2022
ANNUAL REPORT
2022 ANNUAL REPORT 2022 ANNUAL REPORT
Contents
Introduction
Company Financial Snapshot
Letter to Shareholders
Featured Spotlights
Board Members and Officers
Additional Information
GAAP to Non-GAAP Reconciliations
CONMED 10-K
4
5
6
8
10
12
14
16
4 | Introduction
for the
Future
2022 was the year for us to level up. Staying laser focused on our customer
needs, CONMED built a world-class digital experience on www.CONMED.com,
invested in operational technology, and expanded our product portfolio through
two exciting acquisitions. Collectively, these investments position us to capture
new market share and enable exceptional patient outcomes.
We enter this new year with room to grow. We are better equipped now to support
our customers and internal teams. We believe our investments and efforts in 2022
have strengthened CONMED’s ability to deliver in the future.
Company Financial Snapshot
2022 ANNUAL REPORT | 5
Company Snapshot
$1.05 BILLON
FY 2022 REVENUE
Geographic Revenue
Product Revenue
Asia Pacific
16%
Orthopedic Surgery
44%
EMEA
19%
45%
International
Revenue
US
55%
Americas Ex-US
10%
Employees Globally
4,100
General Surgery
56%
General Surgery
Products used in the areas of advanced surgical
and advanced endoscopic technologies.
Orthopedic Surgery
Surgical devices including capital, single-use, and im-
plants used in the repair of soft tissue and joint injuries.
Revenue ($ in Thousands)
Adjusted Diluted Net Earnings per Share*
$1,100,000
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$3.50
$3.00
$2.50
$2.00
$1.50
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
*Adjusted diluted net earnings per share is a non-GAAP measure. Refer to the “GAAP to Non-GAAP Reconciliations”
section for the most directly comparable GAAP measure, GAAP diluted net earnings (loss) per share.
2022 ANNUAL REPORT 6 | Letter to Shareholders
Annual Report 2022
Letter to Shareholders
To the Shareholders of CONMED Corporation:
In 2022, CONMED recorded revenue of $1.05 billion, representing growth of 3.4% as reported, 4.6% in constant
currency* with acquisitions contributing 240 basis points compared to 2021. Adjusted diluted net earnings per share*
finished the year at $2.65, a decrease of 17.4% over 2021 adjusted diluted net earnings per share* of $3.21. During the
fourth quarter, we experienced substantial disruptions related to the implementation of a new warehouse management
system, which negatively impacted our fourth quarter and annual financial results. While disappointed, we worked
diligently to resolve the disruptions and are working to ensure any residual impact is limited in 2023. Furthermore,
we view our new warehouse management system as a key component of our broader digitalization initiative and an
important step in our efforts to create scalable processes and systems across our business to position us for future
growth. Beyond our results, the 2022 macro environment was characterized by a continuation of the headwinds
precipitated by the global pandemic. Global issues governing supply chain efficiency and recovery spurred aggressive
inflation while reduced healthcare staffing levels and procedural deferrals impacted revenue growth. We navigated these
headwinds and remained true to our broader business strategy as the CONMED leadership team and Board continued
to make meaningful progress in building a sustainable business designed to deliver above-market long-term revenue
and earnings growth for its shareholders. To this end, we released several new products across the company throughout
2022 and completed two transformational acquisitions—first the In2Bones Global, Inc. foot and ankle business in June
followed by BioRez Inc., with its BioBrace® platform technology, in August.
We are excited by the performance and potential of these platforms, however, it is equally important to note that we are
committed to growing all of our revenue, and we believe that our internal organic development initiatives will drive these
businesses forward to ensure our continued success. While our recent acquisitions have increased our leverage, in June
of 2022 we completed the extinguishment of $275 million of our 2019 2.625% five-year convertible notes and secured
a new five-year convertible financing vehicle with a fixed interest charge at 2.25% covering $800 million of our debt. We
believe this was a prudent and well-executed decision in a rising interest rate environment, and I want to recognize our
internal finance teams and our banking and legal partners for all their work in making this transaction successful.
During the year, we accomplished several other critical milestones including the launch of our new company website.
This was a comprehensive company-wide effort driven by our Marketing Communications team that resulted in a greatly
enhanced digital presence for our company, our products, and our overall external engagement, and serves to further
advance our digital strategy. I encourage you to explore our site at www.CONMED.com. Further, in October, we
delivered our first company-wide ESG report, which can be found on our website. This report is the first output of our
formal activities to further define, align and advance our ESG initiatives across CONMED. I am proud of the
comprehensive undertaking and diligence that went into the creation of this report as well as its validation through our
internal audit function. The leadership team and Board of Directors are committed to making defined and measurable
progress across each aspect of ESG. Finally, as has been central to our success, we remain committed to a broad range
of employee-focused activities designed to drive engagement and facilitate retention in a challenging labor market. In
2022, our employee participation in our annual engagement survey reached 99%, and more than 25% of our employees
provided active referrals for open positions within the company. We continue to advance a human capital management
philosophy that includes the full participation of our Board of Directors.
2022 ANNUAL REPORT | 7
I would also like to acknowledge the retirement of two important leaders from CONMED during the year. In May, Mark
Tryninski retired from the CONMED Board of Directors having reached his 15-year term of service. Mark served as Chair
of CONMED’s Board of Directors from 2013 to 2020, leading the company through a period of significant growth that
included several key acquisitions including SurgiQuest and Buffalo Filter®. In April, Jed Kennedy retired from CONMED
having served in a variety of executive roles. Jed joined the company in 2012 through the acquisition of Viking
Technologies and subsequently held roles leading various commercial businesses and key product development initiatives
while informally serving as a mentor to many of our young engineers. I want to thank both Mark and Jed for their service
and contributions to CONMED and wish them both well in their retirement.
Looking Forward
As we enter 2023, we are optimistic about the outlook for the market and our business. While overall costs remain
inflated, improvements in procedural volumes and healthcare staffing levels have increased market activity. We are also
pleased that the initial reception to our new offerings with In2Bones and BioBrace® has exceeded our early expectations
and, coupled with our internal innovation, have positioned our Orthopedics segment for strong growth. Similarly, we are
continuing to advance our General Surgery category as AirSeal® expands into the larger laparoscopic space, and
Buffalo Filter® continues to expand with the added tailwind of increasing legislation mandating surgical smoke evacuation.
Additionally, our internal R&D teams are delivering a compelling sequence of new and refreshed products for the market.
Overall, we believe our business is well positioned for top-line growth, which when combined with continued margin
expansion, will enable us to deliver above-market earnings growth in the years ahead.
Closing
The CONMED team is focused on remaining great stewards of your company through our focus on people, innovative
products, and growing profitability. Over the course of the last year, we made substantial investments in these areas,
and we are operationally focused to ensure success in the years ahead. As with last year, our continued investment in
a comprehensive digital strategy and the development of a responsible ESG program will create new opportunities for
growth and efficiency, strengthen our culture, and ultimately enhance our future performance. Given the actions we took
and the results we delivered, I believe that CONMED continues to strengthen as an organization and is well positioned
for success over the long term.
Now more than ever before, every employee of the company can impact the business and build a great career; every
employee of the company will have the opportunity to make a difference for our customers and be a part of a growing
business; and every employee of the company will benefit from a strong and growing culture with exceptional values.
Behind every initiative and accomplishment are the employees of CONMED, and, as I’ve said many times before, our
employees will drive, define, and deliver our success as a company. Because of them, I remain confident that CONMED
will outperform in our chosen markets.
On behalf of our management team and the Board of Directors, I thank you for your confidence in CONMED.
Sincerely,
Curt Hartman
Chair of the Board, President and Chief Executive Officer
* Constant currency net sales growth and adjusted diluted net earnings per share are non-GAAP financial
measures. Refer to the GAAP to Non-GAAP Reconciliations page for reconciliations to the most directly
comparable GAAP financial measures, reported net sales and diluted net earnings per share.
8 | Featured Spotlights
2022 ANNUAL REPORT
BioBrace®
Strengthening Repairs, Optimizing Outcomes
BioBrace® is highly differentiated. Its unique construct of a reinforced,
bioinductive scaffold allows surgeons to add strength to their repairs
and optimize healing. This has enabled Biorez, and now CONMED,
to stand out over the competition. Through this acquisition, we’ve
distinguished ourselves yet again as innovators in the Orthopedic
market. With BioBrace®, the future is NOW.
In2Bones
Expanding our Foot and Ankle Portfolio
When TruShot® launched in 2018, we solidified extremities as part of
our future. Thus, our search began for a portfolio that would allow us
to fully support our customers’ procedural needs. The acquisition of
In2Bones ensured synergy in all the right categories: Products, People,
and Culture. With products like the QUANTUM® Total Ankle with
OrthoPlanify™ Patient Specific Instrumentation and
CoLink® PCR Carbon Fiber Plating, we have
a comprehensive platform and pipeline of
innovative solutions to excite our customers.
2022 ANNUAL REPORT | 9
CONMED.com
The Fresh Face of our Digital Platform
Last year, CONMED took leaps to enhance digital interaction.
The result is the new www.CONMED.com - a highly user-focused platform, already delivering
increased engagement. This site offers a better experience, taking the customer on a journey.
They navigate from specialty to technique, and ultimately to a solution that enables exceptional
patient outcomes. CONMED.com delivers the first phase of our long-term digitalization goals.
October 2022 | Platinum Award Winner | International Marcom Awards
Our ESG Commitments
Making a Difference for a Better Tomorrow
At CONMED, we are focused on doing things the right way and
being good corporate citizens. In 2022, we launched our first ESG
Report to share key insights about our initiatives, programs, and
results with our various stakeholders, including our current and future
investors, customers, employees, suppliers, community members, and
more. You can view the report on the ESG section of our website.
10 | Board Members and Officers
Board Members
Curt R. Hartman
Chair of the Board,
President and Chief Executive Officer
David Bronson
Director
Martha Goldberg Aronson
Lead Independent Director
Brian P. Concannon
Director
Jerome J. Lande
Director
LaVerne Council
Director
Barbara J. Schwarzentraub
Director
Charles M. Farkas
Director
Dr. John L. Workman
Director
2022 ANNUAL REPORT | 11
Executive Team
Curt R. Hartman
President and Chief Executive Officer
Patrick J. Beyer
President, CONMED International
& Global Orthopedics
Brent Lalomia
EVP, Quality Assurance and Regulatory Affairs
Heather L.Cohen
EVP & Chief Human Resources & Legal Officer
Stanley W. (Bill) Peters
President Advanced Surgical and
Advanced Endoscopic Technologies
Todd W. Garner
EVP & Chief Financial Officer
Peter K. Shagory
EVP, Strategy & Corporate Development
Other Officers
Terence M. Bergé
Vice President, Corporate Controller
John Ferrell
EVP, Human Resources
Johonna Pelletier
Treasurer & Vice President, Tax
Shanna Cotti-Osmanski
EVP, Information Technology & CIO
Daniel S. Jonas
Special Counsel & Corporate
Secretary
Victoria Womack Styles
Vice President & General Manager,
Advanced Endoscopic Technologies
'
Stephan Epinette
Vice President, International
Nate Miersma
Vice President & General Manager,
US Orthopedics
Alan Taylor
Vice President, Sales, Marketing,
and Innovation
12 | Additional Information
Additional Information
CORPORATE OFFICE
CONMED Corporation
11311 Concept Blvd.
Largo, FL 33773
Phone: 1-866-4CONMED
CUSTOMER SERVICE
1-866-4CONMED
customerexperience@CONMED.com
www.CONMED.com
Ethics policy available at
www.CONMED.com
STOCK
CONMED Corporation’s stock is traded
on the New York Stock Exchange with
the symbol: CNMD
SHAREHOLDER INFO
Interested shareholders may
obtain a copy of the Company’s
Annual Report without charge
upon written request to:
Investor Relations Department
CONMED Corporation
Attn: Todd Garner
11311 Concept Blvd.
Largo, FL 33773
727-214-2975
Transfer Agent/Registrar
Computershare Investor
Services
P.O. Box 43006
Providence, RI 02940-3006
1-800-368-5948
www.computershare.com/investor
2022 ANNUAL REPORT | 13
4,540
1,955
55.3%
-
-
-
-
-
-
-
-
56.2%
6,586
2,169
1,087
2,820
3,993
55.3%
1,335
2,858
-
55.4%
GAAP to Non-GAAP Reconciliations*
Reconciliations of Reported Net Income (Loss) to Adjusted Net Earnings
(in thousands, except per share amounts, unaudited)
Selling &
Year Ended December 31, 2022
Tax
As reported
% of sales
EPS
Shares
Legal matters
Acquisition and integration costs
Restructuring and related costs
Software implementation costs
Contingent consideration fair value adjustment
Convertible notes premium on extinguishment
Change in fair value of convertible notes hedges upon
settlement
Loss on early extinguishment of debt
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Expense/
Effective Tax
Net Income
(Benefit)
Rate
(Loss)
Basic EPS
Adjustments Diluted EPS
$
571,245
$
454,039
$
70,054
$
28,905
$
112,011
$
9,720
-13.7%
$
(80,582)
$
-
$
(80,582)
54.6%
43.4%
6.7%
$
(2.68)
30,040
$
(2.68)
30,040
-
(10,063)
(775)
(786)
(6,769)
(2,518)
-
-
-
14,603
775
2,741
6,769
2,518
-
-
-
38.8%
12.6%
46,965
(462)
6,029
14,889
5,538
(103,125)
(61,521)
(5,460)
(3,426)
(3,257)
(2,044)
(32,362)
1,237
(3,288)
(8,120)
(3,020)
164,646
8,717
5,470
$
52,698
$
577,740
$
433,128
$
97,460
$
28,905
$
-
$
15,857
$
6,000
(27,791)
33,791
(4,910)
9,381
29,320
$
405,337
$
131,251
$
23,995
$
-
$
25,238
23.5%
$
82,018
$
2,978
$
84,996
Selling &
Year Ended December 31, 2021
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Tax
Effective Tax
Expense
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
$
568,036
$
414,754
$
109,717
$
35,485
$
1,127
$
10,563
14.4%
$
62,542
$
-
$
62,542
56.2%
41.0%
10.9%
$
2.14
29,162
$
1.94
3,054
32,216
Restructuring and related costs
Loss on early extinguishment of debt
(414)
-
414
-
(1,127)
109
281
305
846
$
568,036
$
414,340
$
110,131
$
35,485
$
-
$
10,953
$
63,693
$
6,000
(27,133)
33,133
(13,943)
11,394
35,682
$
387,207
$
143,264
$
21,542
$
-
$
22,347
18.4%
$
99,375
$
-
$
99,375
38.3%
14.2%
30,040
2,656
$
2.65
32,696
(578)
32,118
29,162
3,054
$
3.21
32,216
(1,273)
30,943
Selling &
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Year Ended December 31, 2020
Tax
Expense/
Effective Tax
$
460,300
$
373,817
$
46,010
$
44,052
$
355
$
(7,914)
-493.9%
$
9,517
$
-
$
9,517
(Benefit)
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
53.4%
43.3%
5.3%
$
0.33
28,581
$
0.32
883
29,464
(2,095)
(4,782)
(1,192)
-
-
6,586
4,264
5,869
4,012
3,993
39.2%
12.1%
1,807
739
460
888
485
5,847
3,804
4,062
3,124
3,508
$
476,955
$
365,748
$
70,734
$
44,052
$
355
$
(3,535)
$
29,862
$
6,000
(27,945)
33,945
(13,414)
13,037
34,322
$
337,803
$
104,679
$
30,638
$
355
$
9,502
12.9%
$
64,184
$
-
$
64,184
$
2.18
Selling &
Year Ended December 31, 2019
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Tax
Effective Tax
Expense
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
$
524,715
$
400,141
$
79,114
$
42,701
$
5,188
$
2,605
8.3%
$
28,620
$
-
$
28,620
54.9%
41.9%
8.3%
$
1.01
28,325
$
0.97
1,170
29,495
(13,066)
14,401
2,858
-
3,609
354
1,149
(3,904)
$
528,908
$
387,075
$
96,373
$
42,701
$
1,284
$
7,717
$
44,671
$
6,000
(26,075)
32,075
(11,756)
10,590
$
361,000
$
128,448
$
30,945
$
1,284
$
18,307
19.0%
$
77,912
$
-
$
77,912
37.8%
13.4%
$
2.64
Selling &
Research &
Tax
Administrative
Development
Operating
Expense/
Effective Tax
Other
Expense
Gross Profit
Expense
Expense
Income
$
469,110
$
355,617
$
42,188
$
71,305
$
-
(Benefit)
$
9,799
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
19.3%
$
40,854
$
-
$
40,854
54.6%
41.4%
4.9%
8.3%
Year Ended December 31, 2018
$
1.45
28,118
$
1.41
772
28,890
$
469,110
$
353,245
$
37,976
$
77,889
$
-
$
12,159
$
45,078
(2,372)
-
-
-
54.6%
(4,212)
-
-
-
4,212
2,372
-
23,174
39.1%
4.4%
11.8%
2,117
1,155
(912)
5,413
$
2.18
10,792
2,504
2,755
33,241
2,095
1,217
912
17,761
-
-
-
-
Amortization of intangible assets
$
6,000
(17,174)
$
336,071
$
37,976
$
101,063
$
-
$
17,572
21.9%
$
62,839
$
-
$
62,839
Net Sales
2022
2021
$
1,045.5
$
1,010.6
*Refer to our 2022 Annual Report on Form 10-K, available both within this document and at www.CONMED.com, as well as our Form 8-K filings with the SEC on February 2, 2023, January 26, 2022,
January 27, 2021, January 29, 2020 and January 22, 2019 for additional information regarding our non-GAAP measures.
Sales Summary*
(in millions, unaudited)
% Change from 2021 to 2022
As Reported
Impact of
Foreign
Currency
Constant
Currency
3.4%
1.2%
4.6%
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
Shares
Convertible note hedges
Adjusted Diluted Shares
As reported
% of sales
EPS
Shares
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
Shares
Convertible note hedges
Adjusted Diluted Shares
As reported
% of sales
EPS
Shares
Plant underutilization costs
Product rationalization costs
Restructuring and related costs
Acquisition and integration costs
Manufacturing consolidation costs
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
As reported
% of sales
EPS
Shares
Acquisition and integration costs
Manufacturing consolidation costs
Debt refinancing costs
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
As reported
% of sales
EPS
Shares
Impairment charges
Business acquisition costs
Tax reform
Gross profit %
As adjusted
% of sales
Adjusted Diluted EPS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14 | CONMED GAAP to Non-GAAP Reconcilliations
GAAP to Non-GAAP Reconciliations*
Reconciliations of Reported Net Income (Loss) to Adjusted Net Earnings
(in thousands, except per share amounts, unaudited)
Selling &
Administrative
Expense
$
454,039
43.4%
Operating
Income
$
70,054
6.7%
Gross Profit
$
571,245
54.6%
Year Ended December 31, 2022
Interest
Expense
Other
Expense
$
28,905
$
112,011
Tax
Expense/
(Benefit)
$
9,720
Effective Tax
Rate
-13.7%
Net Income
(Loss)
(80,582)
$
Basic EPS
Adjustments Diluted EPS
(80,582)
$
-
$
$
(2.68)
30,040
$
(2.68)
30,040
-
4,540
-
1,955
-
-
-
-
-
$
577,740
55.3%
6,000
$
Gross Profit
$
568,036
56.2%
-
-
$
568,036
56.2%
6,000
$
(10,063)
(775)
(786)
(6,769)
(2,518)
-
-
-
$
433,128
14,603
775
2,741
6,769
2,518
-
-
-
-
-
-
-
-
-
-
-
-
(103,125)
46,965
(462)
6,029
14,889
5,538
(61,521)
-
-
97,460
$
-
-
28,905
$
(5,460)
(3,426)
$
-
(3,257)
(2,044)
15,857
$
(32,362)
1,237
(3,288)
(8,120)
(3,020)
164,646
8,717
5,470
52,698
$
$
(27,791)
405,337
38.8%
$
33,791
131,251
12.6%
(4,910)
23,995
$
-
$
-
9,381
25,238
$
29,320
82,018
$
23.5%
$
2,978
$
84,996
30,040
2,656
$
2.65
32,696
(578)
32,118
Year Ended December 31, 2021
Selling &
Administrative
Expense
Operating
Income
Interest
Expense
Other
Expense
$
414,754
41.0%
$
109,717
10.9%
$
35,485
$
1,127
Tax
Expense
$
10,563
Effective Tax
Rate
14.4%
Net Income
$
62,542
Basic EPS
Adjustments Diluted EPS
62,542
$
-
$
$
2.14
29,162
$
1.94
32,216
3,054
(414)
-
414
-
$
414,340
$
110,131
-
-
35,485
$
-
(1,127)
$
-
109
281
10,953
$
305
846
63,693
$
$
(27,133)
387,207
38.3%
$
33,133
143,264
14.2%
(13,943)
21,542
$
-
$
-
11,394
22,347
$
35,682
99,375
$
18.4%
$
-
$
99,375
29,162
3,054
$
3.21
32,216
(1,273)
30,943
Selling &
Administrative
Expense
$
373,817
43.3%
Operating
Income
$
46,010
5.3%
Gross Profit
460,300
$
53.4%
Year Ended December 31, 2020
Interest
Expense
Other
Expense
$
44,052
$
355
Tax
Expense/
(Benefit)
$
(7,914)
Effective Tax
Rate
-493.9%
Net Income
$
9,517
Basic EPS
Adjustments Diluted EPS
9,517
$
-
$
$
0.33
28,581
$
0.32
29,464
883
6,586
2,169
1,087
2,820
3,993
476,955
55.3%
6,000
$
$
-
(2,095)
(4,782)
(1,192)
-
$
365,748
6,586
4,264
5,869
4,012
3,993
70,734
$
-
-
-
-
-
44,052
$
-
-
-
-
-
355
$
739
460
1,807
888
485
(3,535)
$
5,847
3,804
4,062
3,124
3,508
29,862
$
$
(27,945)
337,803
39.2%
$
33,945
104,679
12.1%
(13,414)
30,638
$
-
355
$
13,037
9,502
$
34,322
64,184
$
12.9%
$
-
$
64,184
$
2.18
Selling &
Administrative
Expense
$
400,141
41.9%
Operating
Income
$
79,114
8.3%
Gross Profit
524,715
$
54.9%
Year Ended December 31, 2019
Interest
Expense
Other
Expense
$
42,701
$
5,188
Tax
Expense
$
2,605
Effective Tax
Rate
8.3%
Net Income
$
28,620
Basic EPS
Adjustments Diluted EPS
28,620
$
-
$
$
1.01
28,325
$
0.97
29,495
1,170
1,335
2,858
-
$
528,908
55.4%
6,000
$
(13,066)
-
-
$
387,075
14,401
2,858
-
96,373
$
-
-
-
42,701
$
-
-
(3,904)
1,284
$
3,609
354
1,149
7,717
$
10,792
2,504
2,755
44,671
$
$
(26,075)
361,000
37.8%
$
32,075
128,448
13.4%
(11,756)
30,945
$
-
1,284
$
10,590
18,307
$
33,241
77,912
$
19.0%
$
-
$
77,912
$
2.64
Selling &
Administrative
Expense
$
355,617
41.4%
Research &
Development
Expense
Operating
Income
$
42,188
4.9%
$
71,305
8.3%
Gross Profit
469,110
$
54.6%
Other
Expense
$
-
Tax
Expense/
(Benefit)
$
9,799
Effective Tax
Rate
19.3%
Year Ended December 31, 2018
Net Income
$
40,854
Basic EPS
Adjustments Diluted EPS
40,854
$
-
$
$
1.45
28,118
$
1.41
772
28,890
As reported
% of sales
EPS
Shares
Acquisition and integration costs
Legal matters
Restructuring and related costs
Software implementation costs
Contingent consideration fair value adjustment
Convertible notes premium on extinguishment
Change in fair value of convertible notes hedges upon
settlement
Loss on early extinguishment of debt
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
Shares
Convertible note hedges
Adjusted Diluted Shares
As reported
% of sales
EPS
Shares
Restructuring and related costs
Loss on early extinguishment of debt
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
Shares
Convertible note hedges
Adjusted Diluted Shares
As reported
% of sales
EPS
Shares
Plant underutilization costs
Product rationalization costs
Restructuring and related costs
Acquisition and integration costs
Manufacturing consolidation costs
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
As reported
% of sales
EPS
Shares
Acquisition and integration costs
Manufacturing consolidation costs
Debt refinancing costs
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
As reported
% of sales
EPS
Shares
Impairment charges
Business acquisition costs
Tax reform
Gross profit %
As adjusted
% of sales
Adjusted Diluted EPS
Amortization of intangible assets
$
6,000
(17,174)
(2,372)
-
-
-
-
-
54.6%
(4,212)
-
-
-
4,212
2,372
-
23,174
-
-
-
-
2,117
1,155
(912)
5,413
$
469,110
$
353,245
$
37,976
$
77,889
$
-
$
12,159
$
45,078
2,095
1,217
912
17,761
$
336,071
$
37,976
$
101,063
$
-
$
17,572
21.9%
$
62,839
$
-
$
62,839
39.1%
4.4%
11.8%
$
2.18
Net Sales
2022
2021
$
1,045.5
$
1,010.6
*Refer to our 2022 Annual Report on Form 10-K, available both within this document and at www.CONMED.com, as well as our Form 8-K filings with the SEC on February 2, 2023, January 26, 2022,
January 27, 2021, January 29, 2020 and January 22, 2019 for additional information regarding our non-GAAP measures.
