| Total sales from contracts with customers | $533,158 | $711,586 | $1,244,744 |
| 2022 | |||
|---|---|---|---|
| Orthopedic Surgery | General Surgery | Total | |
| Primary Geographic Markets | |||
| United States | $173,176 | $405,777 | $578,953 |
| Europe, Middle East & Africa | 113,649 | 84,288 | 197,937 |
| Asia Pacific | 103,353 | 59,124 | 162,477 |
| Americas (excluding the United States) | 71,350 | 34,755 | 106,105 |
| Total sales from contracts with customers | $461,528 | $583,944 | $1,045,472 |
Sales are attributed to countries based on the location of the customer. We held $139.9 million and $127.3 million of long-lived assets in the United States at December 31, 2024 and 2023, respectively. We held $22.9 million and $18.3 million of long-lived assets in Mexico at December 31, 2024 and 2023, respectively. There were no significant investments in long-lived assets in other countries outside the United States at December 31, 2024 and 2023. No single customer represented over 10% of our consolidated net sales for the years ended December 31, 2024, 2023 and 2022.
The accounting policies of our single operating segment are the same as those described in Note 1. The CODM assesses performance for the single operating segment and decides how to allocate resources and make investment decisions based on net income (loss), consistent with what is reported on the consolidated statements of comprehensive income (loss). Net income is used to monitor budget versus actual results. The CODM also uses net income in competitive analysis by benchmarking to CONMED’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the single segment.
The following table includes significant segment expenses for the years ended December 31, 2024, 2023 and 2022:
| Years Ended | |||
|---|---|---|---|
| December 31, | |||
| 2024 | 2023 | 2022 | |
| Net sales | $1,307,015 | $1,244,744 | $1,045,472 |
| Cost of sales | 573,983 | 568,499 | 474,227 |
| Salesforce and commission expense | 225,886 | 215,799 | 186,596 |
| Marketing expense | 65,338 | 60,918 | 56,027 |
| Distribution expense | 50,183 | 53,701 | 44,874 |
| General and administrative expense | 117,463 | 111,235 | 96,108 |
| Stock-based compensation expense | 25,558 | 24,257 | 21,729 |
| Amortization expense | 28,629 | 29,068 | 27,791 |
| Non-cash adjustments to fair value of contingent consideration liability | (41,048) | (2,421) | 2,518 |
| Research and development expense | 54,426 | 52,602 | 47,152 |
| Interest expense | 37,297 | 39,775 | 28,905 |
| Loss on convertible notes and related hedge transactions(b) | — | — | 112,011 |
| Provision for income taxes | 30,606 | 16,369 | 9,720 |
| Other segment items(a) | 6,271 | 10,483 | 18,396 |
| Net income (loss) | $132,423 | $64,459 | $(80,582) |
(a)Other segment items consist of restructuring and related costs in 2024, 2023 and 2022; third party services pertaining to review of potential issues with certain royalty payments to surgeons involved in design teams in 2024; income/expense related to the termination of a distributor agreement in 2024 and 2023; lease impairment costs in 2024; acquisition and integration costs in 2023 and 2022; software implementation costs in 2023 and 2022; and a legal settlement in 2022.
(b)Loss on convertible notes and related hedge transactions consists of loss on early extinguishment of debt, loss on convertible notes conversion premium and loss on convertible notes hedge transactions settlement in 2022.
Total assets for the Company's single operating segment are the same as presented on the Company's consolidated balance sheet, which is used to measure segment performance.
Note 13 -Employee Benefit Plans
We sponsor an employee savings plan (“401(k) plan”) covering substantially all of our United States based employees. We also sponsor a defined benefit pension plan (the “pension plan”) that was frozen in 2009. It covered substantially all our United States based employees at the time it was frozen.
Total employer contributions to the 401(k) plan were $8.0 million, $8.2 million and $9.9 million during the years ended December 31, 2024, 2023 and 2022, respectively.
We use a December 31, measurement date for our pension plan. Cumulative gains and losses in excess of 10% of the greater of the benefit obligation or the market-related value of assets are amortized on a straight-line basis over the lesser of the expected average remaining life expectancy of the plan's participants or 10.85 and 11.13 years at December 31, 2024 and 2023, respectively. The limits of 10.85 and 11.13 years, respectively, are adjusted to reflect the percentage change in the average remaining service period for the plan's active membership.
The following table provides a reconciliation of the projected benefit obligation, plan assets and funded status of the pension plan at December 31:
| 2024 | 2023 | |
|---|---|---|
| Accumulated benefit obligation | $69,235 | $70,588 |
| Change in benefit obligation | ||
| Projected benefit obligation at beginning of year | $70,588 | $71,203 |
| Service cost | 721 | 776 |
| Interest cost | 3,452 | 3,646 |
| Actuarial gain | (1,373) | (806) |
| Benefits paid | (3,112) | (3,018) |
| Settlements | (1,041) | (1,213) |
| Projected benefit obligation at end of year | $69,235 | $70,588 |
| Change in plan assets | ||
| Fair value of plan assets at beginning of year | $65,896 | $62,356 |
| Actual gain (loss) on plan assets | 3,930 | 7,771 |
| Benefits paid | (3,112) | (3,018) |
| Settlements | (1,041) | (1,213) |
| Fair value of plan assets at end of year | $65,673 | $65,896 |
| Funded status | $(3,562) | $(4,692) |
The projected benefit obligation decreased $1.4 million from December 31, 2023 to December 31, 2024 mainly due to interest rate changes.
