ConMed disappoints; earnings fall short of goal
Jan. 9, 2003

By MARRECCA FIORE
Observer-Dispatch

ConMed's record sales in the fourth quarter of 2002 did not meet the company's expectations and will lower its fourth quarter and full-year earnings, a company official said during a conference call with investors Wednesday.

ConMed also announced the purchase of Jacksonville, Fla.-based CORE Dynamics Inc. for $9 million in cash. Just last month, the company announced its purchase of ValMed Corp. of Portland, Ore., and Quebec-based NorTex Medical Ltd. for $6 million in cash and stock. ConMed, a medical technology company and one of the region's largest employers, hopes to grow through acquisitions, officials have said.

ConMed plans to move CORE's manufacturing to Utica over a four-month period this year. The move will bring between 30 to 40 new manufacturing jobs to Utica, said Sean Leous of New York-based FD Morgan-Walke, ConMed's media relations company.

ConMed had sales of approximately $115.3 million for the fourth quarter, about $6 million less than the company projected, President and Chief Operating Officer Joseph J. Corasanti told investors. Because of the shortfall, the company's fourth quarter earnings per share are expected to be between 31 and 33 cents for the quarter and between $1.30 and $1.32 for the year, about 6 cents lower than anticipated, he said.

"This shortfall was centered around capital equipment products such as our powered surgical instruments and our video systems," he said.

Corasanti said the flat sales of the company's video systems weakened arthroscopy revenues. Powered surgical instrument sales were flat because gains in its large bone products, led by PowerPro, were offset by declines in small bone and specialty product groups, he said.

News of lower than anticipated sales sent ConMed's stock down by about 10 percent immediately following the company's morning conference call, a local stock analyst said. The stock closed down 12 percent at $18.21 a share.

"Analysts were expecting earnings of 38 cents for the quarter and $1.38 for the year," said stock analyst Gregory McLean, president of Caruso McLean and Co. Inc. of Utica. "Certainly the earnings are somewhat shy of that and Wall Street is punishing ConMed for that."

McLean said it's not unusual for growing companies to have record sales that are somewhat disappointing and expects ConMed's stock will recover once news of the shortfall subsides.

The three companies acquired by ConMed in the past two months should bring the company additional sales revenue in next year, McLean said.

"They're companies that can be absorbed fairly easily into the balance sheet of ConMed and won't significantly impact their bottom line," he said. "The companies also fit will with their business plan and add to the overall synergies for the long term. ... They should, in time, contribute to the company's bottom line."

CORE Dynamics Inc. is a developer and manufacturer of minimally invasive laparoscopic surgical devices. ValMed and NorTex provide products and services for operating rooms and critical care departments.

Corasanti said he expects the three companies to add substance to ConMed's surgical product offerings. In 2003, the company expects sales to grow 6 percent and earnings per share to grow 15 percent, excluding one-time acquistion expenses for CORE Dynamics, over 2002, Corasanti added.