Sales Summary*
(in millions, unaudited)
% Change from 2021 to 2022
As Reported
Impact of
Foreign
Currency
Constant
Currency
3.4%
1.2%
4.6%
GAAP to Non-GAAP Reconciliations*
Reconciliations of Reported Net Income (Loss) to Adjusted Net Earnings
(in thousands, except per share amounts, unaudited)
Selling &
Year Ended December 31, 2022
Tax
As reported
% of sales
EPS
Shares
Legal matters
Acquisition and integration costs
Restructuring and related costs
Software implementation costs
Contingent consideration fair value adjustment
Convertible notes premium on extinguishment
Change in fair value of convertible notes hedges upon
settlement
Loss on early extinguishment of debt
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Expense/
Effective Tax
Net Income
(Benefit)
Rate
(Loss)
Basic EPS
Adjustments Diluted EPS
$
571,245
$
454,039
$
70,054
$
28,905
$
112,011
$
9,720
-13.7%
$
(80,582)
$
-
$
(80,582)
54.6%
43.4%
6.7%
$
(2.68)
30,040
$
(2.68)
30,040
-
(10,063)
(775)
(786)
(6,769)
(2,518)
-
-
-
14,603
775
2,741
6,769
2,518
-
-
-
38.8%
12.6%
46,965
(462)
6,029
14,889
5,538
(103,125)
(61,521)
(5,460)
(3,426)
(3,257)
(2,044)
(32,362)
1,237
(3,288)
(8,120)
(3,020)
164,646
8,717
5,470
$
52,698
$
577,740
$
433,128
$
97,460
$
28,905
$
-
$
15,857
$
6,000
(27,791)
33,791
(4,910)
9,381
29,320
$
405,337
$
131,251
$
23,995
$
-
$
25,238
23.5%
$
82,018
$
2,978
$
84,996
Selling &
Year Ended December 31, 2021
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Tax
Effective Tax
Expense
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
$
568,036
$
414,754
$
109,717
$
35,485
$
1,127
$
10,563
14.4%
$
62,542
$
-
$
62,542
56.2%
41.0%
10.9%
$
2.14
29,162
$
1.94
3,054
32,216
Restructuring and related costs
Loss on early extinguishment of debt
(414)
-
414
-
(1,127)
109
281
305
846
$
568,036
$
414,340
$
110,131
$
35,485
$
-
$
10,953
$
63,693
$
6,000
(27,133)
33,133
(13,943)
11,394
35,682
$
387,207
$
143,264
$
21,542
$
-
$
22,347
18.4%
$
99,375
$
-
$
99,375
38.3%
14.2%
30,040
2,656
$
2.65
32,696
(578)
32,118
29,162
3,054
$
3.21
32,216
(1,273)
30,943
4,540
1,955
55.3%
-
-
-
-
-
-
-
-
56.2%
6,586
2,169
1,087
2,820
3,993
55.3%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Selling &
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Year Ended December 31, 2020
Tax
Expense/
Effective Tax
$
460,300
$
373,817
$
46,010
$
44,052
$
355
$
(7,914)
-493.9%
$
9,517
$
-
$
9,517
(Benefit)
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
53.4%
43.3%
5.3%
$
0.33
28,581
$
0.32
883
29,464
(2,095)
(4,782)
(1,192)
-
-
6,586
4,264
5,869
4,012
3,993
39.2%
12.1%
1,807
739
460
888
485
5,847
3,804
4,062
3,124
3,508
$
476,955
$
365,748
$
70,734
$
44,052
$
355
$
(3,535)
$
29,862
$
6,000
(27,945)
33,945
(13,414)
13,037
34,322
$
337,803
$
104,679
$
30,638
$
355
$
9,502
12.9%
$
64,184
$
-
$
64,184
$
2.18
Selling &
Gross Profit
$
524,715
54.9%
Administrative
Operating
Expense
Income
$
400,141
41.9%
$
79,114
8.3%
Year Ended December 31, 2019
Interest
Expense
Other
Expense
Tax
Effective Tax
Expense
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
$
42,701
$
5,188
$
2,605
8.3%
$
28,620
$
-
$
28,620
1,335
2,858
-
$
528,908
55.4%
6,000
$
(13,066)
-
-
$
387,075
14,401
2,858
-
96,373
$
-
-
-
42,701
$
-
-
(3,904)
1,284
$
3,609
354
1,149
7,717
$
$
$
1.01
28,325
0.97
29,495
10,792
2022 ANNUAL REPORT | 15
2,504
2,755
44,671
1,170
$
$
(26,075)
361,000
37.8%
$
32,075
128,448
13.4%
(11,756)
30,945
$
-
1,284
$
10,590
18,307
$
33,241
77,912
$
19.0%
$
-
$
77,912
$
2.64
Selling &
Administrative
Expense
$
355,617
41.4%
Research &
Development
Expense
$
42,188
4.9%
Operating
Income
$
71,305
8.3%
Other
Expense
$
-
Gross Profit
$
469,110
54.6%
Tax
Expense/
(Benefit)
$
9,799
Effective Tax
Rate
19.3%
Year Ended December 31, 2018
Net Income
$
40,854
Basic EPS
Adjustments Diluted EPS
40,854
$
-
$
$
1.45
28,118
$
1.41
28,890
772
-
-
-
$
469,110
54.6%
6,000
$
-
(2,372)
-
$
353,245
(4,212)
-
-
37,976
$
4,212
2,372
-
77,889
$
-
-
-
$
-
2,117
1,155
(912)
12,159
$
2,095
1,217
912
45,078
$
$
(17,174)
336,071
39.1%
$
-
37,976
4.4%
$
23,174
101,063
11.8%
-
$
-
5,413
17,572
$
17,761
62,839
$
21.9%
$
-
$
62,839
$
2.18
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
Shares
Convertible note hedges
Adjusted Diluted Shares
As reported
% of sales
EPS
Shares
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
Shares
Convertible note hedges
Adjusted Diluted Shares
As reported
% of sales
EPS
Shares
Plant underutilization costs
Product rationalization costs
Restructuring and related costs
Acquisition and integration costs
Manufacturing consolidation costs
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
As reported
% of sales
EPS
Shares
Acquisition and integration costs
Manufacturing consolidation costs
Debt refinancing costs
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
As reported
% of sales
EPS
Shares
Impairment charges
Business acquisition costs
Tax reform
Gross profit %
Amortization of intangible assets
As adjusted
% of sales
Adjusted Diluted EPS
30,040
2,656
$
2.65
32,696
(578)
32,118
Net Sales
2022
2021
$
1,045.5
$
1,010.6
Sales Summary*
(in millions, unaudited)
% Change from 2021 to 2022
Impact of
Foreign
Currency
As Reported
3.4%
1.2%
Constant
Currency
4.6%
*Refer to our 2022 Annual Report on Form 10-K, available both within this document and at www.CONMED.com, as well as our Form 8-K filings with the SEC on February 2, 2023, January 26, 2022,
January 27, 2021, January 29, 2020 and January 22, 2019 for additional information regarding our non-GAAP measures.
4,540
1,955
55.3%
-
-
-
-
-
-
-
-
56.2%
6,586
2,169
1,087
2,820
3,993
55.3%
1,335
2,858
-
55.4%
GAAP to Non-GAAP Reconciliations*
Reconciliations of Reported Net Income (Loss) to Adjusted Net Earnings
(in thousands, except per share amounts, unaudited)
Selling &
Year Ended December 31, 2022
Tax
As reported
% of sales
EPS
Shares
Legal matters
Acquisition and integration costs
Restructuring and related costs
Software implementation costs
Contingent consideration fair value adjustment
Convertible notes premium on extinguishment
Change in fair value of convertible notes hedges upon
settlement
Loss on early extinguishment of debt
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Expense/
Effective Tax
Net Income
(Benefit)
Rate
(Loss)
Basic EPS
Adjustments Diluted EPS
$
571,245
$
454,039
$
70,054
$
28,905
$
112,011
$
9,720
-13.7%
$
(80,582)
$
-
$
(80,582)
54.6%
43.4%
6.7%
$
(2.68)
30,040
$
(2.68)
30,040
-
(10,063)
(775)
(786)
(6,769)
(2,518)
-
-
-
14,603
775
2,741
6,769
2,518
-
-
-
38.8%
12.6%
46,965
(462)
6,029
14,889
5,538
(103,125)
(61,521)
(5,460)
(3,426)
(3,257)
(2,044)
(32,362)
1,237
(3,288)
(8,120)
(3,020)
164,646
8,717
5,470
$
52,698
$
577,740
$
433,128
$
97,460
$
28,905
$
-
$
15,857
$
6,000
(27,791)
33,791
(4,910)
9,381
29,320
$
405,337
$
131,251
$
23,995
$
-
$
25,238
23.5%
$
82,018
$
2,978
$
84,996
Selling &
Year Ended December 31, 2021
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Tax
Effective Tax
Expense
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
$
568,036
$
414,754
$
109,717
$
35,485
$
1,127
$
10,563
14.4%
$
62,542
$
-
$
62,542
56.2%
41.0%
10.9%
$
2.14
29,162
$
1.94
3,054
32,216
Restructuring and related costs
Loss on early extinguishment of debt
(414)
-
414
-
(1,127)
109
281
305
846
$
568,036
$
414,340
$
110,131
$
35,485
$
-
$
10,953
$
63,693
$
6,000
(27,133)
33,133
(13,943)
11,394
35,682
$
387,207
$
143,264
$
21,542
$
-
$
22,347
18.4%
$
99,375
$
-
$
99,375
38.3%
14.2%
29,162
3,054
$
3.21
32,216
(1,273)
30,943
Selling &
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Year Ended December 31, 2020
Tax
Expense/
Effective Tax
$
460,300
$
373,817
$
46,010
$
44,052
$
355
$
(7,914)
-493.9%
$
9,517
$
-
$
9,517
(Benefit)
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
53.4%
43.3%
5.3%
$
0.33
28,581
$
0.32
883
29,464
(2,095)
(4,782)
(1,192)
-
-
6,586
4,264
5,869
4,012
3,993
39.2%
12.1%
1,807
739
460
888
485
5,847
3,804
4,062
3,124
3,508
$
476,955
$
365,748
$
70,734
$
44,052
$
355
$
(3,535)
$
29,862
$
6,000
(27,945)
33,945
(13,414)
13,037
34,322
$
337,803
$
104,679
$
30,638
$
355
$
9,502
12.9%
$
64,184
$
-
$
64,184
$
2.18
Selling &
Year Ended December 31, 2019
Administrative
Operating
Gross Profit
Expense
Income
Interest
Expense
Other
Expense
Tax
Effective Tax
Expense
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
$
524,715
$
400,141
$
79,114
$
42,701
$
5,188
$
2,605
8.3%
$
28,620
$
-
$
28,620
54.9%
41.9%
8.3%
$
1.01
28,325
$
0.97
1,170
29,495
(13,066)
14,401
2,858
-
3,609
354
1,149
(3,904)
$
528,908
$
387,075
$
96,373
$
42,701
$
1,284
$
7,717
$
44,671
$
6,000
(26,075)
32,075
(11,756)
10,590
$
361,000
$
128,448
$
30,945
$
1,284
$
18,307
19.0%
$
77,912
$
-
$
77,912
37.8%
13.4%
$
2.64
Selling &
Research &
Tax
Administrative
Development
Operating
Expense/
Effective Tax
Other
Expense
Gross Profit
Expense
Expense
Income
$
469,110
$
355,617
$
42,188
$
71,305
$
-
(Benefit)
$
9,799
Rate
Net Income
Basic EPS
Adjustments Diluted EPS
19.3%
$
40,854
$
-
$
40,854
54.6%
41.4%
4.9%
8.3%
Year Ended December 31, 2018
$
1.45
28,118
$
1.41
772
28,890
$
469,110
$
353,245
$
37,976
$
77,889
$
-
$
12,159
$
45,078
(2,372)
-
-
-
54.6%
(4,212)
-
-
-
4,212
2,372
-
23,174
39.1%
4.4%
11.8%
2,117
1,155
(912)
5,413
$
2.18
10,792
2,504
2,755
33,241
2,095
1,217
912
17,761
-
-
-
-
Amortization of intangible assets
$
6,000
(17,174)
$
336,071
$
37,976
$
101,063
$
-
$
17,572
21.9%
$
62,839
$
-
$
62,839
Net Sales
2022
2021
$
1,045.5
$
1,010.6
*Refer to our 2022 Annual Report on Form 10-K, available both within this document and at www.CONMED.com, as well as our Form 8-K filings with the SEC on February 2, 2023, January 26, 2022,
January 27, 2021, January 29, 2020 and January 22, 2019 for additional information regarding our non-GAAP measures.
Sales Summary*
(in millions, unaudited)
% Change from 2021 to 2022
As Reported
Impact of
Foreign
Currency
Constant
Currency
3.4%
1.2%
4.6%
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
Shares
Convertible note hedges
Adjusted Diluted Shares
As reported
% of sales
EPS
Shares
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
Shares
Convertible note hedges
Adjusted Diluted Shares
As reported
% of sales
EPS
Shares
Plant underutilization costs
Product rationalization costs
Restructuring and related costs
Acquisition and integration costs
Manufacturing consolidation costs
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
As reported
% of sales
EPS
Shares
Acquisition and integration costs
Manufacturing consolidation costs
Debt refinancing costs
Adjusted gross profit %
Amortization
As adjusted
% of sales
Adjusted Diluted EPS
As reported
% of sales
EPS
Shares
Impairment charges
Business acquisition costs
Tax reform
Gross profit %
As adjusted
% of sales
Adjusted Diluted EPS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16 | CONMED 10-K
United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended: December 31, 2022 Commission file number: 001-39218
CONMED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
16-0977505
(I.R.S. Employer Identification No.)
11311 Concept Boulevard
Largo, Florida
(Address of principal executive offices)
33773
(Zip Code)
(727) 392-6464
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which
registered
Common Stock, $0.01 par value
CNMD
NYSE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer", "accelerated filer", "smaller reporting company", and
"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of
the shares of voting common stock held by non-affiliates of the registrant was approximately $2.2 billion based upon the closing price of the
Company’s common stock on the NYSE Stock Market.
The number of shares of the registrant's $0.01 par value common stock outstanding as of February 15, 2023 was 30,499,439.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Definitive Proxy Statement and any other informational filings for the 2023 Annual Meeting of Shareholders are
incorporated by reference into Part III of this report.
CONMED CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR YEAR ENDED DECEMBER 31, 2022
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Part I
Part II
Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Exhibits, Financial Statement Schedules
Signatures
Item 16.
Form 10-K Summary
Part IV
1
Page
2
8
19
19
19
19
20
21
22
30
30
30
31
31
31
32
32
32
32
32
33
34
85
CONMED CORPORATION
Item 1. Business
Forward Looking Statements
This Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2022 (“Form 10-K”) contains certain
forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information
relating to CONMED Corporation (“CONMED”, the “Company”, “we” or “us” — references to “CONMED”, the
“Company”, “we” or “us” shall be deemed to include our direct and indirect subsidiaries unless the context otherwise
requires) which are based on the beliefs of our management, as well as assumptions made by and information currently
available to our management.
When used in this Form 10-K, the words “estimate”, “project”, “believe”, “anticipate”, “intend”, “expect” and
similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors, including those identified under the caption “Item 1A-Risk Factors” and elsewhere in this
Form 10-K which may cause our actual results, performance or achievements, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors
include, among others, the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
general economic and business conditions, including, without limitation, a potential economic downturn,, supply chain
challenges and constraints, including the availability and cost of materials, the effects of inflation, and increased
interest rates;
compliance with and changes in regulatory requirements;
the failure of any enterprise-wide software programs or information technology systems, or potential disruption
associated with updating or implementing new software programs or information technology systems;
the risk of an information security breach, including a cybersecurity breach;
the COVID-19 global pandemic poses significant risks to our business, financial condition and results of operations as
the pandemic, government and hospital responses to it, continue;
the possibility that United States or foreign regulatory and/or administrative agencies may initiate enforcement
actions against us or our distributors;
the introduction and acceptance of new products;
the ability to advance our product lines, including challenges and uncertainties inherent in product research and
development, and the uncertain impact, outcome and cost of ongoing and future clinical trials and market studies;
competition;
changes in customer preferences;
changes in technology;
cyclical customer purchasing patterns due to budgetary, staffing and other constraints;
environmental compliance risks, including lack of availability of sterilization with Ethylene Oxide (“EtO”) or other
compliance costs associated with the use of EtO;
the quality of our management and business abilities and the judgment of our personnel, as well as our ability to
attract, motivate, and retain employees at all levels of the Company;
the availability, terms and deployment of capital;
current and future levels of indebtedness and capital spending;
changes in foreign exchange and interest rates;
the ability to evaluate, finance and integrate acquired businesses, products and companies;
changes in business strategy;
the risk of a lack of allograft tissues due to reduced donations of such tissues or due to tissues not meeting the
appropriate high standards for screening and/or processing of such tissues;
the ability to defend and enforce intellectual property, including the risks related to theft or compromise of intellectual
property in connection with our international operations;
the risk of patent, product and other litigation as well as the cost associated with such litigation;
trade protection measures, tariffs and other border taxes, and import or export licensing requirements;
weather related events which may disrupt our operations; and
various other factors referenced in this Form 10-K.
See “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Item 1-
Business” and “Item 1A-Risk Factors” for a further discussion of these factors. You are cautioned not to place undue reliance
2
on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to publicly
release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-K or
to reflect the occurrence of unanticipated events.
General
CONMED Corporation was incorporated under the laws of the State of New York in 1970 and became a Delaware
corporation in May 2020. CONMED 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. The Company’s 4,100 employees
distribute its products worldwide from three primary manufacturing locations. Our headquarters are located in Largo, Florida.
We have historically used strategic business acquisitions, internal product development and distribution relationships
to diversify our product offerings, increase our market share in certain product lines, realize economies of scale and take
advantage of growth opportunities in the healthcare field.
We are committed to offering products with the highest standards of quality, technological excellence and customer
service. Substantially all of our facilities have attained certification under the ISO international quality standards and other
domestic and international quality accreditations.
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports are accessible free of charge through the Investor Relations section of our website (http://www.conmed.com) as
soon as practicable after such materials have been electronically filed with, or furnished to, the United States Securities and
Exchange Commission (the "SEC"). In addition, the SEC maintains an Internet site (http:/www.sec.gov) containing reports,
proxy and information statements and other information regarding issuers that file with the SEC.
Business Strategy
CONMED's vision is to empower healthcare providers worldwide to deliver exceptional outcomes for patients through
the following initiatives:
•
•
•
Introduction of New Products and Product Enhancements. We pursue organic growth through developing new
products and enhancing existing products. We seek to develop new technologies which improve the durability,
performance and usability of existing products. In addition to our internal research and development efforts, we
receive new ideas for products and technologies, particularly in procedure-specific areas, from surgeons, inventors and
other healthcare professionals.
Pursue Strategic Acquisitions. We pursue strategic acquisitions, distribution and similar arrangements in existing
and new growth markets to achieve increased operating efficiencies, geographic diversification and market
penetration. Targeted companies have historically included those with proven technologies and established brand
names which provide potential sales, marketing and manufacturing synergies. This includes the acquisitions of
In2Bones Global, Inc. ("In2Bones") on June 13, 2022 and Biorez, Inc. ("Biorez") on August 9, 2022, respectively.
Realize Manufacturing and Operating Efficiencies. We continually review our production systems for
opportunities to reduce operating costs, consolidate product lines or process flows, reduce inventory and optimize
existing processes.
• Geographic Diversification. We believe that significant growth opportunities exist for our surgical products outside
the United States. Principal international markets for our products include Europe, Latin America, Canada and the
Asia/Pacific Rim.
•
Active Participation in the Medical Community. We believe that excellent working relationships with physicians
and others in the medical industry enable us to gain an understanding of trends and emerging opportunities. Active
participation allows us to quickly respond to the changing needs of physicians and patients. In addition, we are an
active sponsor of medical education both in the United States and internationally, offering training on new and
innovative surgical techniques as well as other medical education programs on the use of our products.
3
Products
The following table sets forth the percentage of net sales for each of our product lines during each of the three years
ended December 31:
Orthopedic surgery
General surgery
Consolidated net sales
Net sales (in thousands)
Orthopedic Surgery
Year Ended December 31,
2021
2020
2022
44 %
56
100 %
43 %
57
100 %
43 %
57
100 %
$ 1,045,472
$ 1,010,635
$
862,459
We provide products that support sports medicine, the repair of soft tissue in the knee, hip, shoulder and increasingly
in the upper and lower extremities through our acquisition of In2Bones. In these procedures, we offer products such as
TruShot® with Y-Knot® All-In-One Soft Tissue Fixation System, Y-Knot® All-Suture Anchors, and Argo™ Knotless Suture
Anchors which provide unique clinical solutions to orthopedic surgeons for the repair of soft tissue injuries. During 2022, we
acquired Biorez, Inc. which focuses on augmentation and healing using the BioBrace® implant technology. In addition to
implants, we offer supporting products that enable surgeons to perform minimally invasive sports medicine surgeries. These
products include powered resection instruments as well as fluid management and visualization systems and the related single-
use products which are marketed under a number of brands, including CONMED Linvatec®, Concept® and Shutt®. In sports
medicine, we compete with Smith & Nephew, plc; Arthrex, Inc.; Stryker Corporation; Johnson & Johnson: DePuy Mitek, Inc.;
Zimmer Biomet, Inc.; Paragon 28 and Treace Medical Concepts.
We also provide our customers with a comprehensive line of battery-powered, autoclavable, large and small bone
power tool systems for use in orthopedic, arthroscopic, oral/maxillofacial, podiatric, spinal and cardiothoracic surgeries. These
products are marketed under the Hall® surgical brand name, a pioneer in power surgical tools in the United States. In powered
instruments, our competition includes Stryker Corporation; Medtronic plc; Johnson & Johnson: DePuy Synthes, Inc.; and
Zimmer Biomet, Inc.
In 2022, approximately 74% of orthopedic surgery revenue came from single-use products that are expected to be
recurring.
General Surgery
Our general surgery product line offers a large range of products in the areas of advanced surgical and advanced
endoscopic technologies.
Our advanced surgical product offering includes the leading clinical insufflation system (AirSeal®). AirSeal® includes
the proprietary valveless access ports that deliver significant benefits to traditional minimally invasive surgery and robotic
surgical procedures. The Buffalo Filter acquisition complemented the CONMED portfolio of smoke removal devices, which
provides the Company with the broadest portfolio of single-use and capital smoke evacuation products available in the medical
device market today. In addition to AirSeal® and the Buffalo Filter® products, the Company manufactures and sells an extensive
energy line and a broad offering of endomechanical products. The electrosurgical offering consists of monopolar and bipolar
generators, argon beam coagulation generators, handpieces, smoke management systems and other accessories. Our
endomechanical products offer a full line of instruments, including the Anchor1 line of tissue retrieval bags, trocars, suction
irrigation devices, graspers, scissors and dissectors, used in minimally invasive surgery. Our competition includes Medtronic
plc; Johnson & Johnson: Ethicon Endo-Surgery, Inc.; Stryker Endoscopy, Olympus, ERBE Elektromedizin GmbH; and Applied
Medical Resources Corporation.
Our advanced endoscopic technologies offering includes a comprehensive line of therapeutic and diagnostic products
used in gastroenterology procedures which utilize flexible endoscopes, as well as patient monitoring products. In addition to
these offerings, we offer a unique energy platform specifically designed for gastroenterology and pulmonology procedures.
Devices include products for dilatation, hemostasis, biliary, structure management, infection prevention and patient monitoring.
Patient monitoring includes ECG electrodes, EEG electrodes and cardiac defibrillation pads. Our competition includes Boston
1
Anchor is a trademark of the Anchor Products Company, Addison, Illinois.
4
Scientific Corporation - Endoscopy; Cook Medical, Inc.; Merit Medical Endotek; Olympus, Inc.; STERIS Corporation - U.S.
Endoscopy, Cantel Medical- Medivators, Inc., Cardinal and 3M Company.
In 2022, approximately 91% of general surgery revenue came from single-use products that are expected to be
recurring.
International
Expanding our international presence is an important component of our long-term growth plan. Our products are sold
in over 100 countries. International sales efforts are coordinated through local country dealers (including sub-distributors or
sales agents) or through direct in-country sales. We distribute our products through sales subsidiaries and branches with offices
located in Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Italy, Japan, Korea, the
Netherlands, Poland, Spain, Sweden and the United Kingdom. In these countries, our sales are denominated in the local
currency and amounted to approximately 34% of our total net sales in 2022. In the remaining countries where our products are
sold through independent distributors, sales are denominated in United States dollars.
Competition
We compete in orthopedic and general surgery medical device markets across the world. Our competitors range from
large manufacturers with multiple business units to smaller manufacturers with limited product offerings. We believe we have
appropriate product offerings and adequate market share to compete effectively in these markets. The global markets are
constantly changing due to technological advances. We seek to closely align our research and development with our key
business objectives, namely developing and improving products and processes, applying innovative technology to the
manufacture of products for new global markets and reducing the cost of producing core products.
The breadth of our product lines in our key product areas enables us to meet a wide range of customer requirements
and preferences. This has enhanced our ability to market our products to surgeons, hospitals, surgery centers, group purchasing
organizations ("GPOs"), integrated delivery networks ("IDNs") and other customers, particularly as institutions seek to reduce
costs and minimize the number of suppliers.
Marketing
A significant portion of our products are distributed domestically directly to more than 6,000 hospitals, surgery centers
and other healthcare institutions as well as through medical specialty distributors. We are not dependent on any single customer
and no single customer accounted for more than 10% of our net sales in 2022, 2021 and 2020.
A significant portion of our U.S. sales are to customers affiliated with GPOs, IDNs and other large national or regional
accounts, as well as to the Veterans Administration and other hospitals operated by the Federal government. For hospital
inventory management purposes, some of our customers prefer to purchase our products through independent third-party
medical product distributors.
Our employee sales representatives are extensively trained in our various product offerings. Each employee sales
representative is assigned a defined geographic area and compensated on a commission basis or through a combination of salary
and commission. The sales force is supervised and supported by either area directors or district managers. In certain
geographies, sales agent groups are used in the United States to sell our orthopedic products. These sales agent groups are paid
a commission for sales made to customers while home office sales and marketing management provide the overall direction and
training for marketing and positioning of our products. Our sales professionals provide surgeons and other healthcare
professionals with information relating to the technical features and benefits of our products.