Amounts recognized in the consolidated balance sheets consist of the following at December 31,:
| 2024 | 2023 | |
|---|---|---|
| Other long-term liabilities | $(3,562) | $(4,692) |
| Accumulated other comprehensive loss | (22,281) | (24,770) |
Accumulated other comprehensive loss for the years ended December 31, 2024 and 2023 consists of net actuarial losses not yet recognized in net periodic pension cost (before income taxes).
The following actuarial assumptions were used to determine our accumulated and projected benefit obligations as of December 31,:
| 2024 | 2023 | |
|---|---|---|
| Discount rate | 5.65% | 5.15% |
Other changes in plan assets and benefit obligations recognized in other comprehensive income in 2024 and 2023 are as follows:
| 2024 | 2023 | |
|---|---|---|
| Current year actuarial loss | $898 | $4,447 |
| Amortization of actuarial loss | 1,591 | 2,129 |
| Total recognized in other comprehensive income (loss) | $2,489 | $6,576 |
Net periodic pension cost for the years ended December 31, consists of the following:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Service cost | $721 | $776 | $1,077 |
| Interest cost on projected benefit obligation | 3,452 | 3,646 | 2,148 |
| Expected return on plan assets | (4,405) | (4,130) | (5,295) |
| Amortization of loss | 1,591 | 2,129 | 2,589 |
| Net periodic pension cost | $1,359 | $2,421 | $519 |
Non-service pension cost/(benefit) was immaterial for the years ended 2024, 2023 and 2022.
The following actuarial assumptions were used to determine our net periodic pension benefit cost for the years ended December 31,:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Discount rate on benefit obligation | 5.15% | 5.41% | 2.81% |
| Effective rate for interest on benefit obligation | 5.08% | 5.34% | 2.33% |
| Expected return on plan assets | 7.00% | 7.00% | 7.00% |
The Company’s discount rate and mortality assumptions are the significant assumptions in determining the projected benefit obligation of the Company’s pension plan.
The discount rate represents the interest rate used in estimating the present value of projected cash flows to settle the Company’s pension obligations. The discount rate assumption is determined by management using a full yield curve approach, which involves applying the specific spot rates along the yield curve used in the determination of the benefit obligation that correlates to the relevant projected cash flows.
Mortality assumptions are based on published mortality studies developed primarily based on past experience of the broad population and modified for projected longevity trends. The mortality assumptions used for 2024 and 2023 are based on the Pri-2012 Mortality Tables using the MP-2021 mortality improvement scale.
In determining the expected return on pension plan assets, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance.
Asset management objectives include maintaining an adequate level of diversification to reduce interest rate and market risk and providing adequate liquidity to meet immediate and future benefit payment requirements.
The allocation of plan assets by category is as follows at December 31,:
| Percentage of PensionPlan Assets · TargetAllocation | |||
|---|---|---|---|
| 2024 | 2023 | 2025 | |
| Equity securities | 71% | 72% | 75% |
| Debt securities | 29% | 28% | 25% |
| Total | 100% | 100% | 100% |
As of December 31, 2024, the pension plan held 27,562 shares of our common stock, which had a fair value of $1.9 million. We believe that our long-term asset allocation on average will approximate the targeted allocation. We regularly review our actual asset allocation and periodically rebalance the pension plan’s investments to our targeted allocation when deemed appropriate.
FASB guidance defines fair value and establishes a framework for measuring fair value and related disclosure requirements as described in Note 16. Following is a description of the valuation methodologies used for our pension assets. There have been no changes in the methodologies used at December 31, 2024 and 2023:
| Common Stock: | Common stock is valued at the closing price reported on the common stock’s respective stock exchange and is classified within level 1 of the valuation hierarchy. |
|---|---|
| Fixed Income Securities: | Valued at the closing price reported on the active market on which the individual securities are traded and are classified within level 1 of the valuation hierarchy. |
| Money Market Fund: | These investments are public investment vehicles valued using the Net Asset Value (NAV). |
| Mutual Funds: | These investments are public investment vehicles valued using the Net Asset Value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. |
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the pension plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table sets forth the value of the pension plan's assets as of December 31, 2024 and December 31, 2023:
| 2024 | 2023 | |
|---|---|---|
| Investments measured at fair value: | ||
| Common Stock | $7,797 | $7,926 |
| Fixed Income Securities | 17,016 | 16,735 |
| Total Investments measured at fair value | 24,813 | 24,661 |
| Investments measured at NAV: | ||
| Money Market Fund | 1,885 | 1,834 |
| Mutual Funds | 38,975 | 39,401 |
| Total Investments measured at NAV | 40,860 | 41,235 |
| Total Investments | $65,673 | $65,896 |
We do not expect to make any contributions to our pension plan for 2025.
The following table summarizes the benefits and settlements expected to be paid by our pension plan in each of the next five years and in aggregate for the following five years. The expected payments are estimated based on the same assumptions used to measure the Company’s projected benefit obligation at December 31, 2024.
| 2025 | $6,059 |
| 2026 | 6,076 |
| 2027 | 5,672 |
| 2028 | 5,541 |
| 2029 | 5,367 |
| 2030-2034 | 25,803 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.