Our healthcare systems organization is responsible for interacting with large regional and national accounts (e.g.
GPOs, IDNs, etc.). We have contracts with many such organizations and believe that the loss of any individual group
purchasing contract would not materially impact our business.
We sell to a diversified base of customers around the world and, therefore, believe there is no material concentration of
credit risk.
5
Manufacturing
Raw material costs constitute a substantial portion of our cost of production. Substantially all of our raw materials and
select components used in the manufacturing process are procured from external suppliers. Where possible, we work closely
with multiple suppliers to ensure continuity of supply while maintaining high quality and reliability. As a result of supply chain
best practices, new product development and acquisitions, we often form strategic partnerships with key suppliers. As a result,
components and raw materials may be sole sourced. We continuously seek to manage our supply chain to mitigate supply
disruptions that may pose an overall material adverse effect on our financial and operational performance. We seek to schedule
production and maintain adequate levels of safety stock based on a number of factors, including experience, knowledge of
customer ordering patterns, demand, manufacturing lead times and optimal quantities required to maintain the highest possible
service levels. Customer orders are generally processed for immediate shipment and backlog of firm orders is therefore not
generally material to an understanding of our business.
Research and Development
New and improved products play a critical role in our continued sales growth. Internal research and development
efforts focus on the development of new products and technological and design improvements. We maintain close working
relationships with surgeons, inventors and other healthcare professionals who often suggest to us new product and technology
ideas, principally in procedure-specific areas. In certain cases, we seek to obtain rights to these ideas through negotiated
agreements. Such agreements typically compensate the originator through payments based upon a percentage of licensed
product net sales. Annual royalty expense approximated $3.2 million, $2.0 million and $1.5 million in 2022, 2021 and 2020,
respectively.
Amounts expended for Company research and development were approximately $47.2 million, $43.6 million and
$40.5 million during 2022, 2021 and 2020, respectively.
Intellectual Property
Patents and other proprietary rights, in general, are important to our business. We have rights to intellectual property,
including United States patents and foreign equivalent patents which cover a wide range of our products with expiration dates
from 2023 to 2041. We own a majority of these patents and have exclusive and non-exclusive licensing rights to the
remainder. We believe that the development of new products and technological and design improvements to existing products
will continue to be important to our competitive position.
Government Regulation and Quality Systems
The development, manufacture, sale and distribution of our products are subject to regulation by numerous agencies
and legislative bodies, including the U.S. Food and Drug Administration ("FDA") and comparable foreign counterparts. In the
United States, these regulations were enacted under the Medical Device Amendments of 1976 to the Federal Food, Drug and
Cosmetic Act and its subsequent amendments, and the regulations issued or proposed thereunder.
The FDA’s Quality System Regulations set forth requirements for our product design and manufacturing processes,
require the maintenance of certain records, provide for on-site inspection of our facilities and continuing review by the
FDA. Many of our products are also subject to industry-defined standards. Authorization to commercially market our products
in the U.S. is granted by the FDA under a procedure referred to as a 510(k) pre-market notification and clearance or Premarket
Approval ("PMA"). We believe that our products and processes presently meet applicable standards in all material respects.
Medical device regulations continue to evolve world-wide. Products marketed in the member countries of the
European Union ("EU") and other countries require preparation of technical files and design dossiers which demonstrate
compliance with applicable international regulations. As government regulations continue to change, there is a risk that the
distribution of some of our products may be interrupted or discontinued if they do not meet the country specific requirements.
We market our products in numerous countries outside the United States and therefore are subject to regulations
affecting, among other things, product standards, sterilization, packaging requirements, labeling requirements, import laws and
on-site inspection by independent bodies with the authority to issue or not issue certifications we may require to be able to sell
products in certain countries. Many of the regulations applicable to our devices and products in these countries are similar to
those of the FDA. The member countries of the EU follow the requirements under the EU Medical Device Regulation ("EU
MDR") which replaced a single set of regulations in May 2017 for all member countries. EU MDR imposes stricter
requirements for the marketing and sale of medical devices, including in the areas of clinical evaluation requirements, quality
6
systems, labeling and post-market surveillance with an effective date of May 2021. During the transition period, medical
devices with notified body certificates issued under the EU Medical Device Directive prior to May 2021 may continue to be
placed on the market for the earlier of the remaining validity of the certificate or May 2024. These regulations require
companies that wish to manufacture and distribute medical devices in the European Union to maintain quality system
certifications through European Union recognized Notified Bodies. These Notified Bodies authorize the use of the CE Mark
allowing free movement of our products throughout the member countries. Requirements pertaining to our products vary
widely from country to country, ranging from simple product registrations to detailed submissions such as those required by the
FDA. We believe that our products and quality procedures currently meet applicable standards for the countries in which they
are marketed.
As noted above, our facilities are subject to periodic inspection by the United States Food and Drug Administration
(“FDA”) and foreign regulatory agencies or notified bodies for, among other things, conformance to Quality System Regulation
and Current Good Manufacturing Practice (“CGMP”) requirements and foreign or international standards. Refer to Note 14 for
further discussion.
We are also subject to various environmental health and safety laws and regulations both in the United States and
internationally, as are our suppliers and sterilization service providers. Our operations involve the use of substances regulated
under environmental laws, primarily in manufacturing and sterilization processes. We believe our policies, practices and
procedures are properly designed to comply, in all material respects, with applicable environmental laws and regulations. We
do not expect internal compliance with these requirements to have a material effect on purchases of property, plant and
equipment, cash flows, net income (loss) or our competitive position. Refer to Item 1A, Risk Factors, for further discussion of
the use of outside EtO sterilization service providers.
CONMED Workforce Overview
One of CONMED's core values is our belief in the power of engaged talent. As of December 31, 2022, we had
approximately 4,100 full-time employees, including approximately 2,600 in operations and the remaining in sales, marketing,
research and development and administration.
We know that our people are our most important assets and crucial to our ability to deliver on our mission.
Accordingly, the success and growth of our business depends in large part on our ability to attract, engage and develop a
diverse population of talented employees at all levels of our organization.
Talent Management and Succession Planning
All levels of Company management are engaged in talent management practices. The Board of Directors ("Board")
reviews the Company’s people strategy in support of its business strategy at least annually and frequently discusses talent
opportunities, including a detailed discussion of the Company’s global leadership talent and succession plans with a focus on
key positions at the senior executive level. High-potential leaders are given exposure and visibility to Board members through
formal presentations and informal events. More broadly, the Board is regularly updated on key talent indicators for the overall
workforce, including diversity, recruitment and development programs.
Competitive Pay and Benefits
Our compensation programs are designed to align the compensation of our employees with CONMED’s performance
and to provide the proper incentives to attract, retain and motivate employees to achieve positive results. The structure of our
compensation programs balances incentive earnings for both short-term and long-term performance. Our benefits offerings
vary from country to country, dependent on local market practices. We regularly evaluate our benefits offerings to ensure their
competitiveness as well as equity and fairness.
CONMED is committed to pay equity for all employees. Annually we review our pay equity globally. If pay equity
issues are identified that cannot be explained by historical performance, time in role, tenure, or other job-related factors, we
promptly address the inequity.
Diversity and Inclusion
A demonstrated commitment to diversity and inclusion is vital to CONMED's success as we seek out individuals who
bring their unique capabilities to our Company. We believe that diverse teams stimulate innovation, enhance our understanding
7
of the needs of our global customer base and ultimately deliver better results for our stakeholders. We value individual strengths
and are committed to hiring and retaining employees of all different backgrounds and experiences. Tracking representation of
diversity in our workforce helps us to understand where our opportunities exist. These metrics are reviewed on a regular basis
at the senior executive level. We also recognize that representation of diversity in the workforce is not enough to have the
impact desired, so we encourage inclusion and belonging in addition to representation.
Development
CONMED recognizes that development is most effective when customized to an employee’s unique experiences and
interests. In this spirit, CONMED employees and managers utilize various tools such as the annual performance review process
and individual development plans to facilitate a specific individual’s career growth.
Because our managers are the crucial link in our employee’s growth and development, in 2021 CONMED launched a
global leadership program called Embark. More than 375 leaders around the globe completed this interactive program on-line,
which included topics such as diversity of thought, developing strengths and employee relations.
Employee Engagement
Measuring our team members’ engagement helps us understand what is working well and where we have opportunities
to improve. CONMED utilizes the Gallup Q12 Employee Engagement Survey both to measure engagement across the
organization, and to provide a basis for individual team action planning sessions.
In May 2022, 99% of our global workforce participated in the survey, and all team members were invited to participate
in subsequent team action planning sessions. During these sessions, survey results are reviewed and discussed. Additionally, the
team agrees upon action items they can take to improve their engagement and make CONMED an even better place to work.
Following these sessions, managers meet with their teams periodically to discuss progress on agreed upon action items. Due to
the commitment of our global team members, CONMED’s global engagement average overall score has increased year-over-
year.
Item 1A. Risk Factors
An investment in our securities, including our common stock, involves a high degree of risk. Investors should
carefully consider the specific factors set forth below as well as the other information included or incorporated by reference in
this Form 10-K. See “Forward Looking Statements”.
(i) Risks Related to Our Business and the Medical Device Industry
Our financial performance is dependent on conditions in the healthcare industry and the broader economy. Our business
and financial performance could be adversely affected, directly or indirectly, by a potential economic downturn.
The results of our business are directly tied to the economic conditions in the healthcare industry and the broader economy as a
whole. We will continue to monitor and manage the impact of the overall economic environment on the Company.
Market volatility and uncertainty related to inflation and its effects, which could potentially contribute to poor economic
conditions, may contribute to or enhance some of the risks described herein. Any of these effects, or others that the Company is
not able to predict, could adversely affect its financial condition or results of operations. Any deterioration in global economic
conditions could also have material adverse effects on the Company’s businesses or financial condition, even if the Company’s
direct exposure to the affected region is limited. Global political trends could increase the probability of a deterioration in
global economic conditions.
In this regard, approximately 16% of our 2022 revenues are derived from the sale of capital products. The sales of such
products may be negatively impacted if hospitals and other healthcare providers are unable to secure the financing necessary to
purchase these products or otherwise defer purchases.
The COVID-19 global pandemic may pose significant risks to our business if the pandemic, and various responses to it,
continue for an extended period of time.
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The actions undertaken to reduce or respond to the spread of the virus, including its variants, have created and may continue to
create significant disruptions with respect to the demand for non-urgent surgeries in hospitals and surgery centers and hospital
and ambulatory surgery center operating volumes.
As of the date of this report:
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In some geographies or territories, our field-based sales representatives are limited in their ability to travel to
service or call on customers,
2. Some hospitals in some areas have delayed certain procedures to reserve space for COVID-19 patients or have
experienced slowdowns due to staffing shortages.
As such, the COVID-19 pandemic has directly and indirectly adversely impacted the Company’s business, financial condition
and operating results. The extent to which this will continue will depend on numerous evolving factors that are highly
uncertain, rapidly changing and cannot be predicted with precision or certainty at this time.
Limitations on the availability of Ethylene Oxide (“EtO”) sterilization services may limit our ability to sell certain sterile
products.
Approximately 30% of our products when measured in terms of revenues, are sterilized by third-party sterilizers using ethylene
oxide, a chemical which, when present or used in high levels or concentrations, has raised some environmental concerns in
some areas within the United States, with the result that some EtO sterilization facilities have closed, or are threatened with
closure, either temporarily or permanently, in connection with government enforcement actions or enhanced regulations
prompted by environmental concerns. On August 3, 2022, the U.S. Environmental Protection Agency (the “EPA”) announced
its plans to engage and share up-to-date information on the risks posed by EtO from commercial sterilizers, as well as its efforts
to address the risks. The EPA also announced that it expects to propose an air pollution regulation to protect public health by
addressing EtO emissions at commercial sterilizers. We have been able to secure EtO sterilization services to date, and do not
currently expect sterilization availability to have a material impact on our business. If, however, there are further restrictions on
capacity or further government actions adverse to EtO sterilization, it is possible that we could be impacted materially in the
future.
As a manufacturer of medical devices that interacts with physicians and health care providers domestically and
internationally, we face risks under domestic and foreign regulations, including the Foreign Corrupt Practices Act, similar
statutes in other countries, and government enforcement actions more generally.
Manufacturers of medical devices have been the subject of various investigations or enforcement actions relating to interactions
with health care providers domestically or internationally. The interactions with domestic health care providers are subject to
regulations, known as the Anti-Kickback Statute, the Stark Act and the False Claims Act, that generally govern incentives for
health care providers, or methods of reimbursement funded in whole or in part by the government. Similarly, the Foreign
Corrupt Practices Act (“FCPA”), and similar foreign laws, prohibit certain conduct by manufacturers, generally described as
bribery, with respect to interactions, either directly through foreign subsidiaries or indirectly through distributors, with health
care providers who may be considered government officials because they are affiliated with public hospitals. The FCPA also
imposes obligations on manufacturers listed on U.S. stock exchanges to maintain accurate books and records, and maintain
internal accounting controls sufficient to provide assurance that transactions are accurately recorded, lawful and in accordance
with management’s authorization. The FCPA can pose unique challenges for manufacturers who operate in foreign cultures
where conduct prohibited by the FCPA may not be viewed as illegal in local jurisdictions, and because, in some cases, a United
States manufacturer may face risks under the FCPA based on the conduct of third parties over whom the manufacturer may not
have complete control.
In this regard, from time to time, the Company may receive an information request or subpoena from a government agency,
such as the Securities and Exchange Commission, Department of Justice, Equal Employment Opportunity Commission, the
Occupational Safety and Health Administration, the United States Food and Drug Administration, the Department of Labor, the
Treasury Department or other federal and state agencies or foreign governments or government agencies. Alternatively,
employees or private parties may provide us with reports of alleged misconduct. These information requests or subpoenas may
or may not be routine inquiries, or may begin as informal or routine inquiries and over time develop into investigations or
enforcement actions of various types under the FCPA or otherwise. Similarly, the employee and third party reports may prompt
us to conduct internal investigations into the alleged misconduct. As a medical device company, CONMED’s operations and
interactions with government hospitals, healthcare professionals and purchasers may be subject to various federal and state
regulations, including the federal False Claims Act, which provides, in part, that the federal government may bring a lawsuit
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against any person or entity that it believes has knowingly presented, or caused to be presented, a false or fraudulent request for
payment to the government, or has made or used, or caused to be made or used, a false statement or false record material to a
false claim. In addition, in certain circumstances, private parties may bring so-called Qui Tam claims as plaintiffs purportedly
on behalf of the government asserting claims arising under the False Claims Act. A violation of the False Claims Act may
result in fines up to $11,000 for each false claim, plus up to three times the amount of damages sustained by the government,
and may also provide the basis for the imposition of administrative penalties and exclusion from participation in federal
healthcare programs. Many states have enacted false claims acts that are similar to the federal False Claims Act. No inquiry or
claim that the Company currently faces or has faced to date, and no report of misconduct that the Company has received to date,
has had a material adverse effect on our financial condition, results of operations or cash flows. There can be no assurance,
however, that any pending inquiries will not become investigations or enforcement actions, or the costs associated with
responding to such inquiries, investigations, enforcement actions or investigations relating to reports of misconduct will not
have a material adverse effect on our financial condition, results of operations or cash flows.
Failure to comply with regulatory requirements may result in recalls, loss of revenues, fines or materially adverse
implications.
Substantially all of our products are classified as class II medical devices subject to regulation by numerous agencies, including
the U.S. Food and Drug Administration ("FDA") and comparable international counterparts. As a manufacturer of medical
devices, our manufacturing processes and facilities are subject to on-site inspection and continuing review by the FDA for
compliance with the Quality System Regulation ("QSR"). There can be no assurance that the costs of responding to such
inspections will not be material.
Manufacturing and sales of our products outside the United States are also subject to international regulatory requirements
which vary from country to country. Moreover, we are generally required to obtain regulatory clearance or approval prior to
marketing a new product. The time required to obtain approvals from foreign countries may be longer or shorter than that
required for FDA clearance, and requirements for such approvals may differ from FDA requirements. Failure to comply with
applicable domestic and/or foreign regulatory requirements may result in:
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fines, seizure or recall of products, or other enforcement actions;
total or partial suspension of production;
loss of certifications, withdrawal of existing product approvals or clearances;
refusal to approve or clear new applications or notices;
increased quality control costs; or
criminal prosecution.
In addition to the QSR, many of our products are also subject to industry-defined standards. We may not be able to comply
with these regulations and standards due to deficiencies in component parts or our manufacturing processes. If we are not able
to comply with the QSR or industry-defined standards, we may not be able to fill customer orders and we may decide to cease
production or sale of non-compliant products. Failure to produce products could affect our revenues, profit margins and could
lead to loss of customers.
Our products are subject to product recall and we have conducted product recalls in the past. Although no recall has had a
material adverse effect on our business or financial condition, we cannot be certain that regulatory issues will not have a
material adverse effect on our business, financial condition or results of operations in the future or that product recalls will not
harm our reputation and our customer relationships.
The highly competitive market for our products may create adverse pricing pressures.
The market for our products is highly competitive and our customers have alternative suppliers. Many of our competitors offer
a range of products in areas other than those in which we compete, which may make such competitors more attractive to
surgeons, hospitals, group purchasing organizations and others. In addition, many of our competitors are large, technically
competent firms with substantial assets. Competitive pricing pressures or the introduction of new products by our competitors
could have an adverse effect on our revenues. See “Products” in Item 1 - Business for a further discussion of these competitive
forces.
Factors which may influence our customers’ choice of competitor products include:
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changes in surgeon preferences;
increases or decreases in healthcare spending related to medical devices;
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our inability to supply products as a result of product recall, market withdrawal or back-order;
the introduction by competitors of new products or new features to existing products;
the introduction by competitors of alternative surgical technology; and
advances in surgical procedures, discoveries or developments in the healthcare industry.
Cost reduction efforts in the healthcare industry could put pressures on our prices and margins.
In recent years, the healthcare industry has undergone significant change driven by various efforts to reduce costs. Such efforts
include national healthcare reform, trends towards managed care, cuts in Medicare reimbursement for procedures, consolidation
of healthcare distribution companies and collective purchasing arrangements by GPOs and IDNs. Demand and prices for our
products may be adversely affected by such trends.
We use a variety of raw materials in our businesses, and significant shortages, inflation or price increases could increase
our operating costs and adversely impact the competitive positions of our products.
Our reliance on certain suppliers and commodity markets to secure raw materials used in our products exposes us to volatility in
the prices and availability of raw materials. In some instances, we participate in commodity markets that may be subject to
allocations by suppliers. A disruption in deliveries from our suppliers, price increases or decreased availability of raw materials
or commodities could have an adverse effect on our ability to meet our commitments to customers or increase our operating
efficiencies and/or costs. The increases in costs or availability of raw materials may be exacerbated as a result of the
COVID-19 pandemic, Russia's invasion of Ukraine and ongoing global supply chain challenges. In addition, increased
inflation in wages and materials may also increase our costs. We believe that our supply management practices are based on an
appropriate balancing of the foreseeable risks and the costs of alternative practices. Where possible we have addressed
increasing supply chain costs in pricing, yet continued cost pressures and raw material availability have had and may continue
to have an adverse effect on our results of operations.
We may not be able to keep pace with technological change or to successfully develop new products with wide market
acceptance, which could cause us to lose business to competitors.
The market for our products is characterized by rapidly changing technology. Our future financial performance will depend in
part on our ability to develop and manufacture new products on a cost-effective basis, to introduce them to the market on a
timely basis, to fund studies and otherwise develop clinical data to support the efficacy of our products, and to have them
accepted by surgeons and other healthcare professionals.
We may not be able to keep pace with technology or to develop viable new products, including our ability to advance the
Biorez and In2Bones product lines we acquired during 2022. In addition, many of our competitors are substantially larger with
greater financial resources which may allow them to more rapidly develop new products. Factors which may result in delays of
new product introductions or cancellation of our plans to manufacture and market new products include:
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research and development delays;
capital and other financial constraints;
delays or failures in securing regulatory approvals;
the potential inability to secure clinical data demonstrating the efficacy of our products, or the inability to
develop such clinical data on a timely basis, may delay, limit or preclude the adoption and market acceptance
of new products we may develop; and
changes in the competitive landscape, including the emergence of alternative products or solutions which
reduce or eliminate the markets for pending products.
Ordering patterns of our customers may change resulting in reductions in sales.
Our hospital and surgery center customers purchase our products in quantities sufficient to meet their anticipated
demand. Likewise, our healthcare distributor customers purchase our products for ultimate resale to healthcare providers in
quantities sufficient to meet the anticipated requirements of the distributors’ customers. Hospitals and customers may reduce
demand for surgical products if they reserve space for COVID-19 patients or experience staff shortages or disputes. Should
inventories of our products owned by our hospital, surgery center and distributor customers grow to levels higher than their
requirements, our customers may reduce the ordering of products from us. This could result in reduced sales.
(ii) Risks Related to Our Indebtedness
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The terms of our indebtedness outstanding from time to time, including our senior credit agreement, may restrict our
current and future operations, particularly our ability to respond to changes or to take certain actions.
The senior credit agreement contains, and future credit facilities are expected to contain, a number of restrictive covenants that
impose significant operating and financial restrictions on us and may limit our ability to respond to changes in our business or
competitive activities, or to otherwise engage in acts that may be in our long-term best interest, including restrictions on our
ability to:
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incur indebtedness;
allow for liens to be placed on our assets;
make investments;
engage in transactions with affiliates;
make certain restricted payments or enter into certain restrictive agreements;
enter into certain swap agreements;
change our line of business;
pay dividends or make other distributions on, or redeem or repurchase, capital stock;
consolidate, merge or sell all or substantially all of our assets;
prepay and/or modify the terms of certain indebtedness; and
pursue acquisitions.
These covenants, unless waived, may prevent us from pursuing and/or securing acquisitions, significantly limit our operating
and financial flexibility and limit our ability to respond to changes in our business or competitive activities. Our ability to
comply with such provisions may be affected by events beyond our control. In the event of any default under our credit
agreement, the credit agreement lenders may elect to declare all amounts borrowed under our credit agreement, together with
accrued interest, to be due and payable. If we were unable to repay such borrowings, the credit agreement lenders could
proceed against collateral securing the credit agreement which consists of substantially all of our property and assets. Our
credit agreement also contains a material adverse effect clause which may limit our ability to access additional funding under
our credit agreement should a material adverse change in our business occur.
We may not be able to generate sufficient cash to service our indebtedness and other obligations, and, our leverage and debt
service requirements may require us to adopt alternative business strategies.
As of December 31, 2022, we had $1,074.6 million of debt outstanding, representing 58% of total capitalization. In particular,
on June 6, 2022, we completed an $800 million offering of the 2.250% Notes (as defined below) (including the full exercise by
the initial purchasers of their $100 million option to purchase additional 2.250% Notes) through a private offering pursuant to
Rule 144A (the “2.250% Notes Offering”). We may not have sufficient cash flow available to enable us to meet our
obligations. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include
actions such as foregoing acquisitions, reducing or delaying capital expenditures, selling assets, restructuring or refinancing our
indebtedness or seeking additional equity capital. We cannot be certain that any of these strategies could be implemented on
terms acceptable to us, if at all. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations
—Liquidity and Capital Resources” and Note 8.
The degree to which we are leveraged could have important consequences to investors, including but not limited to the
following:
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a portion of our cash flow from operations must be dedicated to debt service and will not be available for operations,
capital expenditures, acquisitions, dividends and other purposes;
our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or general
corporate purposes may be limited or impaired or may be at higher interest rates;
we may be at a competitive disadvantage when compared to competitors that are less leveraged;
we may be hindered in our ability to adjust rapidly to market conditions;
our degree of leverage could make us more vulnerable in the event of a downturn in general economic conditions or
other adverse circumstances applicable to us; and
our interest expense could increase if interest rates in general increase because a portion of our borrowings, including
our borrowings under our credit agreement, are and will continue to be at variable rates of interest.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase
significantly.
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Borrowings under our senior credit agreement are at variable rates of interest and expose us to interest rate risk. If interest rates
were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount
borrowed remained the same, and our net income (loss) and cash flows, including cash available for servicing our indebtedness,
will correspondingly decrease. The interest rates rose in fiscal year 2022 and may rise further going forward. In the future, we
may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce
interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness,
and any swaps we enter into may not fully mitigate our interest rate risk.
Loans under our senior credit agreement bear interest based on SOFR, a benchmark interest rate that has replaced LIBOR,
but experience with this replacement benchmark interest rate is limited.
As a result of the phase out of LIBOR, the London Interbank Offered Rate, which was historically the basic rate of interest used
as a reference for setting the interest rate on loans globally, we have progressively amended our senior credit agreement to
adopt alternatives to LIBOR for calculating the interest rates applicable. Most recently, in December 2022, we amended the
agreement to adopt a term rate based on the Secured Overnight Financing Rate ("SOFR") as the benchmark rate for U.S. dollar
borrowings. SOFR and similar alternatives to LIBOR for other currencies, such as the Sterling Overnight Index Average
("SONIA"), which is used for pound sterling loans under our senior credit agreement, are calculated and administered
differently from LIBOR, which could result in interest rates and/or payments that are higher or lower than the rates and
payments that we experienced when interest rates were based on LIBOR. Given the limited historical data available for such
alternative benchmark rates, the full consequences of their adoption cannot be predicted at this time. In addition, because the
use of rates based on SOFR, SONIA and other alternatives to LIBOR is relatively new, there could be unanticipated difficulties
or disruptions with the calculation and publication of such rates, which could pose operational challenges to the administration
of our senior credit agreement.
Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This
could further exacerbate the risks to our financial condition described above.
We may incur substantial additional indebtedness, including secured indebtedness. As of December 31, 2022, we have $513.2
million of availability under the senior credit agreement. If we incur secured indebtedness and such secured indebtedness is
either accelerated or becomes subject to a bankruptcy, liquidation or reorganization, our assets would be used to satisfy
obligations with respect to the indebtedness secured thereby before any payment could be made on the debt that is not
similarly secured. If new debt or other liabilities are added to our current debt levels, the related risks that we now face could
intensify. Our senior credit agreement restricts our ability to incur additional indebtedness, including secured indebtedness,
but if the facilities mature or are repaid, we may not be subject to such restrictions under the terms of any subsequent
indebtedness.
The conditional conversion features of our 2.625% Convertible Notes due 2024 (the "2.625% Notes") and the 2.250%
Convertible Notes due 2027 (the "2.250% Notes" and, together with the 2.625% Notes, the “Convertible Notes”), if
triggered, may adversely affect our financial condition.
In the event the conditional conversion features of the 2.625% Notes issued on January 29, 2019 or the 2.250% Notes issued on
June 6, 2022 are triggered, holders of the applicable Convertible Notes will be entitled to convert the applicable Convertible
Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, we
would be required to make cash payments to satisfy all or a portion of our conversion obligation based on the conversion rate,
which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Convertible Notes, we could
be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes
as a current rather than long-term liability, which could result in a material reduction of our net working capital. Refer to Note
8 for further details on the Convertible Notes.
The convertible notes hedge and warrant transactions that we entered into in connection with the offering of the Convertible
Notes may affect the value of the Convertible Notes and our common stock.
In connection with the offering of the Convertible Notes, we entered into convertible notes hedge transactions with certain
option counterparties (each an “Option Counterparty”). The convertible notes hedge transactions are expected generally to
reduce the potential dilution upon conversion of the Convertible Notes and/or offset any cash payments we are required to make
in excess of the principal amount of converted Convertible Notes, as the case may be. We also entered into warrant transactions
with each Option Counterparty. The warrant transactions could separately have a dilutive effect on our common stock to the
extent that the market price per share of our common stock exceeds the strike price of the warrants, unless we elect to settle the
warrants in cash. In connection with establishing its initial hedge of the convertible notes hedge and warrant transactions, each
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Option Counterparty or an affiliate thereof may have entered into various derivative transactions with respect to our common
stock concurrently with or shortly after the pricing of the Convertible Notes. This activity could increase (or reduce the size of
any decrease in) the market price of our common stock or the Convertible Notes at that time. In addition, each Option
Counterparty or an affiliate thereof may modify its hedge position by entering into or unwinding various derivatives with
respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market
transactions prior to the maturity of the Convertible Notes (and is likely to do so during any observation period related to a
conversion of the Convertible Notes). This activity could also cause or avoid an increase or a decrease in the market price of
our common stock or the Convertible Notes. In addition, if any such convertible notes hedge and warrant transactions fail to
become effective, each Option Counterparty may unwind its hedge position with respect to our common stock, which could
adversely affect the value of our common stock and the value of the Convertible Notes.
We are subject to counterparty risk with respect to the convertible notes hedge transactions.
Each Option Counterparty to the convertible notes hedge transactions is a financial institution whose obligation to perform
under the convertible notes hedge transaction will not be secured by any collateral. If an Option Counterparty becomes subject
to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at
that time under our transactions with the Option Counterparty. Our exposure will generally correlate to the increase in the
market price and in the volatility of our common stock. In addition, upon a default by an Option Counterparty, we may suffer
adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. Although these
counterparties are large, reputable U.S. financial institutions, we can provide no assurances as to the financial stability or
viability of any Option Counterparty.
(iii) Risks Related to Our Acquisition Strategy
Our financial performance is subject to the risks inherent in any acquisition, including the effects of increased borrowing
and integration of newly acquired businesses or product lines.
A key element of our business strategy has been to expand through acquisitions and we may seek to pursue additional
acquisitions in the future. Our success in pursuing acquisitions depends on our ability to identify target companies or product
lines that are available for sale, to identify risks in the diligence process and, to negotiate successful terms with the sellers, as
the sellers may also be negotiating with other bidders with greater financial resources. Even when we win a bid, our success is
also dependent in part upon our ability to integrate acquired companies or product lines into our existing operations. We may
not have sufficient management and other resources to accomplish the integration of our past and future acquisitions, which
may strain our relationship with customers, suppliers, distributors, personnel or others. There can be no assurance that we will
be able to identify and make acquisitions, or that we will be able to obtain financing for such acquisitions, on acceptable
terms. In addition, while we are generally entitled to customary indemnification from sellers of businesses or coverage from
representation and warranty insurance for any difficulties that may have arisen prior to our acquisition of each business,
acquisitions may involve exposure to unknown liabilities and the amount and time for claiming under these indemnification
provisions is often limited. As a result, our financial performance is now, and will continue to be, subject to various risks
associated with the acquisition of businesses, including the financial effects associated with any increased borrowing required to
fund such acquisitions or with the integration of such businesses.
The terms of any future preferred equity or debt financing may give holders of any preferred securities or debt securities
rights that are senior to rights of our common shareholders or impose more stringent operating restrictions on our company.
Debt or equity financing may not be available to us on acceptable terms. If we incur additional debt or raise equity through the
issuance of preferred stock or convertible securities, the terms of the debt or the preferred stock issued may give the holders
rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The
terms of the debt may also impose additional and more stringent restrictions on our operations. If we raise funds through the
issuance of additional equity, the ownership percentage of our existing shareholders would be diluted.
(iv) Other Risks Related to Our Business
We could experience a failure of a key information technology system, process or site or a breach of information security,
including a cybersecurity breach or failure of one or more key information technology systems, networks, processes,
associated sites or service providers, and could potentially become liable for a breach of various data privacy regulations.
We rely extensively on information technology (“IT”) systems for the storage, processing, and transmission of our electronic,
business-related, information assets used in or necessary to conduct business. We leverage our internal IT infrastructures, and
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those of our business partners or other third parties, to enable, sustain, and support our global business activities. In addition,
we rely on networks and services, including internet sites, data hosting and processing facilities and tools and other hardware,
software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or
their vendors, to assist in conducting our business. The data we store and process may include customer payment information,
personal information concerning our employees, confidential financial information, and other types of sensitive business-related
information. In limited instances, we may also come into possession of information related to patients of our physician
customers. Numerous and evolving cybersecurity threats pose potential risks to the security of our IT systems, networks and
services, as well as the confidentiality, availability and integrity of our data. In addition, the laws and regulations governing
security of data on IT systems and otherwise collected, processed, stored, transmitted, disclosed and disposed of by companies
are evolving, adding another layer of complexity in the form of new requirements. We have made, and continue to make
investments, seeking to address these threats, including monitoring of networks and systems, hiring of third party service
providers with expertise in cybersecurity, employee training and security policies for employees and third-party providers. The
techniques used in these attacks change frequently and may be difficult to detect for periods of time and difficult to anticipate
by implementing adequate preventative measures.
Our worldwide operations mean that we are subject to laws and regulations, including data protection and cybersecurity laws
and regulations, in many jurisdictions. For example, the European Union ("EU") General Data Protection Regulation ("GDPR")
requires us to manage personal data in the EU and may impose fines of up to four percent of our global revenue in the event of
certain violations. In addition, legal requirements standards for cross-border personal data transfers from outside the United
States are constantly changing, including the revisions made by the European Economic Area (“EEA”) that require the use of
revised Standard Contractual Clauses (“SCCs”) for international data transfers from the EEA. The SCCs are required to be used
for new agreements involving the cross-border transfer of personal data from the EEA and must be supplemented by an
assessment and due diligence of the legal and regulatory landscape of the jurisdiction of the data importer, the channels used to
transmit personal data and any sub-processors that may receive personal data. The UK has developed its own set of SCCs that
must be used for transfers of personal data from the UK to the U.S. In December 2022, the European Commission announced a
draft adequacy decision for the EU-U.S. Data Privacy Framework (the “EU-U.S. DPF”), a cross-border data transfer
mechanism that will replace the EU-U.S. Privacy Shield that was invalidated in 2020. The EU-U.S. DPF is in development and
there is no guarantee that it will be approved in its current form. Compliance with these changes and any future changes to data
transfer or privacy requirements could potentially require us to make significant technological and operational changes, any of
which could result in substantial costs, and failure to comply with applicable data protection and transfer or privacy laws
requirements could subject us to fines or regulatory oversight.
Likewise, the California Consumer Privacy Act ("CCPA") imposes obligations on companies that conduct business in
California, and meet other requirements, with respect to the collection or sale of specified personal information. In November
2020, voters in the State of California approved the California Privacy Rights Act (“CPRA”), a ballot measure that amends and
supplements the CCPA by, among other things, expanding certain rights relating to personal information and its use, collection,
deletion, and disclosure by covered businesses. Compliance with the CCPA, the CPRA, and other state statutes, common law,
or regulations designed to protect consumer, employee, or job applicant personal information could potentially require
substantive technology infrastructure and process changes across many of the Company’s businesses. Other jurisdictions are
also implementing or proposing a variety of data privacy laws and regulations. Further, there has been a developing trend of
civil lawsuits and class actions relating to breaches of consumer data held by large companies or incidents arising from other
cyber-attacks. Any data security breaches, cyber-attacks, malicious intrusions or significant disruptions could result in actions
by regulatory bodies and/or civil litigation, any of which could materially and adversely affect our business, results of
operations, financial condition, cash flows, reputation or competitive position.
The costs of attempting to protect IT systems and data may increase, and there can be no assurance that these added security
efforts will prevent all breaches of our IT systems or thefts of our data. If our IT systems are damaged or cease to function
properly, the networks or service providers we rely upon fail to function properly, we fail to comply with an applicable law or
regulation, such as the GDPR, or we or one of our third-party providers suffer a loss or disclosure of our business or stakeholder
information due to any number of causes ranging from catastrophic events or power outages to improper data handling or
security breaches and our business continuity plans do not effectively address these failures on a timely basis, we may be
exposed to potential disruption in operations, loss of customers, reputational, competitive and business harm, and significant
costs from remediation, litigation and regulatory actions.
We rely on various software programs and information technology systems to run our business, some of which may be old or
no longer supported and requiring replacements or updates. The failure of any of these software systems or information
technology systems to operate properly, or disruptions associated with updating or implementing new software or
information technology systems, may have a material adverse effect on our business, prospects, results of operations,
financial condition and/or cash flows.
15
We rely on various software programs and information technology systems to run our business, some of which maybe old, have
suffered outages, may no longer be supported and may require replacements or updates. For example, in the fourth quarter of
2022, we launched a new warehouse management system (“WMS”), which caused service level disruptions that impacted our
ability to ship certain quantities of finished goods to customers. There can be no assurances that the resolution of the WMS
issues will fully recover in 2023 the sales that were delayed or lost in the fourth quarter of 2022 and thereafter. Further, the
implementation may disrupt our operations and our ability to fulfill customer orders. Also, these disruptions have caused and
may continue to cause the Company to incur incremental costs and expenses in connection with the resolution of
implementation issues. To the extent that these disruptions recur and/or persist over time, this could negatively impact our
competitive position and our relationships with our customers and thus could have a material adverse effect on our business,
prospects, results of operations, financial condition and/or cash flows.
We rely on a third party to obtain, process and distribute sports medicine allograft tissue. If such tissue cannot be obtained,
is not accepted by the market or is not accepted under numerous government regulations, our results of operations could be
negatively impacted.
A portion of our orthopedic revenues relate to our share of the service fees from the Musculoskeletal Transplant Foundation
("MTF") allograft tissues for which we have exclusive worldwide sales representation, marketing and promotion rights, as
further described in our revenue recognition policy in Note 1. Our primary costs related to these revenues come from our
commission expense and certain marketing costs. Our ability to increase the service fees may be constrained by certain factors
which are outside of our control, such as the limited supply of donors and donated tissue that meets the quality standards of
MTF. Similarly, under the terms of the agreement, MTF remains responsible for tissue procurement and processing, shipment
of tissues and invoicing of service fees to customers. To the extent MTF’s performance does not meet customer expectations or
otherwise fails, we may be unable to increase the allograft service fees or to find a suitable replacement for MTF on terms that
are acceptable.
The FDA and several states have statutory authority to regulate allograft processing and allograft-based materials. The FDA
could identify deficiencies in future inspections of MTF or MTF's suppliers or promulgate future regulatory rulings that could
disrupt our business, reducing profitability.
We distribute some products for third-party companies, and cannot ensure that our rights to distribute such third-party
products will continue indefinitely.
While we generally own the products' designs and rights to the products we sell, in some cases we distribute products for third-
parties. While these third-parties may have business reasons for contracting with us to distribute their products, we may face
the risk that the third-parties may seek alternate distribution partners when their distribution contracts with us expire or are
scheduled for renewal. If we lose the distribution rights to such products, we may not be able to find replacement products that
are acceptable to our customers, or to us.
If we lose our patents or they are held to be invalid, or if our products or services infringe on third party patents, we could
become subject to liability and our competitive position could be harmed.
Much of the technology used in the markets in which we compete is covered by patents. We have numerous U.S. patents and
corresponding international patents on products expiring at various dates from 2023 through 2041 and have additional patent
applications pending. See Item 1 Business “Research and Development” and “Intellectual Property” for a further description of
our patents. The loss of our patents could reduce the value of the related products and any related competitive
advantage. Competitors may also be able to design around our patents and to compete effectively with our products. In
addition, the cost of enforcing our patents against third parties and defending our products against patent infringement actions
by others could be substantial, and we may not prevail.
While we seek to take reasonable steps to avoid infringing on patents we do not own or license, we cannot be sure that our
services and products do not infringe on the intellectual property rights of third parties, and we may have infringement claims
asserted against us. These claims could cost us money, prevent us from offering some services or products, or damage our
reputation. We cannot be certain that:
•
•
•
pending patent applications will result in issued patents;
patents issued to or licensed by us will not be challenged by competitors;
our patents will be found to be valid or sufficiently broad to protect our technology or provide us with a competitive
advantage; or
16
•
we will be successful in defending against pending or future patent infringement claims asserted against our products.
We may be sued for product liability claims and our insurance coverage may be insufficient to cover the nature and amount
of any product liability claims.
Even if our products are properly designed and perform as intended, we may be sued. The nature of our products as medical
devices, and the litigious environment, should be regarded as potential risks which could significantly and adversely affect our
financial condition and results of operations. The insurance we maintain to protect against claims associated with the use of our
products has deductibles and may not adequately cover the amount or nature of any claim asserted against us. We are also
exposed to the risk that our insurers may become insolvent or that premiums may increase substantially. See “Item 3 - Legal
Proceedings” for a further discussion of the risk of product liability actions and our insurance coverage.
Damage to our physical properties as a result of windstorm, earthquake, fire or other natural or man-made disaster may
cause a financial loss and a loss of customers.
Although we maintain insurance coverage for physical damage to our property and the resultant losses that could occur during a
business interruption, we are required to pay deductibles and our insurance coverage is limited to certain caps. For example,
our deductible for windstorm damage to our Florida property amounts to 2% of any loss. Any increase in the frequency or
severity of natural disaster events could result in increased insurance premiums.
Further, while insurance reimburses us for our lost gross earnings during a business interruption, if we are unable to supply our
customers with our products for an extended period of time, there can be no assurance that we will regain the customers’
business once the product supply is returned to normal.
Our significant international operations subject us to foreign currency fluctuations and other risks associated with
operating in countries outside the United States.
A significant portion of our revenues, approximately 45% of 2022 consolidated net sales, were to customers outside the United
States. We have sales subsidiaries in a significant number of countries in Europe as well as Australia, Canada, China, Japan
and Korea. In those countries in which we have a direct presence, our sales are denominated in the local currency and those
sales denominated in local currency amounted to approximately 34% of our total net sales in 2022. The remaining 11% of sales
to customers outside the United States was on an export basis and transacted in United States dollars.
Because a significant portion of our operations consist of sales activities in jurisdictions outside the United States, our financial
results may be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the
markets in which we distribute products. While we have a hedging strategy involving foreign currency forward contracts for
2022, our revenues and earnings are only partially protected from foreign currency translation if the United States dollar
strengthens as compared with currencies such as the Euro. Further, as of the date of this Form 10-K, we have not entered into
any foreign currency forward contracts beyond 2024. Our international presence exposes us to certain other inherent risks,
including:
•
•
•
•
•
•
•
•
imposition of limitations on conversions of foreign currencies into dollars or remittance of dividends and other
payments by international subsidiaries;
imposition or increase of withholding and other taxes on remittances and other payments by international subsidiaries;
trade barriers and tariffs;
compliance with economic sanctions, trade embargoes, export controls, and the customs laws and regulations of the
many countries in which we operate;
political risks, including political instability;
reliance on third parties to distribute our products;
hyperinflation in certain countries outside the United States; and
imposition or increase of investment and other restrictions by foreign governments.
We cannot be certain that such risks will not have a material adverse effect on our business and results of operations.
Our new products may fail to achieve expected levels of market acceptance.
New product introductions may fail to achieve market acceptance. The degree of market acceptance for any of our products
will depend upon a number of factors, including:
17
•
•
•
•
•
•
•
our ability to develop and introduce new products and product enhancements on a timely basis;
our ability to successfully implement new technologies;
the market’s readiness to accept new products;
having adequate financial and technological resources for future product development and promotion;
the efficacy of our products;
the extent to which we have, are able to fund and develop, clinical data surrounding the use and efficacy of our
products; and
the prices of our products compared to the prices of our competitors’ products.
If our new products do not achieve market acceptance, we may be unable to recover our investments and may lose business to
competitors.
In addition, some of the companies with which we now compete, or may compete in the future, have or may have more
extensive research, marketing and manufacturing capabilities and significantly greater technical and personnel resources than
we do, and may be better positioned to continue to improve their technology in order to compete in an evolving industry. See
“Products” in Item 1 - Business for a further discussion of these competitive forces.
Our Board of Directors may, in the future, limit or discontinue payment of a dividend on common stock.
We have paid a quarterly dividend to our shareholders since 2012. However, we may not pay such dividends in the future at
the prior rate, or at all. All decisions regarding our payment of dividends will be made by our Board of Directors from time to
time, and are subject to an evaluation of our financial condition, results of operations and capital requirements, applicable law,
industry practice, contractual restraints and other business considerations. In addition, our senior credit agreement may
restrict our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit
or prohibit dividend payments. We may not have sufficient surplus or net profits under Delaware law to be able to pay any
dividends, which may result from extraordinary cash expenses, actual expenses exceeding contemplated costs, funding of
capital expenditures or increases in reserves.
Anti-takeover provisions in our organizational documents and Delaware law could delay or prevent a change in control.
Provisions of our certificate of incorporation and bylaws may delay or prevent a merger or acquisition that a shareholder may
consider favorable. These provisions include:
•
•
•
•
•
•
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of
those shares, including preferences and voting rights, without shareholder approval, which could be used to
significantly dilute the ownership of a hostile acquirer;
the requirement that a special meeting of shareholders may be called only by the board of directors, the chair of the
board of directors, the president, or stockholders holding at least 25% of our outstanding stock (subject to certain
procedural and informational requirements), which may delay the ability of our shareholders to force consideration
of a proposal or to take action;
the procedural safeguards in place in connection with stockholder action by written consent, including a requirement
that stockholders of at least 25% of our outstanding common stock request that the board of directors set a record date
to determine the stockholders entitled to act by written consent;
providing indemnification and exculpation rights to our directors and officers;
advance notice procedures that shareholders must comply with in order to nominate candidates to our board of
directors or to propose matters to be acted upon at a shareholders’ meeting, which may discourage or deter a
potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise
attempting to obtain control of us; and
exclusive forum provisions, including provisions providing for the Court of Chancery of the State of Delaware as the
exclusive forum for bringing certain actions.
As a Delaware corporation, we are also subject to Section 203 of the Delaware General Corporation Law, which provides that
we may not engage in a business combination, such as a merger, consolidation, recapitalization, asset sale or disposition of
stock, with any "interested stockholder" for a period of three years from the date that the interested stockholder first became an
interested stockholder unless certain conditions are met.
Any provision of our certificate of incorporation and bylaws or Delaware law that has the effect of delaying or deterring a
change in control could limit the opportunity for our shareholders to receive a premium for their shares of our common stock,
and could also affect the price that some investors are willing to pay for our common stock.
18
Environmental laws and regulations and climate change initiatives could materially and adversely affect our business,
financial condition, and results of operations.
Our business and facilities and those of our suppliers are subject to a number of federal, state, local and international laws and
regulations governing the protection of human health and the environment. In addition, concern over climate change and
sustainability has led to foreign and domestic legislative and regulatory initiatives directed at limiting carbon dioxide and other
greenhouse gas emissions. A failure to comply with current or future environmental laws and regulations could result in fines
or penalties. Any such expenses or liability could have a material adverse effect on our financial condition, results of
operations or cash flows.
Our ability to attract and retain qualified employees is critical to our success.
Our employees are our most important resource, and in many areas of the medical industry, competition for qualified personnel
is intense. We seek to attract talented and diverse new employees and retain and motivate our existing employees. If we are
unable to continue to attract or retain qualified employees, including our executives, our performance, including our
competitive position, could be materially and adversely affected.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Facilities
The following table sets forth certain information with respect to our principal operating facilities. We believe that our
facilities are generally well maintained, are suitable to support our business and adequate for present and anticipated needs.
Location
Square Feet
Own or Lease
Lease Expiration
Utica, NY
Largo, FL
Chihuahua, Mexico
Chihuahua, Mexico
Lithia Springs, GA
Brussels, Belgium
Mississauga, Canada
Greenwood Village, CO
Westborough, MA
Frenchs Forest, Australia
500,000
278,000
207,720
40,626
188,400
58,276
36,054
27,763
19,533
16,959
Own
Own
Lease
Lease
Lease
Lease
Lease
Lease
Lease
Lease
—
—
October 2024
March 2028
January 2025
June 2024
July 2036
July 2024
November 2025
July 2025
Our principal manufacturing facilities are located in Utica, NY, Largo, FL and Chihuahua, Mexico. Lithia Springs,
GA and Brussels, Belgium are our principal distribution centers. We also maintain sales and administrative offices in countries
throughout the world.
Item 3. Legal Proceedings
We are involved in various proceedings, legal actions and claims arising in the normal course of business, including
proceedings related to product, labor and intellectual property and other matters that are more fully described in Note 14. We
are not a party to any pending legal proceedings other than ordinary routine litigation incidental to our business.
Item 4. Mine Safety Disclosures
Not applicable.
19
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common stock, par value $.01 per share, is traded on the New York Stock Exchange ("NYSE"), effective
February 10, 2020, under the symbol “CNMD”. Prior to this date, our common stock was traded on the NASDAQ Global
Market under the same symbol. At February 6, 2023, there were 468 registered holders of our common stock and
approximately 61,445 accounts held in “street name”.
Our Board of Directors has authorized a share repurchase program; see Note 10 for further details.
The Board of Directors declared a quarterly cash dividend of $0.20 per share in 2021 and 2022. The fourth quarter
dividend for 2022 was paid on January 5, 2023 to shareholders of record as of December 16, 2022. The total dividend payable
at December 31, 2022 was $6.1 million and is included in other current liabilities in the consolidated balance sheet. Future
decisions as to the payment of dividends will be at the discretion of the Board of Directors. See "Item 1A. Risk Factors - Other
Risk Factors Related to our Business - Our Board of Directors may, in the future, limit or discontinue payment of a dividend on
common stock."
Refer to Item 12 for information relating to compensation plans under which equity securities of CONMED
Corporation are authorized for issuance.
20
Performance Graph
The performance graph below compares the cumulative five-year total shareholder return on the Company’s Common
Stock with the cumulative total return of the S&P 500 Index and the Standard & Poor’s Health Care Equipment Index. In each
case, the cumulative total return assumes reinvestment of dividends into the same class of equity securities at the frequency
with which dividends are paid on such securities during the applicable fiscal year.
Item 6. [Reserved]
21
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Consolidated Financial Statements and related notes
contained elsewhere in this report.
This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons
between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included
in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Overview of CONMED Corporation
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.
Our product lines consist of orthopedic surgery and general surgery. Orthopedic surgery consists of sports medicine
instrumentation and 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 the 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 as a percentage of consolidated net sales are as follows:
Orthopedic surgery
General surgery
Consolidated net sales
2022
2021
2020
44 %
56
100 %
43 %
57
100 %
43 %
57
100 %
A significant amount of our products are used in surgical procedures with approximately 84% of our revenues derived
from the sale of single-use products. Our capital equipment offerings also facilitate the ongoing sale of related single-use
products and accessories, thus providing us with a recurring revenue stream. We manufacture substantially all of our products
in facilities located in the United States and Mexico. We market our products both domestically and internationally directly to
customers and through distributors. International sales approximated 45% in 2022, 45% in 2021 and 44% in 2020.
Business Environment
On June 13, 2022, we acquired 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. We financed the purchase through a combination of cash on hand and long
term borrowings as further described in Note 8.
On August 9, 2022, we acquired Biorez and all of its stock (the "Biorez Acquisition") for an aggregate upfront
payment of $85.5 million in cash. We paid $83.7 million as of December 31, 2022, with a $1.8 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. The Biorez Acquisition was funded through a combination of cash on
hand and long-term borrowings.
Refer to Note 3 for further information on the business acquisitions.
Our business has been and may continue to be impacted by the COVID-19 pandemic as variants of the virus emerge.
We believe we will continue to experience market variability as a result of the pandemic that could influence sales, suppliers,
patients and customers. There remains uncertainty related to the COVID-19 pandemic, including the duration and severity of
future impacts to the business and we continue to see our customers and suppliers impacted in a variety of ways. The Company
is also being impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs
caused by inflationary pressures and ongoing supply chain challenges. We continuously work with suppliers to mitigate these
impacts; however, we expect these challenges to continue in 2023. This will likely impact our results of operations. See "Item
22
1A. Risk Factors" for more information. For additional discussion regarding COVID 19, see Liquidity and Capital Resources
below.
During 2022, the world experienced, and continues to experience, the impact of Russia's invasion of Ukraine. The
Company has no direct operations in either Russia or Ukraine and our business is limited to selling to third party distributors.
Total revenues associated with sales to third party distributors in these countries are not material to the consolidated financial
results, and we have fully reserved the outstanding accounts receivable from distributors in these territories which are not
material. We will continue to monitor and adjust our business strategy in this region as necessary. While the direct impact on
the Company of Russia's invasion of Ukraine is limited, we are being affected by increases in the price of oil as a result of
sanctions on Russia, which contributes to overall inflation and increased costs.
During the fourth quarter of 2022, we implemented a warehouse management system to increase capacity and
efficiency, however this also caused significant delays in shipping. As a result, we believe we lost a significant amount of sales
and incurred incremental costs during this period. See Risk Factors - Other Risks Related to Our Business. We rely on various
software programs and information technology systems to run our business, some of which may be old or no longer supported
and requiring replacements or updates. The failure of any of these software systems or information technology systems to
operate properly, or disruptions associated with updating or implementing new software or information technology systems,
may have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.
Critical Accounting Policies
Preparation of our financial statements requires us to make estimates and assumptions which affect the reported
amounts of assets, liabilities, revenues and expenses. Note 1 describes the significant accounting policies used in preparation of
the consolidated financial statements. The most significant areas involving management judgments and estimates are described
below and are considered by management to be critical to understanding the financial condition and results of operations of
CONMED Corporation. Actual results may or may not differ from these estimates.
Goodwill and 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 that are 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”). Determining the fair
value of intangible assets acquired as part of a business combination requires us to make significant estimates. These estimates
include the timing and amount of cash flow projections, including revenue growth rates, obsolescence rate, EBITDA margin,
the customer attrition rate, royalty rate and discount rates. As these are significant estimates, we would obtain the assistance of
a third-party valuation specialist in estimating fair values of intangible assets for significant acquisitions.
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 2022. 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.
23
See Note 7 for further discussion of goodwill and other intangible assets.
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
operating 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. See Note 16 for further discussion of
contingent consideration.
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 $71.2 million as of December 31, 2022. 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.
In performing a sensitivity analysis on the pension benefit obligation, a 0.25% increase in our discount rate would
decrease the pension benefit obligation by $1.6 million and a 0.25% decrease in the discount rate would increase the pension
benefit obligation by $1.7 million. See Note 13 for further discussion of the pension plan.
Consolidated Results of Operations
The following table presents, as a percentage of net sales, certain categories included in our consolidated statements of
comprehensive income (loss) for the periods indicated:
Net sales
Cost of sales
Gross profit
Selling and administrative expense
Research and development expense
Income from operations
Interest expense
Other expense
Income (loss) before income taxes
Provision (benefit) for income taxes
Net income (loss)
Years Ended December 31,
2021
100.0 %
43.8
56.2
41.0
2022
100.0 %
45.4
54.6
43.4
2020
100.0 %
46.6
53.4
43.3
4.5
6.7
2.8
10.7
(6.8)
0.9
(7.7) %
4.3
10.9
3.5
0.1
7.2
1.0
6.2 %
4.7
5.3
5.1
—
0.2
(0.9)
1.1 %
24
Net Sales
The following table presents net sales by product line for the years ended December 31, 2022, 2021 and 2020:
Orthopedic surgery
General surgery
Net sales
Single-use products
Capital products
Net sales
Orthopedic surgery
General surgery
Net sales
Single-use products
Capital products
Net sales
% Change from
2021 to 2022
Impact of
Foreign
Currency
As
Reported
5.3 %
2.1 %
3.4 %
6.7 %
-10.5 %
3.4 %
1.2 %
1.0 %
1.2 %
1.1 %
1.1 %
1.2 %
Constant
Currency a
6.5 %
3.1 %
4.6 %
7.8 %
-9.4 %
4.6 %
2022
2021
$
461.5 $
584.0
438.4
572.2
$ 1,045.5 $ 1,010.6
$
874.9 $
170.6
820.1
190.5
$ 1,045.5 $ 1,010.6
% Change from
2020 to 2021
Impact of
Foreign
Currency
2021
2020
As
Reported
$
438.4 $
572.2
$ 1,010.6 $
$
820.1 $
190.5
$ 1,010.6 $
374.7
487.8
862.5
703.0
159.5
862.5
17.0 %
17.3 %
17.2 %
16.7 %
19.5 %
17.2 %
-1.3 %
-0.6 %
-0.9 %
-0.9 %
-1.1 %
-0.9 %
Constant
Currency a
15.7 %
16.7 %
16.3 %
15.8 %
18.4 %
16.3 %
(a) Refer to Non-GAAP Financial Measures below for further details.
Net sales increased 3.4% to $1,045.5 million in 2022 from $1,010.6 million in 2021 driven by increases in our product
lines. Net sales of In2Bones and Biorez products account for $24.8 million of sales in 2022.
•
•
Orthopedic surgery sales increased 5.3% in 2022 to $461.5 million from $438.4 million in 2021 which was primarily
driven by $24.8 million of sales from the recent acquisitions as well as growth in our sports medicine and procedures
specific product offerings. This was offset by declines in capital equipment sales.
General surgery sales increased 2.1% in 2022 to $584.0 million from $572.2 million in 2021 which was primarily
driven by the continued growth in our AirSeal and other advanced surgical product offerings as well as advanced
endoscopic technologies products.
Cost of Sales
Cost of sales was $474.2 million in 2022 compared to $442.6 million in 2021. Gross profit margins were 54.6% in
2022 and 56.2% in 2021. The decrease in gross profit margin of 1.6 percentage points in 2022 was driven by recognition of
unfavorable production variances resulting from cost increases and inflation in raw materials, freight and other costs of
production. In addition, during 2022, we incurred costs for inventory step-up adjustments of $4.5 million related to the
In2Bones acquisition and $2.0 million in consulting fees related to a cost improvement initiative.
Selling and Administrative Expense
Selling and administrative expense was $454.0 million in 2022 compared to $414.8 million in 2021. Selling and
administrative expense as a percentage of net sales was 43.4% in 2022 and 41.0% in 2021.
25
The increase in selling and administrative expense as a percentage of net sales in 2022 was primarily driven by the
following costs in 2022:
•
•
•
•
•
$10.1 million in consulting fees, legal fees and other integration related costs associated with the acquisitions of
In2Bones and Biorez as further described in Note 3;
$6.8 million in costs related to the implementation of a new warehouse management system. These costs mainly
consisted of incremental freight, professional fees and other costs;
$2.5 million in costs related to fair value adjustments to contingent consideration;
$0.8 million in legal fees related to the settlement of litigation; and
$0.8 million in costs consisting of severance related to the elimination of certain positions.
Research and Development Expense
Research and development expense was $47.2 million in 2022 and $43.6 million in 2021. As a percentage of net sales,
research and development expense was 4.5% in 2022 and 4.3% in 2021. The higher spend as a percentage of net sales in 2022
was mainly driven by the In2Bones and Biorez acquisitions.
Interest Expense
Interest expense decreased to $28.9 million in 2022 compared to $35.5 million in 2021. The weighted average interest
rates on our borrowings were 2.58% in 2022 decreasing from 2.76% in 2021. The decrease in interest expense in 2022 was
primarily due to decreases in our term loan and revolving credit facility borrowings and 2021 including $10.2 million in interest
expense related to the amortization of debt discount that is no longer applicable in 2022 as a result of the adoption of ASU
2020-06, as further described in Note 2. These are offset by the increased borrowings of the 2.250% Notes entered into on June
6, 2022.
Other Expense
Other expense during the year ended December 31, 2022 consisted of $103.1 million related to the conversion
premium on the repurchase and extinguishment of 2.625% Notes; $5.5 million related to the settlement of the associated
convertible notes hedge transactions and $3.4 million related to the write-off of deferred financing fees associated with the
repurchase of $275.0 million of the 2.625% Notes and the pay down of $90.0 million on our term loan as further described in
Note 8.
During 2021, we recorded $1.1 million related to a loss on early extinguishment and third party fees associated with
the seventh amended and restated senior credit agreement.
Provision (Benefit) for Income Taxes
A provision (benefit) for income taxes was recorded at an effective rate of (13.7)% and 14.4% in 2022 and 2021,
respectively. As compared to the federal statutory rate of 21.0%, the 2022 effective tax rate was lower primarily due to the
premium on extinguishment of the 2.625% Notes and the change in fair value of convertible notes hedges upon settlement as
these items were not deductible for tax purposes. The 2021 effective tax rate was lower than the federal statutory rate primarily
due to benefits from federal income tax items including stock compensation and changes in the valuation allowance relating to
certain foreign operations. A reconciliation of the United States statutory income tax rate to our effective tax rate is included in
Note 9.
Non-GAAP Financial Measures
Net sales on a "constant currency" basis is a non-GAAP measure. The Company analyzes net sales on a constant
currency basis to better measure the comparability of results between periods. To measure percentage sales growth in constant
currency, the Company removes the impact of changes in foreign currency exchange rates that affect the comparability and
trend of net sales.
Because non-GAAP financial measures are not standardized, it may not be possible to compare this financial measure
with other companies' non-GAAP financial measures having the same or similar names. This adjusted financial measure should
not be considered in isolation or as a substitute for reported net sales growth, the most directly comparable GAAP financial
measure. This non-GAAP financial measure is an additional way of viewing net sales that, when viewed with our GAAP
26
results, provides a more complete understanding of our business. The Company strongly encourages investors and shareholders
to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
EBITDA is also a non-GAAP measure and is defined as earnings before income tax, interest expense, depreciation and
amortization.
Liquidity and Capital Resources
Our liquidity needs arise primarily from capital investments, working capital requirements and payments on
indebtedness under the seventh amended and restated senior credit agreement. We have historically met these liquidity
requirements with funds generated from operations and borrowings under our revolving credit facility. In addition, we have
historically used term borrowings, including borrowings under the amended and restated senior credit agreement and
borrowings under separate loan facilities, in the case of real property purchases, to finance our acquisitions. We also have the
ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering.
We had total cash on hand at December 31, 2022 of $28.9 million, of which approximately $23.3 million was held by
our foreign subsidiaries outside the United States with unremitted earnings. During 2022, we redeployed $17.2 million of cash
from certain non-U.S. subsidiaries primarily for U.S. debt reduction which consisted primarily of earnings that were taxed in
2017 as part of the deemed repatriation toll charge implemented by Tax Reform. We may repatriate funds from certain foreign
subsidiaries in the future. Refer to Note 9 for further details.
Operating Cash Flows
Our net working capital position was $284.7 million at December 31, 2022. Net cash provided by operating activities
was $33.4 million in 2022 and $111.8 million in 2021 generated on net income (loss) of $(80.6) million in 2022 and $62.5
million in 2021. The change in cash provided by operating activities in 2022 as compared to 2021 was mainly driven by:
•
•
•
•
A decrease in cash flows from inventory as we increased inventory levels to mitigate inventory supply challenges as
well as the impact from lower sales in the fourth quarter of 2022 resulting from the implementation of a warehouse
management system;
An increase in cash flows from accounts payable is primarily due to the timing of payments;
A decrease in cash from accrued compensation and benefits resulting from lower incentive compensation accruals as
sales and earnings were lower than incentive targets; and
Lower net income as we experienced higher costs due to the integration associated with acquisitions and warehouse
management system implementation.
Investing Cash Flows
Net cash used in investing activities increased to $249.5 million in 2022 compared to $14.9 million in 2021 primarily
due to the $144.7 million payment for the In2Bones Acquisition and $83.0 million for the Biorez Acquisition. In addition,
capital expenditures were higher in 2022 compared to 2021.
Financing Cash Flows
Financing activities in 2022 provided cash of $225.0 million compared to the use of cash of $101.5 million in 2021.
Below is a summary of the significant financing activities impacting the change during 2022 compared to 2021:
• We received proceeds of $800.0 million in 2.250% Notes as further described in Note 8.
• We paid $275.0 million in aggregate principal on the repurchase and extinguishment of the 2.625% Notes as further
described in Note 8.
• We had net payments on our revolving line of credit of $70.0 million as compared to $67.0 million in net payments
during 2021 as we used proceeds from our 2.250% Notes to pay down our outstanding balance.
• We had net payments on our term loan of $93.0 million as we prepaid $90.0 million with proceeds from the 2.250%
Notes, compared to $14.2 million in 2021, inclusive of a $52.4 million impact on both borrowings and repayments
between independent counterparties associated with the seventh amended and restated credit agreement.
• We paid $187.6 million to purchase hedges related to our 2.250% Notes. Partially offsetting this, were proceeds of
$72.0 million from the issuance of warrants as further described in Note 8.
• We paid $69.5 million to settle warrants related to the 2.625% Notes and received $86.2 million to settle the hedges
related to the 2.625% Notes as further described in Note 8.
27
• We paid $21.8 million in debt issuance costs mainly related to the 2.250% Notes in 2022 compared to $2.0 million in
debt issuance costs related to the seventh amended and restated senior credit agreement in 2021.
• We paid $0.8 million and $6.2 million in 2022 and 2021, respectively, in contingent consideration related to prior
acquisitions.
Other Liquidity Matters
Our cash balances and cash flows generated from operations may be used to fund strategic investments, business
acquisitions, working capital needs, research and development, common stock repurchases and payments of dividends to our
shareholders. Management believes that cash flow from operations, including cash and cash equivalents on hand and available
borrowing capacity under our seventh amended and restated senior credit agreement, will be adequate to meet our anticipated
operating working capital requirements, debt service, funding of capital expenditures, dividend payments and common stock
repurchases in the foreseeable future. In addition, management believes we could access capital markets, as necessary, to fund
future business acquisitions.
The Company is also being impacted by the macro-economic environment and we are experiencing higher
manufacturing and operating costs caused by inflationary pressures, ongoing supply chain challenges and the impact of the
warehouse management system implementation. As noted above, there also remains uncertainty related to the COVID-19
pandemic, including the duration and severity of future impacts to the business and we continue to see our customers and
suppliers impacted by staffing shortages. We continue to monitor our spending and expenses in light of these factors. However,
we may need to take further steps to reduce our costs, or to refinance our debt. See “Item 1A. Risk Factors - Risks Related to
Our Indebtedness."
There were $134.6 million in borrowings outstanding on the term loan facility as of December 31, 2022. There were
$70.0 million in borrowings outstanding under the revolving credit facility as of December 31, 2022. Our available borrowings
on the revolving credit facility at December 31, 2022 were $513.2 million with approximately $1.8 million of the facility set
aside for outstanding letters of credit.
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, 2022. We are also required, under certain circumstances, to make mandatory prepayments from
net cash proceeds from any issuance of equity and asset sales.
On June 6, 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 at an exchange premium cost of $103.1 million. At such time, we also settled related hedges and warrants as noted above
and further described in Note 8. 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 the remaining 2.625%
Notes in cash.
On June 6, 2022, we issued $800.0 million in 2.250% Notes and irrevocably elected to settle the principal value in
cash. A portion of these proceeds were used to repurchase and extinguish a portion of the 2.625% Notes, pay off our
outstanding balance on our revolving line of credit on that date, pay down $90.0 million of our term loan and partially pay for
our In2Bones Acquisition. At the time of this issuance, we entered into convertible note hedge transactions with a number of
financial institutions for the number of shares of our common stock underlying the Notes. Concurrently 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. Refer to Note 8 for further details.
See Note 8 for further information on our financing agreements and outstanding debt obligations.
Our Board of Directors has authorized a $200.0 million share repurchase program. Through December 31, 2022, 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. We have not purchased any shares of common stock under the share repurchase program during 2022. We have financed
the repurchases and may finance additional repurchases through operating cash flow and from available borrowings under our
revolving credit facility.
28
The Board of Directors declared a quarterly cash dividend of $0.20 per share in 2021 and 2022. Future decisions as to
the payment of dividends will be at the discretion of the Board of Directors. See "Item 1A. Risk Factors - Other Risks Related
to our Business - Our Board of Directors may, in the future, limit or discontinue payment of a dividend on common stock."
We expect an increased level of capital spending during the year ending December 31, 2023 compared to 2022.
Capital spending will be monitored and controlled as the year progresses. We expect to use operating cash flows to satisfy
capital spending requirements.
The following table summarizes our contractual obligations for the next five years and thereafter (amounts in
thousands) as of December 31, 2022. Purchase obligations represent purchase orders for goods and services placed in the
ordinary course of business. Contingent consideration represents the fair value of the current and non-current portions that
while not certain if and/or when the payments will be made, are our best estimate of such payments.
Payments Due by Period
1-3
Years
Less than
1 Year
3-5
Years
More than
5 Years
Total
Long-term debt
Purchase obligations
Contingent consideration payments
Lease obligations
Total contractual obligations
$ 1,074,587 $
203,838
186,432
21,788
70,000 $
197,926
18,633
7,097
— $ 1,004,587 $
5,912
123,369
7,873
—
44,430
2,546
$ 1,486,645 $ 293,656 $ 137,154 $ 1,051,563 $
—
—
—
4,272
4,272
In addition to the above contractual obligations, we are required to make periodic interest payments on our long-term
debt obligations (see additional discussion under Item 7A. “Quantitative and Qualitative Disclosures About Market Risk—
Interest Rate Risk” and Note 8). The above table also does not include unrecognized tax benefits of approximately $0.2
million, the timing and certainty of recognition for which is not known (See Note 9).
Stock-based Compensation
We have reserved shares of common stock for issuance to employees and directors under two shareholder-approved
share-based compensation plans (the "Plans"). The Plans provide for grants of stock options, stock appreciation rights
(“SARs”), dividend equivalent rights, restricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”) and
other equity-based and equity-related awards. The exercise price on all outstanding stock options and SARs is equal to the
quoted fair market value of the stock at the date of grant. RSUs and PSUs are valued at the market value of the underlying
stock on the date of grant. Stock options, SARs, RSUs and PSUs are generally non-transferable other than on death and
generally become exercisable over a four to five year period from date of grant. Stock options and SARs expire ten years from
date of grant. SARs are only settled in shares of the Company’s stock (See Note 10). Total pre-tax stock-based compensation
expense recognized in the consolidated statements of comprehensive income (loss) was $21.7 million, $16.3 million and $13.1
million for the years ended December 31, 2022, 2021 and 2020, respectively.
Other Matters
Through April 1, 2020, our credit facility allowed us to seek to sell products to certain customers in Iran in compliance
with applicable laws and regulations and subject to certain terms and conditions, including pre-approval by us and our lenders
of the identity of any distributor and prior review of each of the end-customers. We had sales to a third-party distributor in Iran
during the first quarter of 2020. We limited such sales into Iran to products that qualified as “medical supplies” within the
meaning of the general license, or covered by specific licenses, provided by the Iranian Transactions and Sanctions Regulations
set forth in the regulations promulgated by the Office of Foreign Assets Control (“OFAC”) of the United States Department of
the Treasury set forth at 31 C.F.R. § 560.530. We have implemented certain controls and processes designed to ensure that the
ultimate end-users for the products are those permitted under the OFAC general license, and that the sales and transactions with
the Iranian distributor otherwise comply with the requirements of the OFAC regulations. The expected revenues and net profits
associated with sales to the Iranian distributor were not material to our overall results of operations.
We do not believe that our activities to date have been subject to required disclosure under Section 13(r) of the
Securities Exchange Act of 1934 (the “Exchange Act”), which, among other things, requires disclosure of transactions and
activities knowingly entered into with the Government of Iran that do not benefit from an OFAC license and with certain
29
designated parties. If, however, activities are in the future discovered to be within the scope of the transactions and activities
captured by Section 13(r) of the Exchange Act, we will make the required disclosures and notices.
New Accounting Pronouncements
See Note 2 for a discussion of new accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential loss arising from adverse changes in market rates and prices such as commodity prices,
foreign currency exchange rates and interest rates. In the normal course of business, we are exposed to various market risks,
including changes in foreign currency exchange rates and interest rates. We manage our exposure to these and other market
risks through regular operating and financing activities and as necessary through the use of derivative financial instruments.
Foreign Currency Risk
Approximately 45% of our total 2022 consolidated net sales were to customers outside the United States. We have
sales subsidiaries in a significant number of countries in Europe as well as Australia, Brazil, Canada, China, Japan and
Korea. In those countries in which we have a direct presence, our sales are denominated in the local currency amounting to
approximately 34% of our total net sales in 2022. The remaining 11% of sales to customers outside the United States was on an
export basis and transacted in United States dollars.
Because a significant portion of our operations consist of sales activities in foreign jurisdictions, our financial results
may be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the markets in
which we distribute products. During 2022, foreign currency exchange rates, including the effects of the hedging program,
caused sales to decrease by approximately $11.6 million.
We hedge forecasted intercompany sales denominated in foreign currencies through the use of forward contracts. 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 recognized into earnings as a component of sales or cost of sales when the forecasted
transaction occurs.
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.
Refer to Note 16 for further discussion.
Interest Rate Risk
At December 31, 2022, we had approximately $204.6 million of variable rate long-term debt outstanding under our
senior credit agreement. Assuming no repayments, if market interest rates for similar borrowings averaged 1.0% more in 2023
than they did in 2022, interest expense would increase, and income (loss) before income taxes would decrease by $2.0
million. Comparatively, if market interest rates for similar borrowings average 1.0% less in 2023 than they did in 2022, our
interest expense would decrease, and income (loss) before income taxes would increase by $2.0 million.
Item 8. Financial Statements and Supplementary Data
Our 2022 Financial Statements are included in this Form 10-K beginning on page 43 and incorporated by reference
herein.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosures
There were no changes in or disagreement with accountants on accounting and financial disclosure.
30
Item 9A. Controls and Procedures
As of the end of the period covered by this report, an evaluation was carried out by CONMED Corporation’s
management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures
were effective as of the end of the period covered by this report. In addition, no change in our internal control over financial
reporting (as defined in Rule 13a-15 under the Securities Exchange Act of 1934) occurred during the fourth quarter of the year
ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
CONMED Corporation acquired the wholly owned subsidiaries of In2Bones Global, Inc. ("In2Bones") on June 13,
2022 and Biorez, Inc. ("Biorez") on August 9, 2022. As permitted by guidance issued by the SEC, management has excluded
the internal controls of In2Bones and Biorez from its annual assessment of the effectiveness of our internal control over
financial reporting for December 31, 2022. In2Bones and Biorez are wholly-owned subsidiaries whose total assets and total
revenues excluded from management’s assessment of internal control over financial reporting represent 1% and 2%,
respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.
Management’s Report on Internal Control over Financial Reporting and the Report of Independent Registered Public
Accounting Firm thereon are set forth in Part IV, Item 15 of the Annual Report on Form 10-K.
Item 9B. Other Information
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
31
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this item is incorporated herein by reference to the sections captioned “Proposal One:
Election of Directors”, “Directors, Executive Officers, Other Company Officers and Nominees for the Board of Directors”,
“Delinquent Section 16(a) Reports", “Ethics Disclosure” and "Meetings of the Board of Directors and Committees, Leadership
Structure and Risk Oversight” in CONMED Corporation’s definitive Proxy Statement or other informational filing to be filed
with the Securities and Exchange Commission on or about April 11, 2023.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference to the sections captioned “Compensation
Discussion and Analysis”, “Compensation Committee Report on Executive Compensation”, “Summary Compensation Table”,
"Pay Versus Performance Table", “Grants of Plan-Based Awards”, “Outstanding Equity Awards at Fiscal Year-End”, “Option
Exercises and Stock Vested”, “Non-Qualified Deferred Compensation”, “Potential Payments on Termination or Change in
Control”, “Director Compensation,” “Pay Ratio” and “Board of Directors and Compensation Committee Interlocks and Insider
Participation; Certain Relationships and Related Transactions” in CONMED Corporation’s definitive Proxy Statement or other
informational filing to be filed with the Securities and Exchange Commission on or about April 11, 2023.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated herein by reference to the section captioned “Security Ownership
of Certain Beneficial Owners and Management” in CONMED Corporation’s definitive Proxy Statement or other informational
filing to be filed with the Securities and Exchange Commission on or about April 11, 2023.
Information relating to shareholder approved compensation plans under which equity securities of CONMED
Corporation are authorized for issuance is set forth below:
Equity Compensation Plan Information
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
3,701,360 $
—
3,701,360
92.98
—
92.98
2,791,031
—
2,791,031
Plan category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated herein by reference to the section captioned “Directors,
Executive Officers and Nominees for the Board of Directors” and “Board of Directors and Compensation Committee Interlocks
and Insider Participation; Certain Relationships and Related Transactions” in CONMED Corporation’s definitive Proxy
Statement or other informational filing to be filed with the Securities and Exchange Commission on or about April 11, 2023.
Item 14. Principal Accounting Fees and Services
The information required by this item is incorporated herein by reference to the section captioned “Principal
Accounting Fees and Services” in CONMED Corporation’s definitive Proxy Statement or other informational filing to be filed
with the Securities and Exchange Commission on or about April 11, 2023.
32
PART IV
Item 15. Exhibits, Financial Statement Schedules
Index to Financial Statements
(a)(1) List of Financial Statements
Page in Form 10-K
Management’s Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets at December 31, 2022 and 2021
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31,
2022, 2021 and 2020
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2022,
2021 and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and
2020
Notes to Consolidated Financial Statements
(2)
List of Financial Statement Schedules
Valuation and Qualifying Accounts (Schedule II) for the Years Ended December 31, 2022,
2021 and 2020
All other schedules have been omitted because they are not applicable, or the required
information is shown in the financial statements or notes thereto.
(3)
List of Exhibits
The exhibits listed on the accompanying Exhibit Index on page 36 below are filed as part of
this Form 10-K.
43
44
47
48
49
50
52
85
33
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/ Curt R. Hartman
Curt R. Hartman
(Chair of the Board, President and
Chief Executive Officer)
Date:
February 21, 2023
34
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/ CURT R. HARTMAN
Curt R. Hartman
Chair of the Board, President &
Chief Executive Officer
/s/ TODD W. GARNER
Todd W. Garner
Executive Vice President
and Chief Financial Officer
/s/ TERENCE M. BERGE
Terence M. Berge
Vice President-
Corporate Controller
February 21, 2023
February 21, 2023
February 21, 2023
/s/ MARTHA GOLDBERG ARONSON
Martha Goldberg Aronson
Lead Independent Director
February 21, 2023
/s/ DAVID BRONSON
David Bronson
/s/ BRIAN P. CONCANNON
Brian P. Concannon
/s/ LAVERNE COUNCIL
Laverne Council
/s/ CHARLES M. FARKAS
Charles M. Farkas
/s/ JEROME J. LANDE
Jerome J. Lande
/s/ BARBARA SCHWARZENTRAUB
Barbara Schwarzentraub
/s/ JOHN L. WORKMAN
John L. Workman
Director
Director
Director
Director
Director
Director
Director
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
February 21, 2023
35
Exhibit No.
Exhibit Index
Description
2.1
3.1
3.2
4.1*
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
-
-
-
-
-
-
-
-
-
-
-
-
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).
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).
Certificate of Incorporation of CONMED Corporation, a Delaware corporation (Incorporated by
reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed with the Securities and
Exchange Commission on May 22, 2020 ).
Description of the Common Stock of CONMED Corporation, a Delaware corporation.
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).
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).
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).
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).
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).
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).
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).
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).
36
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
-
-
-
-
-
-
-
-
-
-
-
-
-
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).
Third Amendment, dated December 22, 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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
37
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
-
-
-
-
-
-
-
-
-
-
-
-
-
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
38
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
-
-
-
-
-
-
-
-
-
-
-
-
-
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
Additional 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 10.17 of the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 7, 2022).
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).
39
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
40
10.62
10.63
10.64
10.65
10.66
10.67
10.68
10.69
10.70+
10.71+
10.72+
10.73+
10.74
10.75
10.76+
10.77+
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2018 Long-Term Incentive Plan (incorporated by reference to Exhibit 4.3 of the Registrants Form S-8
filed on November 5, 2018).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
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).
Stock Option Inducement Award (incorporated by reference to Exhibit 4.3 of the Registrants Form S-8
filed on February 27, 2018).
Restricted Stock Unit Inducement Award (incorporated by reference to Exhibit 4.4 of the Registrants
Form S-8 filed on February 27, 2018).
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).
Employment Transition and Retirement Agreement between the Company and Daniel S. Jonas, dated
December 6, 2022 (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 7, 2022).
41
14
21*
23*
31.1*
31.2*
32.1*
101.INS*
101.SCH*
101.CAL*
101.DEF*
101.LAB*
101.PRE*
104*
-
-
-
-
-
-
-
-
-
-
-
-
-
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
Subsidiaries of the Registrant.
Consent of Independent Registered Public Accounting Firm.
Certification of Curt R. Hartman 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.
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.
Certifications of Curt R. Hartman 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.
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.
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
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
42
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, 2022. 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, 2022. The effectiveness of the Company’s internal control over financial reporting
as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm,
as stated in their report which appears herein.
/s/ Curt R. Hartman
Curt R. Hartman
Chair of the Board, President and
Chief Executive Officer
/s/ Todd W. Garner
Todd W. Garner
Executive Vice President and
Chief Financial Officer
43
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, 2022 and 2021, 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, 2022, 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, 2022,
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, 2022 and 2021, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2022 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, 2022, 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.
As described in Management's Assessment of Internal Control Over Financial Reporting, management has excluded In2Bones
Global, Inc. (“In2Bones”) and Biorez, Inc. (“Biorez”) from its assessment of internal control over financial reporting as of
December 31, 2022 because they were acquired by the Company in purchase business combinations during 2022. We have
also excluded In2Bones and Biorez from our audit of internal control over financial reporting. In2Bones and Biorez are wholly-
44
owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal
control over financial reporting represent 1% and 2%, respectively, of the related consolidated financial statement amounts as of
and for the year ended December 31, 2022.
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 and Developed Technology Intangible Asset - Biorez, Inc. Acquisition and Valuation of
Contingent Consideration and Distributor Relationships and Certain Developed Technology Intangible Assets - In2Bones
Global, Inc. Acquisition
As described in Note 3 to the consolidated financial statements, in 2022, the Company acquired all of the stock of Biorez, Inc.
(Biorez) and In2Bones Global, Inc. (In2Bones) for an aggregate upfront payment in cash of $85.5 million and $145.2 million,
respectively, with potential earn-out payments to Biorez’ and In2Bones’ equity holders in an amount up to $165.0 million and
$110.0 million, respectively, based on achievement of certain revenue targets. The acquisition of Biorez resulted in $176.3
million of a developed technology intangible asset being recorded, and the acquisition of In2Bones resulted in $27.6 million of
distributor relationships intangible assets and $37.3 million of developed technology intangible assets, of which a significant
portion relates to a certain developed technology intangible asset, being recorded. The fair value of these intangible assets was
estimated by management using an income approach, specifically the multi-period excess earnings method for developed
technology and distributor relationships intangible assets and the relief-from-royalty method for a certain developed technology
intangible asset. Developing the fair value of these intangible assets involved significant estimates and assumptions with respect
to the timing and amounts of cash flow projections, including revenue growth rates, obsolescence rate, earnings before income
tax, interest expense, depreciation and amortization (EBITDA) margin, customer attrition rate, royalty rate, and discount rates.
Additionally, at the date of acquisition, contingent consideration of $114.5 million and $69.4 million for Biorez and In2Bones,
respectively, was recorded at fair value based on the consideration expected to be transferred. The fair value of the contingent
consideration was estimated by management using probability-weighted future cash flows discounted back to present value and
is measured using projected payment dates, discount rates, projected revenues, and revenue volatilities.
The principal considerations for our determination that performing procedures relating to the valuation of contingent
consideration and developed technology intangible asset related to the acquisition of Biorez, Inc. and the valuation of
contingent consideration and distributor relationships and certain developed technology intangible assets related to the
acquisition of In2Bones Global, Inc. is a critical audit matter are (i) a high degree of auditor judgment and subjectivity in
performing procedures relating to the valuation of the contingent consideration and acquired distributor relationships and
certain developed technology intangible assets due to the significant judgment by management when developing the fair value
estimates; (ii) the significant audit effort in evaluating management’s significant assumptions related to (a) the revenue growth
rates, discount rates, obsolescence rate, royalty rate, and EBITDA margin for certain developed technology assets, as
applicable, (b) the revenue growth rate, customer attrition rate, and discount rate for distributor relationships, and (c) revenue
45
volatilities, projected revenues and discount rates for contingent consideration; 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
management’s acquisition accounting, including controls over the valuation of the contingent consideration and the acquired
certain developed technology and distributor relationships intangible assets. These procedures also included, among others (i)
reading the purchase agreements and (ii) testing management’s process for developing the fair value estimates. Testing
management’s process included evaluating the appropriateness of the valuation methods, testing the completeness and accuracy
of certain of the underlying data provided by management, and evaluating the reasonableness of significant assumptions related
to (i) the revenue growth rates, discount rates, obsolescence rate, royalty rate, and EBITDA margin for certain developed
technology intangible assets, as applicable, (ii) the revenue growth rate, customer attrition rate, and discount rate for distributor
relationships, and (iii) revenue volatilities, projected revenues and discount rates for contingent consideration. Evaluating the
reasonableness of revenue growth rates and EBITDA margin for certain developed technology intangible assets, as applicable,
and distributor relationships and projected revenues for contingent consideration involved considering the past performance of
the acquired businesses, as well as economic and industry data and forecasts. Professionals with specialized skill and
knowledge were used to assist in the evaluation of the appropriateness of the valuation methods and the reasonableness of the
assumptions related to (i) obsolescence rate, royalty rate, and discount rates for certain developed technology intangible assets,
as applicable, (ii) customer attrition rate and discount rate for distributor relationships, and (iii) revenue volatilities and discount
rates for contingent consideration.
/s/ PricewaterhouseCoopers LLP
Rochester, New York
February 21, 2023
We have served as the Company’s auditor since 1982.
46
CONMED CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 2022 and 2021
(In thousands except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, less allowance for doubtful
accounts of $5,508 in 2022 and $4,528 in 2021
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Deferred income taxes
Goodwill
Other intangible assets, net
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued compensation and benefits
Other current liabilities
Total current liabilities
Long-term debt
Deferred income taxes
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 14)
Shareholders' equity:
Preferred stock, par value $.01 per share; authorized
500,000 shares, none issued or outstanding
Common stock, par value $.01 per share; 100,000,000
authorized; 31,299,194 issued in 2022 and 2021, respectively
Paid-in capital
Retained earnings
Accumulated other comprehensive loss
Less: Treasury stock, at cost;
811,532 and 1,925,893 shares in
2022 and 2021, respectively
Total shareholders' equity
Total liabilities and shareholders' equity
2022
2021
$
28,942
$
20,847
$
$
191,345
332,320
28,619
581,226
115,611
9,650
815,429
681,799
93,877
2,297,592
69,746
73,393
54,733
98,680
296,552
985,076
66,725
203,694
1,552,047
$
$
183,882
231,644
23,750
460,123
108,863
9,657
617,528
471,049
98,797
1,766,017
12,249
58,197
60,488
65,712
196,646
672,407
68,537
42,992
980,582
—
—
313
413,235
412,631
(57,858)
313
396,771
496,605
(54,203)
(22,776)
745,545
2,297,592
$
(54,051)
785,435
1,766,017
$
The accompanying notes are an integral part of the consolidated financial statements.
47
CONMED CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years Ended December 31, 2022, 2021 and 2020
(In thousands except per share amounts)
Net sales
Cost of sales
Gross profit
2022
2021
2020
$
1,045,472 $
1,010,635 $
862,459
474,227
442,599
402,159
571,245
568,036
460,300
Selling and administrative expense
454,039
414,754
373,817
Research and development expense
47,152
43,565
40,473
Operating expenses
Income from operations
Interest expense
Other expense
501,191
458,319
414,290
70,054
109,717
46,010
28,905
35,485
44,052
112,011
1,127
355
Income (loss) before income taxes
(70,862)
73,105
1,603
Provision (benefit) for income taxes
9,720
10,563
(7,914)
Net income (loss)
Per share data:
Basic
Diluted
Other comprehensive income (loss), before income tax:
Cash flow hedging
Pension liability
Foreign currency translation adjustments
Other comprehensive income (loss), before income tax
Provision (benefit) for income taxes related to items in other
comprehensive income (loss)
Other comprehensive income (loss), net of income tax
Comprehensive income (loss)
$
(80,582) $
62,542 $
9,517
$
$
$
$
$
$
(2.68) $
(2.68) $
2.14 $
1.94 $
0.33
0.32
(1,530) $
7,817
(8,418)
(2,131) $
12,660 $
9,163
(7,072)
14,751 $
(8,489)
(6,499)
6,963
(8,025)
1,524
(3,655) $
5,273
9,478 $
(3,621)
(4,404)
(84,237) $
72,020 $
5,113
The accompanying notes are an integral part of the consolidated financial statements.
48
CONMED CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended December 31, 2022, 2021 and 2020
(In thousands)
Common Stock
Shares
Amount
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2019
31,299 $
313 $ 379,324 $ 470,844 $
(59,277) $
Treasury
Stock
(80,737) $
Shareholders’
Equity
Common stock issued under employee
plans
Stock-based compensation
Dividends on common stock ($.80 per
share)
Comprehensive income (loss):
Cash flow hedging loss, net
Pension liability, net
Foreign currency translation adjustments
Net income
Total comprehensive income
Balance at December 31, 2020
Common stock issued under employee
plans
Stock-based compensation
Dividends on common stock ($.80 per
share)
Comprehensive income (loss):
Cash flow hedging gain, net
Pension liability, net
Foreign currency translation adjustments
Net income
Total comprehensive income
Balance at December 31, 2021
Common stock issued under employee
plans
Stock-based compensation
Dividends on common stock ($.80 per
share)
Shares issued for the settlement of
convertible notes
Convertible notes premium on
extinguishment
Settlement of convertible notes hedge
transactions
Settlement of warrants
Issuance of convertible notes hedge
transactions, net of tax
Issuance of warrants
Comprehensive income (loss):
Cash flow hedging loss, net
Pension liability, net
Foreign currency translation adjustments
Net income (loss)
Total comprehensive income (loss)
(9,807)
13,111
13,098
(22,944)
9,517
(6,438)
(4,929)
6,963
31,299 $
313 $ 382,628 $ 457,417 $
(63,681) $
(67,639) $
(2,192)
16,335
13,588
(23,354)
62,542
9,601
6,949
(7,072)
31,299 $
313 $ 396,771 $ 496,605 $
(54,203) $
(54,051) $
710,467
3,291
13,111
(22,944)
5,113
709,038
11,396
16,335
(23,354)
72,020
785,435
8,770
21,729
(24,183)
3,385
21,729
(25,890)
103,125
118,912
(96,758)
(142,128)
72,000
5,385
(24,183)
25,890
—
103,125
118,912
(96,758)
(142,128)
72,000
(84,237)
(1,159)
5,922
(8,418)
(80,582)
Cumulative effect of change in accounting
principle(1)
Balance at December 31, 2022
(17,120)
745,545
(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. Refer to Note 2 for further detail.
313 $ 413,235 $ 412,631 $
(22,776) $
(57,858) $
31,299 $
(37,911)
20,791
The accompanying notes are an integral part of the consolidated financial statements.
49
CONMED CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2022, 2021 and 2020
(In thousands)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation
Amortization of debt discount
Amortization of deferred debt issuance costs
Amortization
Stock-based compensation
Deferred income taxes
Non-cash adjustment to fair value of contingent consideration liability
Loss on early extinguishment of debt
Loss on convertible notes conversion premium
Loss on convertible notes hedge transactions settlement
Increase (decrease) in cash flows from changes in assets and
liabilities, net of acquired assets:
Accounts receivable
Inventories
Accounts payable
Income taxes
Accrued compensation and benefits
Other assets
Other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Payments related to business and asset acquisitions, net of cash acquired
Proceeds from sale of a facility
Net cash used in investing activities
Cash flows from financing activities:
Payments on term loan
Proceeds from term loan
Payments on revolving line of credit
Proceeds from revolving line of credit
Payments to redeem convertible notes
Proceeds from convertible notes
Payments related to contingent consideration
Payments related to debt issuance costs
Dividends paid on common stock
Purchases of convertible notes hedges
Proceeds from issuance of warrants
Proceeds from settlement of convertible notes hedge transactions
Payment for settlement of warrants
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
50
2022
2021
2020
$
(80,582) $
62,542 $
9,517
16,055
—
4,910
53,464
21,729
(6,042)
2,518
3,426
103,125
5,460
(5,203)
(78,564)
13,302
6,726
(8,968)
(17,735)
(256)
33,365
(21,785)
(227,744)
—
16,494
10,217
3,726
54,249
16,335
3,005
—
899
—
—
(9,159)
(37,806)
4,890
(1,675)
11,067
(24,005)
991
111,770
(14,866)
—
—
(249,529)
(14,866)
18,044
9,692
3,723
54,581
13,111
(14,234)
—
—
—
—
13,920
(30,397)
(2,977)
(1,644)
(4,123)
(8,170)
3,488
64,531
(13,013)
(3,852)
3,227
(13,638)
(92,981)
—
(530,000)
460,000
(275,000)
800,000
(798)
(21,830)
(23,960)
(187,600)
72,000
86,228
(69,534)
8,475
225,000
(741)
8,095
20,847
28,942 $
$
(66,654)
52,411
(393,753)
326,753
—
—
(6,222)
(2,000)
(23,256)
—
—
—
—
11,173
(101,548)
(1,865)
(6,509)
27,356
20,847 $
(13,250)
—
(212,000)
199,000
—
—
(2,671)
(3,153)
(22,818)
—
—
—
—
2,833
(52,059)
2,666
1,500
25,856
27,356
Non-cash investing and financing activities:
Contingent consideration
Dividends payable
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest
Income taxes
2022
2021
2020
$ 183,914 $
— $
6,098
5,874
—
5,775
$
26,081 $
9,074
21,797 $
8,559
30,448
9,120
The accompanying notes are an integral part of the consolidated financial statements.
51
CONMED CORPORATION
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. The Company considered COVID-19 related impacts on its estimates, as
appropriate, within its consolidated financial statements and there may be changes to those estimates in future periods. The
Company believes that the accounting estimates are appropriate after giving consideration to the increased uncertainties
surrounding the severity and duration of the COVID-19 pandemic. Due to the inherent uncertainty involved in making
estimates, actual results reported in future periods may differ from those estimates.
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
Leasehold improvements
Machinery and equipment
12 to 40 years
Shorter of life of asset or life of lease
2 to 15 years
52
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 of one year to 14 years, some of which include options to extend the leases for
up to five years, and some of which include options to terminate the leases within one 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 2022. 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.
53
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, 2022 and 2021 is $41.3 million and $42.5 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
operating 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.
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.
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
54
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 $21.7 million, $17.0 million and $14.6 million for 2022,
2021 and 2020, 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.
55
• 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, 2022, 2021 and 2020, respectively:
Net loss
Weighted average shares outstanding
Stock compensation
Warrants
Convertible notes
EPS
Net income
Year Ended December 31, 2022
Basic EPS Adjustments Diluted EPS
$
(80,582)
— $
(80,582)
30,040
—
—
—
30,040
—
—
—
—
—
30,040
—
—
—
30,040
$
(2.68)
$
(2.68)
Year Ended December 31, 2021
Basic EPS Adjustments Diluted EPS
$
62,542
— $
62,542
Weighted average shares outstanding
29,162
—
29,162
Stock compensation
Warrants
Convertible notes
—
—
—
1,275
1,275
506
506
1,273
1,273
29,162
3,054
32,216
EPS
$
2.14
$
1.94
56
Net income
Year Ended December 31, 2020
Basic EPS Adjustments Diluted EPS
$
9,517
— $
9,517
Weighted average shares outstanding
28,581
—
28,581
Stock compensation
Warrants
Convertible notes
—
—
—
883
883
—
—
—
—
28,581
883
29,464
EPS
$
0.33
$
0.32
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 0.6 million and 1.4 million at December 31, 2021 and
2020, respectively. As the Company was in a net loss position for the year ended December 31, 2022, there were no anti-
dilutive shares.
The 2.625% convertible notes due in 2024 (the "2.625% Notes") and 2.250% convertible notes due in 2027 (the
"2.250% Notes"), more fully described in Note 8, are convertible under certain circumstances, as defined in the respective
indentures for each series of notes, into a combination of cash and CONMED common stock. The following is intended to
describe the impact of the 2.625% Notes and 2.250% Notes and related hedge transactions on the calculation of diluted EPS.
Additional shares to be issued pursuant to the terms of the Notes and related hedge transactions, if any, would occur at
settlement.
Effective with our adoption of 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.
On June 6, 2022, the Company repurchased and extinguished $275.0 million principal value of 2.625% Notes as
further discussed in Note 8. Concurrently, the Company entered into a Supplemental Indenture related to the remaining
$70.0 million in 2.625% Notes, pursuant to which the Company irrevocably elected to settle the principal value of the 2.625%
Notes in cash. Similarly, the 2.250% Notes, issued on June 6, 2022, require the principal to be paid in cash. As a result, in
periods in which the Company has net income, only the conversion premium will affect dilutive share count. Accordingly, for
periods prior to adoption of ASU 2020-06 on January 1, 2022 and after June 6, 2022, in periods in which the Company has net
income, the calculation of diluted EPS includes potential diluted shares upon conversion of the 2.625% Notes and the 2.250%
Notes, only when the average market price per share of our common stock for the period is greater than the conversion price
and only for the conversion premium, with the principal portion required to be settled in cash.
We have entered into convertible note hedge transactions to increase the effective conversion price of the 2.625%
Notes from $88.80 to $114.92. However, our convertible notes hedges are not included when calculating potential dilutive
shares since their effect is always anti-dilutive. Concurrent with entering into the hedge transactions, we entered into warrant
transactions under which we agreed to sell shares of our common stock at $114.92. In periods in which the company has net
income, the calculation of diluted EPS includes potential diluted shares to be issued under the warrants when the average
market price per share of our common stock for the period is greater than $114.92, calculated under the treasury stock method.
On June 6, 2022, we entered into convertible notes hedge transactions to increase the effective conversion price of the
2.250% Notes from $145.33 to $251.53. However, our convertible notes hedges are not included when calculating potential
57
dilutive shares since their effect is always anti-dilutive. Concurrent with entering into the hedge transactions, we entered into
warrant transactions under which we agreed to sell shares of our common stock at $251.53. In periods in which the Company
has net income, the calculation of diluted EPS includes potential diluted shares to be issued under the warrants when the
average market price per share of our common stock for the period is greater than $251.53, calculated under the treasury stock
method.
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
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.
the financial statements at
in
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.
58
Accumulated other comprehensive loss
Accumulated other comprehensive loss consists of the following:
Cash Flow
Hedging
Gain (Loss)
Pension
Liability
Foreign
Currency
Translation
Adjustments
Accumulated
Other
Comprehensive
Loss
Balance, December 31, 2019
$
493 $
(31,691) $
(28,079) $
(59,277)
Other comprehensive income (loss) before
reclassifications, net of tax
Amounts reclassified from accumulated other
comprehensive income (loss) before tax(a)
Income tax
(5,393)
(7,068)
6,963
(5,498)
(1,378)
2,821
333
(682)
—
—
1,443
(349)
Net current-period other comprehensive income (loss)
(6,438)
(4,929)
6,963
(4,404)
Balance, December 31, 2020
$
(5,945) $
(36,620) $
(21,116) $
(63,681)
Other comprehensive income (loss) before
reclassifications, net of tax
Amounts reclassified from accumulated other
comprehensive income (loss) before tax(a)
Income tax
6,560
4,426
(7,072)
3,914
4,010
(969)
3,327
(804)
—
—
7,337
(1,773)
Net current-period other comprehensive income (loss)
9,601
6,949
(7,072)
9,478
Balance, December 31, 2021
$
3,656 $
(29,671) $
(28,188) $
(54,203)
Other comprehensive income (loss) before
reclassifications, net of tax
Amounts reclassified from accumulated other
comprehensive income (loss) before tax(a)
Income tax
10,981
3,961
(8,418)
6,524
(16,024)
3,884
2,589
(628)
—
—
(13,435)
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)
(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 August 2020, the Financial Accounting Standards Board ("FASB") issued 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"), 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 ASU is effective for fiscal years beginning after December 15, 2021,
59
with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company adopted this
standard on January 1, 2022 using the modified retrospective method. The adoption of this new guidance resulted in:
•
•
•
•
an increase of approximately $22.6 million to long-term debt in the consolidated balance sheets, to reflect the full
principal amount of the convertible notes then outstanding net of issuance costs (the "2.625% Notes" described more
fully in Note 8);
a reduction of approximately $37.9 million to additional paid-in capital, net of income tax effects, to remove the equity
component separately recorded for the conversion features associated with the 2.625% Notes;
a decrease to deferred income tax liabilities of approximately $5.5 million; and
a cumulative-effect adjustment of approximately $20.8 million, net of income tax effects, to the beginning balance of
retained earnings as of January 1, 2022.
The adoption of this new guidance reduced interest expense related to amortization of debt discount on the 2.625%
Notes by approximately $2.6 million during the three months ended March 31, 2022. Additionally, the dilutive share count
increased by approximately 2.5 million shares as a result of calculating the impact of dilution from the 2.625% Notes using the
if-converted method. During the year ended December 31, 2022, the Company repurchased and extinguished $275.0 million
principal value of the 2.625% Notes as further discussed in Note 8. Concurrently, the Company entered into a Supplemental
Indenture related to the remaining $70.0 million in 2.625% Notes, pursuant to which the Company irrevocably elected to settle
the principal value of those 2.625% Notes in cash. As a result, in periods in which the Company has net income, only the
conversion premium will affect the dilutive share count. 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 for the
year ended December 31, 2022.
Recently Issued Accounting Standards, Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting, which provides optional guidance if certain criteria are met for entities that
have contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be
discontinued as a result of reference rate reform. This ASU was effective as of March 12, 2020 through December 31, 2022
and was extended through December 31, 2024 by ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset
Date of Topic 848. The Company has not adopted these ASUs as of December 31, 2022. Our seventh amended and restated
senior credit agreement includes language to address the change from LIBOR to SOFR, an alternative base rate, therefore we do
not believe reference rate reform will have a significant impact on our 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 is a global developer, manufacturer and
distributor of medical devices for the treatment of disorders and injuries of the upper (hand, wrist and elbow) and 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.
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 $83.7 million as of December 31, 2022, with a $1.8 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 is 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.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of
the In2Bones and Biorez Acquisitions that were accounted for as business combinations. The assessment of fair value is based
on preliminary valuations and estimates that were available to management at the time the consolidated financial statements
were prepared. Accordingly, the allocation of purchase price is preliminary and therefore subject to adjustment during the
measurement adjustment period.
60
Cash
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Current assets
Goodwill
Developed technology
Distributor relationships
Trademarks and tradenames
Other long-term assets
Total assets acquired
Current liabilities assumed
Deferred income taxes
Other long-term liabilities
Total liabilities assumed
Net assets acquired
In2Bones
Biorez
$
445
$
5,036
24,247
1,490
31,218
139,128
37,300
27,600
—
2,875
238,121
$
6,332
16,738
466
23,536
214,585
$
$
$
$
$
754
318
61
118
1,251
60,034
176,300
—
1,600
112
239,297
1,441
37,801
—
39,242
200,055
The goodwill recorded as part of the In2Bones Acquisition primarily represents revenue synergies, the related cost to
enter into this new product offering and the In2Bones assembled workforce. Goodwill is not deductible for tax purposes.
In2Bones distributor relationships and developed technology are each being amortized over a weighted average life of 15 years.
The fair value of the intangible assets was estimated using an income approach, specifically the multi-period excess earnings
method for distributor relationships and the relief-from-royalty method for the developed technology intangible asset.
The goodwill recorded as part of the Biorez Acquisition primarily represents revenue synergies, the related cost to
enter into this new product offering and the Biorez assembled workforce. Goodwill is not deductible for tax purposes. Biorez
developed technology and trademarks and tradenames are each being amortized over a weighted average life of 20 years. The
fair value of the intangible assets was estimated using an income approach, specifically the multi-period excess earnings
method for the developed technology intangible asset.
Significant judgment was applied in estimating the fair value of the developed technology and distributor relationships
intangible assets acquired, which involved the use of significant estimates and assumptions with respect to the timing and
amounts of cash flow projections, including revenue growth rates, obsolescence rate, EBITDA margin, the customer attrition
rate, royalty rate and discount rates. EBITDA is defined as earnings before income tax, interest expense, depreciation and
amortization.
The contingent consideration of $69.4 million and $114.5 million for In2Bones and Biorez, respectively, 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. The fair value of contingent consideration is measured using
projected payment dates, discount rates, revenue volatilities, and projected revenues. The recurring Level 3 fair value
measurements of contingent consideration for which the liability was recorded at the acquisition date include the following
significant unobservable inputs:
Unobservable Input
Discount rate
Revenue volatility
Projected year of payment
Assumptions
In2Bones
5.67%
12.75%
2023-2026
Biorez
10.34%
18.87%
2023-2026
We recorded $23.7 million in net sales for In2Bones since the date of acquisition, June 13, 2022. The net sales were
recorded in the consolidated statements of comprehensive income (loss) for the year ended December 31, 2022. Earnings
61
recorded in the consolidated statements of comprehensive income (loss) for the year ended December 31, 2022 were not
material. We also believe the proforma information is immaterial for the years ended December 31, 2022 and 2021.
Net sales and earnings for Biorez were immaterial to the year ended December 31, 2022. We also believe the
proforma information is immaterial for the years ended December 31, 2022 and 2021.
During 2022, we recognized $4.5 million in costs for inventory step-up adjustments associated with the In2Bones
Acquisition, which are included in cost of sales. 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 are included in selling and
administrative expense.
Note 4 - Inventories
Inventories consist of the following at December 31:
Raw materials
Work in process
Finished goods
Note 5 - Property, Plant and Equipment
Property, plant and equipment consist of the following at December 31:
Land
Building and improvements
Machinery and equipment
Construction in progress
Less: Accumulated depreciation
2022
2021
$ 110,677 $
26,166
195,477
83,386
17,449
130,809
$ 332,320 $ 231,644
2022
2021
$
4,027 $
97,214
269,745
22,161
393,147
(277,536)
4,027
95,518
256,478
16,601
372,624
(263,761)
$ 115,611 $ 108,863
Internal-use software, included in gross machinery and equipment at December 31, 2022 and 2021 was $49.4 million
and $49.1 million, respectively, with related accumulated depreciation of $45.7 million and $45.3 million, respectively.
Internal use software depreciation expense was $2.1 million, $3.3 million and $4.7 million for the years ended December 31,
2022, 2021 and 2020, respectively. Also, during 2020, we sold a vacant facility for $3.2 million.
62
Note 6 - Leases
Lease costs for the years ended December 31, consist of the following:
Operating lease cost:
Straight-line lease cost
Total operating lease cost
Finance lease cost:
Depreciation
Interest on lease liabilities
Total finance lease cost
Total lease cost
2022
2021
2020
$
7,685 $
7,685
7,720 $
7,720
396
17
413
389
30
419
7,255
7,255
355
33
388
$
8,098 $
8,139 $
7,643
Supplemental balance sheet information related to leases as of December 31, is as follows:
Operating leases
Other assets
Other current liabilities
Other long-term liabilities
Total operating lease liabilities
Finance leases
Property, plant and equipment, gross
Accumulated depreciation
Property, plant and equipment, net
Current portion of long-term debt
Long-term debt
Total finance lease liabilities
Weighted average remaining lease term (in years)
Operating leases
Finance leases
Weighted average discount rate
Operating leases
Finance leases
2022
2021
$
$
$
$
$
$
$
17,710
6,919
11,759
18,678
1,924
(1,510)
414
178
52
230
$
$
$
$
$
$
$
19,425
7,162
12,726
19,888
1,984
(1,145)
839
324
240
564
5.17 years
1.92 years
3.90 years
3.05 years
5.39 %
4.54 %
5.02 %
4.47 %
63
Supplemental cash flow information related to leases for the years ended December 31, was as follows:
2022
2021
2020
Cash paid for amounts included in the measurement of lease
liabilities:
Operating cash flows from operating leases
$
7,383 $
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Finance leases
313
5,167
—
7,791 $
287
4,704
305
7,535
373
4,242
76
Maturities of lease liabilities as of December 31, 2022 are as follows:
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less imputed interest
Total lease liabilities
Finance Lease
Operating Lease
$
178 $
34
14
12
2
—
240
6,919
5,417
2,408
1,394
1,138
4,272
21,548
(10)
(2,870)
$
230 $
18,678
As of December 31, 2022, we have not entered into any operating or 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:
Balance as of January 1,
Goodwill resulting from business combinations
Foreign currency translation
Balance as of December 31,
2022
2021
$ 617,528 $ 618,440
199,162
—
(1,261)
(912)
$ 815,429 $ 617,528
During 2022, the Company acquired In2Bones Global, Inc. and Biorez, Inc. as further described in Note 3. Goodwill
resulting from the In2Bones Acquisition amounted to $139.1 million and acquired intangible assets including distributor
relationships and developed technology amounted to $64.9 million. Goodwill resulting from the Biorez Acquisition amounted
to $60.0 million and acquired intangible assets including developed technology and trademarks and tradenames amounted to
$177.9 million.
64
Total accumulated goodwill impairment losses aggregated $107.0 million at December 31, 2022 and 2021,
respectively.
Other intangible assets consist of the following:
Intangible assets with definite lives:
December 31, 2022
December 31, 2021
Weighted
Average
Amortizati
on Period
(Years)
22
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Customer and distributor relationships
24
$ 369,854 $
(170,870) $ 342,452 $
(152,934)
Sales representation, marketing and promotional
rights
Patents and other intangible assets
Developed technology
Intangible assets with indefinite lives:
25
16
18
149,376
(66,000) 149,376
(60,000)
79,838
(52,472)
76,392
(50,890)
320,204
(34,675) 106,604
(26,495)
Trademarks and tradenames
86,544
—
86,544
—
$ 1,005,816 $
(324,017) $ 761,368 $
(290,319)
Amortization expense related to intangible assets which are subject to amortization totaled $33.7 million, $33.3 million
and $34.2 million for the years ending December 31, 2022, 2021 and 2020, 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, 2022 and for each of the five
succeeding years is as follows:
2023
2024
2025
2026
2027
Amortization
included in
expense
Amortization
recorded as a
reduction of
revenue
$
29,351 $
29,059
29,551
29,308
30,347
6,000 $
6,000
6,000
6,000
6,000
Total
35,351
35,059
35,551
35,308
36,347
65
Note 8 - Long Term Debt
Long-term debt consists of the following at December 31:
Revolving line of credit
Term loan, net of deferred debt issuance costs of $729 and $1,373 in 2022 and 2021,
respectively
2.625% convertible notes, net of deferred debt issuance costs of $432 and $3,700 in 2022
and 2021, respectively, and unamortized discount of $23,404 in 2021
2.250% convertible notes, net of deferred debt issuance costs of $18,834 in 2022
Financing leases
Total debt
Less: Current portion
Total long-term debt
2022
2021
$
70,000 $
140,000
133,858
226,196
69,568
781,166
230
1,054,822
69,746
985,076 $
$
317,896
—
564
684,656
12,249
672,407
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. During 2021, we recorded $1.1 million to other expense related to the
loss on the early extinguishment and third-party fees associated with the seventh amended and restated credit agreement.
Interest rates are at SOFR (4.323% at December 31, 2022) plus an interest rate margin of 1.125% (5.448% at December 31,
2022). 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 0.500% or (iii) the one-month Adjusted SOFR rate plus 1.000%, plus, in each case, an interest rate
margin.
There were $134.6 million in borrowings outstanding on the term loan facility as of December 31, 2022. There were
$70.0 million in borrowings outstanding under the revolving credit facility as of December 31, 2022. Our available borrowings
on the revolving credit facility at December 31, 2022 were $513.2 million with approximately $1.8 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, 2022. 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 due in 2024.
Interest is payable semi-annually in arrears on February 1 and August 1 of each year, commencing August 1, 2019. The
2.625% Notes will mature on February 1, 2024, unless earlier repurchased or converted. The 2.625% 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. The 2.625% Notes may be 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 may convert 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 will also have the right to convert the 2.625% Notes prior to November 1, 2023, but only upon the occurrence of
specified events. The conversion rate is subject to anti-dilution adjustments if certain events occur. A portion of the net
proceeds from the offering of the 2.625% Notes were used as part of the financing for the Buffalo Filter acquisition and $21.0
million were used to pay the cost of certain convertible notes hedge transactions as further described below.
66
On June 6, 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. The $70.0 million in 2.625% Notes are reflected in the current portion of long-term debt at
December 31, 2022.
Our effective borrowing rate for nonconvertible debt at the time of issuance of the 2.625% Notes was estimated to be
6.14%, which resulted in $51.6 million of the $345.0 million aggregate principal amount of 2.625% Notes issued, or $39.1
million after taxes, being attributable to equity. For the years ended December 31, 2021 and 2020, we have recorded interest
expense related to the amortization of debt discount on the 2.625% Notes of $10.2 million and $9.7 million respectively, at the
effective interest rate of 6.14%. On January 1, 2022, we adopted ASU 2020-06 using the modified retrospective approach as
further described in Note 2. This ASU eliminated the equity component separately recorded for the conversion features
associated with the convertible notes and related debt discount. For the years ended December 31, 2022, 2021 and 2020, we
have recorded interest expense on the 2.625% Notes of $4.8 million, $9.1 million and $9.1 million, respectively, at the
contractual coupon rate of 2.625%.
The estimated fair value of the 2.625% Notes was approximately $79.0 million as of December 31, 2022 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 2.625% Notes in an over-the-counter market transaction on the last
business day of the period.
2.250% Convertible Notes
On June 6, 2022, we issued $800.0 million aggregate principal amount of 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, 2022, we have recorded interest expense on the 2.250% Notes of $10.3 million at the
contractual coupon rate of 2.250%.
The estimated fair value of the 2.250% Notes was approximately $731.0 million as of December 31, 2022 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 offering of the 2.625% and 2.250% Notes, we entered into convertible note hedge transactions
with a number of financial institutions (each, an “option counterparty”). The convertible note 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 note 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
67
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.
The convertible note 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
note hedge transactions, is greater than the strike price of the convertible note 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 ($114.92 for the 2.625% Notes and $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, 2022 are as follows:
2023
2024
2025
2026
2027
$
70,000
—
—
204,587
800,000
The above amounts exclude debt discount, deferred debt issuance costs and financing leases.
Note 9 - Income Taxes
The provision (benefit) for income taxes for the years ended December 31, 2022, 2021 and 2020 consists of the
following:
Current tax expense (benefit):
Federal
State
Foreign
Deferred income tax expense (benefit):
Federal
State
Foreign
2022
2021
2020
$
98 $
1,582
14,082
15,762
(4,096)
(1,636)
(310)
(6,042)
(97) $
609
7,046
7,558
3,466
1,449
(1,910)
3,005
(729)
86
6,963
6,320
(12,253)
(1,173)
(808)
(14,234)
Provision (benefit) for income taxes
$
9,720 $
10,563 $
(7,914)
68
A reconciliation between income taxes computed at the statutory federal rate and the provision (benefit) for income
taxes for the years ended December 31, 2022, 2021 and 2020 follows:
Tax provision at statutory rate based on income before income taxes
21.0 %
21.0 %
21.0 %
2022
2021
2020
Stock-based compensation
Federal research credit
Valuation allowance
Settlement of taxing authority examinations
1.5
2.4
2.5
—
Non-deductible premium on extinguishment and change in fair value of
convertible notes
(32.2)
Non-deductible/non-taxable items
US tax on worldwide earnings at different rates
Foreign income taxes
State income taxes, net of federal tax benefit
Other, net
(2.9)
(1.8)
(1.8)
(1.4)
(1.0)
(9.4)
(2.3)
(2.2)
(267.7)
(124.2)
49.7
—
(122.9)
—
0.8
—
28.6
(0.4)
(123.7)
3.1
3.7
0.1
79.9
(24.5)
(10.1)
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”.
(13.7) %
14.4 %
(493.9) %
69
The tax effects of the significant temporary differences which comprise the deferred income tax assets and liabilities at
December 31, 2022 and 2021 are as follows:
Assets:
Inventory
Net operating losses
Capitalized research and development
Deferred compensation
Accounts receivable
Compensation and benefits
Accrued pension
Research and development credit
Interest limitation
Convertible notes hedge
Lease liabilities
Other
Less: valuation allowances
Liabilities:
Goodwill and intangible assets
Depreciation
State taxes
Unremitted foreign earnings
Convertible notes debt discount
Lease right-of-use assets
$
2022
2021
2,939 $
12,721
11,402
3,012
3,580
8,723
2,530
16,785
9,116
36,204
2,735
4,134
(543)
113,338
152,155
2,373
11,733
1,573
—
2,579
170,413
4,694
18,383
4,173
2,563
3,147
6,583
3,930
15,542
—
4,869
3,573
5,741
(786)
72,412
106,065
2,546
11,833
2,449
4,915
3,484
131,292
Net liability
$
(57,075) $
(58,880)
Income (loss) before income taxes consists of the following U.S. and foreign income (loss):
U.S. income (loss)
Foreign income
Total income (loss)
2022
2021
2020
$
$
(96,114) $
25,252
(70,862) $
45,260 $
27,845
73,105 $
(16,026)
17,629
1,603
As of December 31, 2022, the amount of federal net operating loss carryforward was $11.0 million and begins to
expire in 2027. As of December 31, 2022, the amount of federal research credit carryforward available was $16.8
million. These credits begin to expire in 2027.
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 $28.7 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 $1.4 million would be due if these earnings were repatriated.
70
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 2019.
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,:
Balance as of January 1,
2022
2021
2020
$
200 $
200 $
2,170
Increases for positions taken in current periods
Decreases in unrecorded tax positions related to settlement with the
taxing authorities
Decreases in unrecorded tax positions related to lapse of statute of
limitations
—
—
—
—
—
—
Balance as of December 31,
$
200 $
200 $
—
(1,970)
—
200
If the total unrecognized tax benefits of $0.2 million at December 31, 2022 were recognized, it would reduce our
annual effective tax rate. The amount of interest accrued in 2020, 2021 and 2022 related to these unrecognized tax benefits was
not material and is included in the provision (benefit) 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 2022, 2021 and 2020. The fourth quarter dividend for 2022 was paid on January 5,
2023 to shareholders of record as of December 16, 2022. The total dividend payable was $6.1 million and $5.9 million at
December 31, 2022 and 2021, respectively, 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, 2022 and 2021, no
preferred stock had been issued.
Our Board of Directors has authorized a $200.0 million share repurchase program. Through December 31, 2022, 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 2022, 2021, and 2020 we did not repurchase any shares.
We have reserved 6.5 million shares of common stock for issuance to employees and directors under two shareholder
approved share-based compensation plans (the "Plans") of which approximately 2.8 million shares remain available for grant at
December 31, 2022. 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”) and performance stock units
(“PSUs”) are valued at the market value of the underlying stock on the date of grant. Stock options, SARs, RSUs and PSUs are
generally non-transferable other than on death and generally become exercisable over a 4 to 5 year period 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.
71
Total pre-tax stock-based compensation expense recognized in the consolidated statements of comprehensive income
(loss) was $21.7 million, $16.3 million and $13.1 million for the years ended December 31, 2022, 2021 and 2020,
respectively. These amounts are included in selling and administrative expense. Tax related benefits of $3.8 million, $3.9
million and $3.2 million were also recognized for the years ended December 31, 2022, 2021 and 2020, respectively. Cash
received from the exercise of stock options was $8.9 million, $19.6 million and $13.7 million for the years ended December 31,
2022, 2021 and 2020, 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, 2022,
2021 and 2020:
Grant date fair value of stock options and SARs
Expected stock price volatility
Risk-free interest rate
Expected annual dividend yield
Expected life of options & SARs (years)
$
2022
2021
2020
$
49.88
38.45 %
1.68 %
0.56 %
5.4
$
42.47
39.27 %
0.81 %
0.64 %
5.5
22.62
26.89 %
0.89 %
0.82 %
5.5
The following table illustrates the stock option and SAR activity for the year ended December 31, 2022:
Outstanding at December 31, 2021
Granted
Forfeited
Exercised
Outstanding at December 31, 2022
Exercisable at December 31, 2022
Stock options & SARs expected to vest
Number
of
Shares
(in 000’s)
Weighted-
Average
Exercise
Price
3,264 $
80.79
730 $
(113) $
(180) $
3,701 $
1,725 $
1,976 $
141.84
114.72
60.80
92.98
67.66
115.09
The weighted average remaining contractual term for SARs and stock options outstanding and exercisable at
December 31, 2022 was 6.6 years and 5.1 years, respectively. The aggregate intrinsic value of SARs and stock options
outstanding and exercisable at December 31, 2022 was $49.3 million and $43.0 million, respectively. The aggregate intrinsic
value of stock options and SARs exercised during the years ended December 31, 2022, 2021 and 2020 was $13.6 million, $49.2
million and $26.6 million, respectively.
72
The following table illustrates the RSU activity for the year ended December 31, 2022:
Outstanding at December 31, 2021
Granted
Vested
Forfeited
Outstanding at December 31, 2022
Number
of
Shares
(in 000’s)
Weighted-
Average
Grant-Date
Fair Value
51 $
101.55
21 $
(25) $
(1) $
136.35
100.68
113.87
46 $
117.91
The weighted average fair value of RSU awards granted in the years ended December 31, 2022, 2021 and 2020 was
$136.35, $129.94 and $85.45, respectively.
The total fair value of RSUs and PSUs vested was $2.6 million, $2.2 million and $6.2 million for the years ended
December 31, 2022, 2021 and 2020, respectively.
As of December 31, 2022, there was $59.2 million of total unrecognized compensation cost related to nonvested stock
options, SARs and RSUs granted under the Plans which is expected to be recognized over a weighted average period of 3.5
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 2022, we issued
approximately 17,353 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, 2022, 2021 and 2020:
Orthopedic Surgery
General Surgery
Total
2022
Timing of Revenue Recognition
Goods transferred at a point in time
Services transferred over time
Total sales from contracts with customers
$
$
422,648 $
38,880
461,528 $
577,625 $
6,319
583,944 $
1,000,273
45,199
1,045,472
Orthopedic Surgery
General Surgery
Total
2021
Timing of Revenue Recognition
Goods transferred at a point in time
Services transferred over time
Total sales from contracts with customers
$
$
398,963 $
39,461
438,424 $
567,244 $
4,967
572,211 $
966,207
44,428
1,010,635
73
Orthopedic Surgery
General Surgery
Total
2020
Timing of Revenue Recognition
Goods transferred at a point in time
Services transferred over time
Total sales from contracts with customers
$
$
340,318 $
34,387
374,705 $
484,147 $
3,607
487,754 $
824,465
37,994
862,459
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, 2022 December 31, 2021
Contract Liability
$
19,114 $
16,760
Revenue recognized during years ended December 31, 2022, 2021 and 2020 from amounts included in contract
liabilities at the beginning of the period were $11.5 million, $10.3 million and $9.3 million, respectively. There were no
material contract assets as of December 31, 2022 and December 31, 2021.
Note 12 - Business Segments and Geographic Areas
We are accounting and reporting 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. Our chief operating decision maker (the
CEO) 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 due to shared infrastructure and resources. Our product lines
consist of orthopedic surgery and general surgery. Orthopedic surgery consists of sports medicine instrumentation and 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, 2022, 2021 and 2020:
Primary Geographic Markets
United States
Europe, Middle East & Africa
Asia Pacific
Americas (excluding the United States)
Orthopedic Surgery
General Surgery
Total
2022
$
173,176 $
405,777 $
113,649
103,353
71,350
84,288
59,124
34,755
578,953
197,937
162,477
106,105
Total sales from contracts with customers
$
461,528 $
583,944 $
1,045,472
Primary Geographic Markets
United States
Europe, Middle East & Africa
Asia Pacific
Americas (excluding the United States)
Orthopedic Surgery
General Surgery
Total
2021
$
158,553 $
393,980 $
108,457
107,590
63,824
81,238
63,628
33,365
552,533
189,695
171,218
97,189
Total sales from contracts with customers
$
438,424 $
572,211 $
1,010,635
74
Orthopedic Surgery
General Surgery
Total
2020
Primary Geographic Markets
United States
Europe, Middle East & Africa
Asia Pacific
Americas (excluding the United States)
$
139,715 $
342,349 $
90,998
93,636
50,356
70,086
46,961
28,358
Total sales from contracts with customers
$
374,705 $
487,754 $
482,064
161,084
140,597
78,714
862,459
Sales are attributed to countries based on the location of the customer. There were no significant investments in long-
lived assets located outside the United States at December 31, 2022 and 2021. No single customer represented over 10% of our
consolidated net sales for the years ended December 31, 2022, 2021 and 2020.
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 $9.9 million, $9.2 million and $8.9 million during the years
ended December 31, 2022, 2021 and 2020, 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 11.38 years. The limit of 11.38 years is 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:
Accumulated benefit obligation
Change in benefit obligation
Projected benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain
Benefits paid
Settlements
Projected benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual gain (loss) on plan assets
Benefits paid
Settlements
Fair value of plan assets at end of year
Funded status
75
2022
2021
71,203 $
95,508
95,508 $
1,077
2,148
(23,607)
(2,805)
(1,118)
71,203 $
79,404 $
(13,125)
(2,805)
(1,118)
62,356 $
101,242
991
1,803
(3,427)
(2,703)
(2,398)
95,508
76,940
7,565
(2,703)
(2,398)
79,404
(8,847) $
(16,104)
$
$
$
$
$
$
The projected benefit obligation decreased $24.3 million as of December 31, 2022 mainly due to the increase in the
discount rate from 2.81% at December 31, 2021 to 5.41% at December 31, 2022 and changes in the lump sum conversion rates.
Amounts recognized in the consolidated balance sheets consist of the following at December 31,:
Other long-term liabilities
Accumulated other comprehensive loss
2022
2021
$
(8,847) $
(31,346)
(16,104)
(39,122)
Accumulated other comprehensive loss for the years ended December 31, 2022 and 2021 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,:
Discount rate
2022
2021
5.41 %
2.81 %
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) in 2022 and
2021 are as follows:
Current year actuarial loss
Amortization of actuarial loss
Total recognized in other comprehensive income (loss)
2022
2021
$
$
5,228 $
2,589
7,817 $
5,836
3,327
9,163
Net periodic pension cost for the years ended December 31, consists of the following:
Service cost
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of loss
Net periodic pension cost
2022
2021
2020
$
1,077 $
2,148
(5,295)
2,589
991 $
1,803
(5,155)
3,327
$
519 $
966 $
717
2,555
(5,021)
2,821
1,072
Non-service cost of $0.4 million is included in other expense in the consolidated statements of comprehensive income
(loss) for the year ended 2020. Non-service pension cost/(benefit) was immaterial for the years ended 2022 and 2021.
The following actuarial assumptions were used to determine our net periodic pension benefit cost for the years ended
December 31,:
Discount rate on benefit obligation
Effective rate for interest on benefit obligation
Expected return on plan assets
2022
2021
2020
2.81 %
2.33 %
7.00 %
2.44 %
1.83 %
7.00 %
3.33 %
2.88 %
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.
76
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 2022 and 2021 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,:
Equity securities
Debt securities
Total
Percentage of Pension
Plan Assets
2022
2021
Target
Allocation
2023
72 %
28 %
100 %
73 %
27 %
100 %
75 %
25 %
100 %
As of December 31, 2022, the pension plan held 27,562 shares of our common stock, which had a fair value of
$2.4 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, 2022 and 2021:
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.
77
The following table sets forth the value of the pension plan's assets as of December 31, 2022 and December 31, 2021:
Investments measured at fair value:
Level 1
Common Stock
Fixed Income Securities
Total Investments measured at fair value
Investments measured at NAV:
Money Market Fund
Mutual Funds
Total Investments measured at NAV
2022
2021
$
6,628 $
15,963
22,591
1,477
38,288
39,765
9,767
20,272
30,039
1,098
48,267
49,365
Total Investments
$
62,356 $
79,404
We do not expect to make any contributions to our pension plan for 2023.
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, 2022.
2023
2024
2025
2026
2027
2028-2032
$5,948
5,643
5,823
6,143
5,538
25,737
Note 14 - Legal Matters and Contingencies
From time to time, the Company may receive an information request, subpoena or warrant from a government agency
such as the Securities and Exchange Commission, Department of Justice, Equal Employment Opportunity Commission, the
Occupational Safety and Health Administration, the United States Food and Drug Administration, the Department of Labor, the
Treasury Department or other federal and state agencies or foreign governments or government agencies. These information
requests, subpoenas or warrants may or may not be routine inquiries, or may begin as routine inquiries and over time develop
into enforcement actions of various types. Likewise, if we receive reports of alleged misconduct from employees and third
parties, we investigate as appropriate.
Manufacturers of medical devices have been the subject of various enforcement actions relating to interactions with
health care providers domestically or internationally whereby companies are claimed to have provided health care providers
with inappropriate incentives to purchase their products. Similarly, the Foreign Corrupt Practices Act ("FCPA") imposes
obligations on manufacturers with respect to interactions with health care providers who may be considered government
officials based on their affiliation with public hospitals. The FCPA also requires publicly listed manufacturers to maintain
accurate books and records, and maintain internal accounting controls sufficient to provide assurance that transactions are
accurately recorded, lawful and in accordance with management's authorization. The FCPA poses unique challenges both
because manufacturers operate in foreign cultures in which conduct illegal under the FCPA may not be illegal in local
jurisdictions, and because, in some cases, a United States manufacturer may face risks under the FCPA based on the conduct of
third parties over whom the manufacturer may not have complete control. While CONMED has not experienced any material
enforcement action to date, there can be no assurance that the Company will not be subject to a material enforcement action in
the future, or that the Company will not incur costs including, in the form of fees for lawyers and other consultants, that are
material to the Company’s results of operations in the course of responding to a future inquiry or investigation.
78
Manufacturers of medical products may face exposure to significant product liability claims, as well as patent
infringement and other claims incurred in the ordinary course of business. To date, we have not experienced any claims that
have been material to our financial statements or financial condition, but any such claims arising in the future could have a
material adverse effect on our business, results of operations or cash flows. We currently maintain commercial product liability
insurance of $35 million per incident and $35 million in the aggregate annually, which we believe is adequate. This coverage is
on a claims-made basis. There can be no assurance that claims will not exceed insurance coverage, that the carriers will be
solvent or that such insurance will be available to us in the future at a reasonable cost.
Our operations are subject, and in the past have been subject, to a number of environmental laws and regulations
governing, among other things, air emissions; wastewater discharges; the use, handling and disposal of hazardous substances
and wastes; soil and groundwater remediation and employee health and safety. Likewise, the operations of our suppliers and
sterilizers are subject to similar environmental laws and regulations. In some jurisdictions, environmental requirements may be
expected to become more stringent in the future. In the United States, certain environmental laws can impose liability for the
entire cost of site restoration upon each of the parties that may have contributed to conditions at the site regardless of fault or
the lawfulness of the party’s activities. While we do not believe that the present costs of environmental compliance and
remediation are material, there can be no assurance that future compliance or remedial obligations would not have a material
adverse effect on our financial condition, results of operations or cash flows.
In 2014, the Company acquired EndoDynamix, Inc. The agreement governing the terms of the acquisition provides
that, if various conditions are met, certain contingent payments relating to the first commercial sale of the products (the
milestone payment), as well as royalties based on sales (the revenue based payments), are due to the seller. In 2016, we notified
the seller that there was a need to redesign the product, and that, as a consequence, the first commercial sale had been delayed.
Consequently, the payment of contingent milestone and revenue-based payments were delayed. On January 18, 2017, the seller
provided notice (the "Notice") seeking $12.7 million under a liquidated damages clause, which essentially represented the
seller's view as to the sum of the projected contingent milestone and revenue-based payments on an accelerated basis.
CONMED responded to the Notice denying that there was any basis for acceleration of the payments due under the acquisition
agreement. On February 22, 2017, the representative of the former shareholders of EndoDynamix filed a complaint in
Delaware Chancery Court claiming breach of contract with respect to the duty to commercialize the product and seeking the
contingent payments on an accelerated basis. In the third quarter of 2018, the Company decided to halt the development of the
EndoDynamix clip applier and recorded a charge to write off assets and released a previously accrued contingent consideration
liability. In court filings the Plaintiffs claim to seek liquidated damages, as well as additional damages up to $24.8 million. A
non-jury trial in the Delaware Chancery Court commenced on March 18, 2021, and testimony concluded on April 7, 2021. On
June 30, 2022, the Court issued a ruling that CONMED had presented overwhelming evidence that it had not breached its
obligations under the acquisition agreement, and that CONMED was entitled to judgement on all claims asserted against it. The
Company had not recorded any expense related to potential damages in connection with this matter and the period within which
the former shareholders of EndoDynamix could have appealed expired without any appeal being filed.
CONMED is defending two Georgia State Court actions. The first action was filed in Cobb County by various
employees, former employees, contract workers and others against CONMED and against a contract sterilizer (the "Cobb
County Action"). The second action was filed in Douglas County against CONMED’s landlord and other allegedly related
entities (the "Douglas County Action"). Plaintiffs in the lawsuits allege personal injury and related claims purportedly arising
from or relating to exposure to Ethylene Oxide, a chemical used to sterilize certain products. CONMED is defending the claims
asserted directly against it and is providing indemnification for certain other defendants based on contractual provisions.
Both actions are in their early stages. The Company’s motion to dismiss in the Cobb County action was heard on
January 10, 2022, and the Court issued a ruling on June 15, 2022 dismissing 44 of the 51 plaintiffs' claims as precluded by the
exclusive workers' compensation remedy, as well as one claim from a non-employee plaintiff. As to the remaining claims that
were not the subject of the motion to dismiss, CONMED believes it has strong defenses and will vigorously defend itself and all
parties it is indemnifying. As with any litigation, there are risks, including the risk that CONMED may not prevail with respect
to the defense of the underlying claims, or with respect to securing adequate insurance coverage for the indemnification claims.
The Company is unable to estimate a range of possible loss at this time, and has not recorded any expense related to potential
damages in connection with this matter because the Company does not believe any potential loss is probable.
CONMED submitted the foregoing claims for insurance coverage. One insurer is providing coverage for certain of the
claims asserted directly against the Company. CONMED has been litigating two lawsuits in the United States District Court for
the Northern District of New York with Federal Insurance Company (“Chubb”): one involving CONMED’s claim for coverage
for the indemnification claims arising from the Cobb County Action, and the other concerning CONMED’s claim for coverage
for the indemnification claims arising from the Douglas County Action. On March 10, 2022, the Court ruled in favor of
CONMED with respect to coverage for the indemnification claims arising from the Cobb County Action. Chubb's motion for
79
reconsideration was denied, and Chubb filed a notice of appeal. On August 9, 2022, CONMED won a similar ruling finding in
its favor and against Chubb as to the coverage case concerning the Douglas County Action. Chubb appealed that decision as
well. CONMED believed its position was well-grounded in the facts and the law. Chubb subsequently withdrew its appeal and
agreed to pay for the underlying defense of the two claims, subject to certain reservations of rights, and in January 2023 agreed
to reimburse CONMED for certain costs it had previously incurred in connection with the defense of the two lawsuits. There
can be no assurance that Chubb will honor its obligations prospectively.
In addition, one of CONMED’s contract sterilizers, which is defending toxic tort claims asserted by various residents
in the areas around its processing facility, has placed CONMED on notice of a claim for indemnification relating to some of
those claims. CONMED is reviewing the notice, and has not at this time taken any position on the notice.
The government of Italy passed a law in late 2015 to tax medical device companies on revenue derived from sales to
public hospitals. The tax is calculated and based on provincial spending over and above certain thresholds. Since the law was
enacted, the Italian government essentially made no effort to administer or collect the tax. A lack of interpretative guidance and
complexity of the law resulted in uncertainty as to the actual amount of liability. In September 2022, the Italian government
passed a further decree which, amongst other provisions, delegated administration and collection to the provincial level for the
years 2015 – 2018. The Italy medical device tax represents variable consideration in the form of a retroactive discount
potentially owed to the customer, which is ultimately the Italian government. The Company is challenging the imposition of
the medical device tax in Italy, as have many other medical device companies, on the ground that the law was never
implemented properly with regulations. While the Company is informed that its position is well-grounded in the law, there can
be no assurance that the Company will prevail. In January 2023, the Italian government postponed the due date for payment of
the tax to April 30, 2023, to allow time for Italian courts to rule on the constitutionality of the law. No amounts have been
remitted to date.
From time to time, we are also subject to negligence and other claims arising out of the ordinary conduct of our
business, including, for example, accidents our employees may experience within the course of their employment or otherwise.
We are currently defending one such claim, which we expect to be fully covered by insurance, involving potentially significant
personal injuries. The Company is unable to estimate any range of possible loss at this time, and therefore has not recorded any
liability related to potential damages in connection with this matter.
We record reserves sufficient to cover probable and estimable losses associated with any such pending claims. We do
not expect that the resolution of any pending claims, investigations or reports of alleged misconduct will have a material
adverse effect on our financial condition, results of operations or cash flows. There can be no assurance, however, that future
claims or investigations, or the costs associated with responding to such claims, investigations or reports of misconduct,
especially claims and investigations not covered by insurance, will not have a material adverse effect on our financial condition,
results of operations or cash flows.
Note 15 - Guarantees
We provide warranties on certain of our products at the time of sale and sell extended warranties. The standard
warranty period for our capital equipment is generally one year and our extended warranties typically vary from one to three
years. Liability under service and warranty policies is based upon a review of historical warranty and service claim
experience. Adjustments are made to accruals as claim data and historical experience warrant.
Changes in the carrying amount of standard warranties for the years ended December 31, are as follows:
Balance as of January 1,
Provision for warranties
Claims made
2022
2021
2020
$
2,344 $
1,826 $
2,186
224
(624)
1,458
(940)
783
(1,143)
Balance as of December 31,
$
1,944 $
2,344 $
1,826
Costs associated with extended warranty repairs are recorded as incurred and amounted to $5.9 million, $6.8
million and $6.1 million for the years ended December 31, 2022, 2021 and 2020 respectively.
80
Note 16 - Fair Value Measurement
We enter into derivative instruments for risk management purposes only. We operate internationally and, in the
normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These
fluctuations can increase the costs of financing, investing and operating the business. We use forward contracts, a type of
derivative instrument, to manage certain foreign currency exposures.
By nature, all financial instruments involve market and credit risks. We enter into forward contracts with major
investment grade financial institutions and have policies to monitor the credit risk of those counterparties. While there can be
no assurance, we do not anticipate any material non-performance by any of these counterparties.
Foreign Currency Forward Contracts. We hedge forecasted intercompany sales denominated in foreign currencies
through the use of forward contracts. 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 recognized into earnings as a component of sales or
cost of sales when the forecasted transaction occurs.
We also enter into forward contracts to exchange foreign currencies for United States dollars in order to hedge our
currency transaction exposures. 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.
The following table presents the notional contract amounts for forward contracts outstanding:
Forward exchange contracts
Forward exchange contracts
As of
FASB ASC Topic 815
Designation
December 31, 2022
December 31, 2021
Cash flow hedge
$
Non-designated
198,473 $
81,929
172,894
38,897
The remaining time to maturity as of December 31, 2022 is within two years for hedge designated foreign exchange
contracts and approximately one month for non-hedge designated forward exchange contracts.
81
Statement of comprehensive income (loss) presentation
Derivatives designated as cash flow hedges
Foreign exchange contracts designated as cash flow hedges had the following effects on accumulated other
comprehensive income (loss) ("AOCI") and net earnings on our consolidated statements of comprehensive income (loss) and
our consolidated balance sheets:
Amount of Gain (Loss)
Recognized in AOCI
Consolidated Statements of Comprehensive
Income (Loss)
Amount of Gain (Loss)
Reclassified from AOCI
Years Ended
Total Amount of Line Item
Presented
Years Ended
Derivative Instrument
2022
2021
2020
Location of
amount
reclassified
2022
2021
2020
2022
2021
2020
Foreign exchange contracts
$ 14,494 $ 8,650 $ (7,111) Net Sales
$ 1,045,472 $ 1,010,635 $ 862,459 $ 15,085 $ (5,421) $ 1,997
Cost of Sales
474,227 442,599 402,159
939 1,411
(619)
Pre-tax gain (loss)
$ 14,494 $ 8,650 $ (7,111)
Tax expense (benefit)
3,513 2,090 (1,718)
Net gain (loss)
$ 10,981 $ 6,560 $ (5,393)
$ 16,024 $ (4,010) $ 1,378
3,884
(969)
333
$ 12,140 $ (3,041) $ 1,045
At December 31, 2022, $2.8 million of net unrealized gains on forward contracts accounted for as cash flow hedges,
and included in accumulated other comprehensive loss, are expected to be recognized in earnings in the next twelve months.
Derivatives not designated as cash flow hedges
Net gains and losses from derivative instruments not accounted for as hedges offset by gains and losses on our
intercompany receivables on our consolidated statements of comprehensive income (loss) were:
Derivative Instrument
Location on Consolidated Statements
of Comprehensive Income (Loss)
2022
2021
2020
Years Ended
Net loss on currency forward contracts
Net gain (loss) on currency transaction
exposures
Selling and administrative expense
$
(240) $
(451) $ (2,269)
Selling and administrative expense
$ (1,950) $ (1,832) $
646
82
Balance sheet presentation
We record these forward foreign exchange contracts at fair value. The following tables summarize the fair value for
forward foreign exchange contracts outstanding at December 31, 2022 and 2021:
December 31, 2022
Derivatives designated as hedging instruments:
Location on Consolidated Balance
Sheet
Asset
Fair
Value
Liabilities
Fair
Value
Net
Fair
Value
Foreign exchange contracts
Foreign exchange contracts
Prepaid expenses and other current
assets
Other long-term liabilities
$
6,757 $
(3,121) $
3,636
60
6,817 $
(400)
(3,521) $
(340)
3,296
$
Derivatives not designated as hedging
instruments:
Foreign exchange contracts
Other current liabilities
48
(395)
(347)
Total derivatives
$
6,865 $
(3,916) $
2,949
December 31, 2021
Derivatives designated as hedging instruments:
Foreign exchange contracts
Foreign exchange contracts
Derivatives not designated as hedging
instruments:
Location on Consolidated Balance
Sheet
Asset
Fair
Value
Liabilities
Fair
Value
Net
Fair
Value
Prepaid expenses and other current
assets
$
5,331 $
(430) $
4,901
Other long-term liabilities
82
(161)
(79)
$
5,413 $
(591) $
4,822
Foreign exchange contracts
Other current liabilities
38
(180)
(142)
Total derivatives
$
5,451 $
(771) $
4,680
Our forward foreign exchange contracts are subject to a master netting agreement and qualify for netting in the
consolidated balance sheets.
Fair Value Disclosure. FASB guidance defines fair value and establishes a framework for measuring fair value and
related disclosure requirements. This guidance applies when fair value measurements are required or permitted. The guidance
indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability
occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market
for the asset or liability. Fair value is defined based upon an exit price model.
Valuation Hierarchy. A valuation hierarchy was established for disclosure of the inputs to the valuations used to
measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices
(unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that
are observable for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived
principally from or corroborated by observable market data through correlation. Level 3 inputs are unobservable inputs based
on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within
the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. There have been
no significant changes in the assumptions.
83
Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of
December 31, 2022 consist of forward foreign exchange contracts. The Company values its forward foreign exchange contracts
using quoted prices for similar assets. The most significant assumption is quoted currency rates. The value of the forward
foreign exchange contract assets and liabilities were valued using Level 2 inputs and are listed in the table above. The
Company values contingent consideration using Level 3 inputs. These include projected payment dates, discount rates, revenue
volatilities, and projected revenues. The fair value of contingent consideration related to the In2Bones Acquisition increased to
$70.2 million at December 31, 2022 from $69.4 million at the date of the acquisition and the fair value of contingent
consideration related to the Biorez Acquisition increased to $116.2 million at December 31, 2022 from $114.5 million at the
date of the acquisition. We recognized the $2.5 million fair value adjustments to contingent consideration in selling and
administrative expense. These adjustments related to the passage of time and changes in market assumptions. Contingent
consideration of $18.6 million and $167.8 million is included in other current liabilities and other long term liabilities,
respectively, in the consolidated balance sheet at December 31, 2022.
The carrying amounts reported in our balance sheets for cash and cash equivalents, accounts receivable, accounts
payable and variable long-term debt approximate fair value.
84
SCHEDULE II—Valuation and Qualifying Accounts
(In thousands)
Description
2022
Allowance for bad debts
Sales returns and
allowance
Deferred tax asset
valuation allowance
2021
Allowance for bad debts
Sales returns and
allowance
Deferred tax asset
valuation allowance
2020
Allowance for bad debts
Sales returns and
allowance
Deferred tax asset
valuation allowance
Additions
Balance at
Beginning of
Period
Charged to
Costs and
Expenses
Charged to
Other
Accounts(1)
Deductions
Balance at End
of Period
$
4,528 $
1,400 $
230 $
(650) $
5,508
4,441
2,923
—
(976)
6,388
786
—
1,571
(1,814)
543
$
3,876 $
2,305 $
— $
(1,653) $
4,528
3,684
1,261
2,721
621
—
—
(504)
4,441
(2,556)
786
$
2,786 $
1,611 $
— $
(521) $
3,876
3,667
1,732
384
989
—
—
(367)
—
3,684
2,721
(1) During 2022, allowances were assumed as part of the In2Bones acquisition.
Item 16. Form 10-K Summary
Registrants may voluntarily provide a summary of information required by Form 10-K under this Item 16. The
Company has elected not to include such summary information.
85
Exhibit 4.1
Description of Common Stock
The following is a description of the general terms, provisions and rights of the common stock, par value $0.01
("Common Stock"), of CONMED Corporation, a Delaware corporation (the "Company," "we," "us," and "our"), related
provisions of the Company’s certificate of incorporation (the “Certificate of Incorporation”) and bylaws (the “Bylaws”) and
applicable Delaware law. This description is qualified in its entirety by, and should be read in conjunction with, the Certificate
of Incorporation and Bylaws, which have been publicly filed with the Securities and Exchange Commission, and applicable
Delaware law.
Authorized Shares
We have the authority to issue an aggregate of 100,000,000 shares of Common Stock. As of February 15, 2023, there
were 31,299,194 shares of our Common Stock issued and 30,499,439 shares of our Common Stock outstanding.
Dividend Rights
Subject to the preferences, limitations and relative rights of holders of our preferred stock, the holders of Common
Stock are entitled to share ratably in dividends if, when and as declared by our board of directors out of funds legally available
therefor.
Voting Rights
Subject to the preferences, limitations and relative rights of holders of our preferred stock, the holders of Common
Stock are entitled to one vote for each share held of record on all matters at all meetings of stockholders.
Liquidation Rights
Subject to the preferences, limitations and relative rights of holders of our preferred stock, the holders of Common
Stock are entitled, in the event of our liquidation, dissolution or winding-up, to share ratably in the distribution of assets
remaining after payment of debts and expenses.
Absence of Other Rights
Our Common Stock has no sinking fund or redemption provisions or preemptive, conversion or exchange rights.
Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws
Our Certificate of Incorporation and Bylaws contain provisions that may delay, defer or discourage another party from
acquiring control of us. We expect that these provisions, some of which are summarized below, will discourage coercive
takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire
control of us to first negotiate with the board of directors, which we believe may result in an improvement of the terms of any
such acquisition in favor of our stockholders. However, they also give the board of directors the power to discourage
acquisitions that some stockholders may favor.
Special Meetings of Stockholders
Our Bylaws provide that special meetings of stockholders may be called by the board of directors, the chair of the
board of directors, if any, the lead independent director of the board of directors, if any, or the president, or upon the request of
stockholders holding at least 25% of the Company's outstanding stock entitled to vote, subject to certain procedural and
informational requirements for calling special meetings of stockholders set forth in the Bylaws.
Stockholder Action by Written Consent
Our Certificate of Incorporation provides that stockholders can take action by written consent if stockholders holding
not less than the minimum number of votes required to authorize or take such action consent, subject to certain procedural
safeguards set forth in the Certificate of Incorporation, including a requirement that the holders of at least 25% of the
Company’s outstanding Common Stock (provided that such shares are determined to be Net Long Shares (as defined in the
Bylaws) that have been held continuously for at least one year) request that the Board set a record date to determine the
stockholders entitled to act by written consent.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
Our Bylaws require compliance with advance notice procedures for stockholder proposals and director nominations to
be brought before an annual meeting of the stockholders.
Exclusive Forum
Our Bylaws provide that unless the Company consents in writing to the selection of an alternate forum, (a) the Court of
Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on
our behalf; (ii) any action asserting a breach of fiduciary duty owed by any of our directors, officers, employees, or
stockholders to the Company or our stockholders; (iii) any action asserting a claim arising pursuant to the Delaware General
Corporation Law (the “DGCL”), our Certificate of Incorporation or our Bylaws; (iv) any action to interpret, apply, enforce or
determine the validity of our Certificate of Incorporation or our Bylaws; or (v) any action asserting a claim against us that is
governed by the internal affairs doctrine (or, if the Court of Chancery does not have jurisdiction, then the Superior Court of the
State of Delaware, or if no state court in Delaware has jurisdiction, the federal district court for the District of Delaware); and
(b) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a
cause of action arising under the Securities Act of 1933, as amended.
Amendment to Certificate of Incorporation and Bylaws
Delaware law provides generally that a majority vote of all the outstanding shares entitled to vote thereon at a meeting
of stockholders is required to approve amendments to a corporation’s certificate of incorporation, unless a corporation’s
certificate of incorporation requires a greater percentage.
Delaware law provides generally that by-laws may be amended, adopted or repealed by the vote of a majority of the
shares cast at a meeting of the Company’s stockholders, unless the certificate of incorporation or by-laws provide otherwise.
Our Bylaws provide that they may be amended, altered or repealed by a majority vote of the outstanding shares of the Company
entitled to vote thereon. Additionally, if permitted under the corporation’s certificate of incorporation, under Delaware law the
board of directors may also amend, adopt or repeal the Company’s by-laws. Our Certificate of Incorporation provides that the
Bylaws may be amended, altered, or repealed by our board of directors without stockholder approval; provided, however, that
any by-law adopted by the board of directors may be amended or repealed by our stockholders.
Delaware Anti-Takeover Statute
We are subject to Section 203 of the DGCL. Accordingly, we may not engage in a business combination, such as a
merger, consolidation, recapitalization, asset sale or disposition of stock, with any “interested stockholder” for a period of three
years from the date that the interested stockholder first became an interested stockholder unless certain conditions are met.
Indemnification and Limitations on Liability of Officers and Directors
Our Certificate of Incorporation and Bylaws require the indemnification of directors and officers by the Company to
the fullest extent permitted by law, but our Bylaws provide that no indemnification is required with respect to any settlement or
disposition of a proceeding unless the Company has given its prior consent to such settlement/disposition. Our Bylaws also
permit us to indemnify employees and to advance expenses to any person entitled to indemnification upon request.
Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director or
officer of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director or officer, except for liability for (i) any breach of the director’s or officer's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) a director for payments of unlawful dividends or unlawful stock purchases or redemptions, (iv) any
transaction from which the director or officer derived an improper personal benefit, or (v) an officer in any action by or in the
right of the corporation. Our Certificate of Incorporation contains a provision eliminating the personal liability of directors for
monetary damages to the fullest extent permitted by law.
Listing
The Company's Common Stock is listed on the New York Stock Exchange under the trading symbol "CNMD."
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is Computershare Investor Services.
CONMED Corporation
Subsidiaries of the Registrant
Name
State or Country of Incorporation
EXHIBIT 21
Aspen Laboratories, Inc.
Biorez, Inc.
Biorez Pty Ltd
Buffalo Filter LLC
CONMED Andover Medical, Inc.
CONMED Austria GmbH
CONMED Denmark ApS
CONMED Deutschland GmbH
CONMED Endoscopic Technologies, Inc.
CONMED Finland Oy
CONMED France SAS
CONMED Iberia SL
CONMED Italia SrL
CONMED Japan K. K.
CONMED Linvatec Australia PTY Ltd
CONMED Linvatec (Beijing) Medical Appliances Co., Ltd
CONMED Linvatec Biomaterials Oy
CONMED Switzerland GmbH
CONMED U.K. Ltd.
Consolidated Medical Equipment Company S. de R.L. de C.V.
EndoDynamix, Inc.
GWH Limited Partnership
Conmed do Brasil Comércio Importação e Exportação de Produtos Médicos
Hospitalares Ltda.
In2Bones Global, Inc.
In2Bones SAS
Largo Lakes I Limited Partnership
Linvatec Corporation
Linvatec Belgium NV
Linvatec Canada ULC
CONMED Europe BV
CONMED Korea Ltd.
Linvatec Nederland B.V.
Linvatec Polska Sp. z.o.o
Linvatec Conmed Sweden AB
Palmerton Holdings, Inc.
SurgiQuest, Inc.
Viking Systems, Inc.
Linvatec India Private Limited
Colorado
Delaware
Australia
Delaware
New York
Austria
Denmark
Germany
Massachusetts
Finland
France
Spain
Italy
Japan
Australia
China
Finland
Switzerland
United Kingdom
Mexico
Delaware
Florida
Brazil
Delaware
France
Delaware
Florida
Belgium
Canada
Belgium
Korea
Netherlands
Poland
Sweden
New York
Delaware
Delaware
India
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-78987, 333-90444,
333-124202, 333-136453, 333-145150, 333-162834, 333-168493, 333-182878, 333-207582, 333-214299, 333-223258 and
333-228171) of CONMED Corporation of our report dated February 21, 2023 relating to the consolidated financial statements,
financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
EXHIBIT 23
/s/ PricewaterhouseCoopers LLP
Rochester, New York
February 21, 2023
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, Curt R. Hartman, certify that:
1.
I have reviewed this annual report on Form 10-K of CONMED Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, 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;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal control over financial reporting.
February 21, 2023
/s/ Curt R. Hartman
Curt R. Hartman
Chair of the Board, President and
Chief Executive Officer
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, Todd W. Garner, certify that:
1.
I have reviewed this annual report on Form 10-K of CONMED Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, 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;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal control over financial reporting.
February 21, 2023
/s/ Todd W. Garner
Todd W. Garner
Executive Vice President and
Chief Financial Officer
Exhibit 32.1
CERTIFICATIONS
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title
18, United States Code), each of the undersigned officers of CONMED Corporation, a Delaware corporation (the
“Corporation”), does hereby certify that:
The Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”) of the Corporation fully
complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in
the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
Date: February 21, 2023
Date: February 21, 2023
/s/ Curt R. Hartman
Curt R. Hartman
Chair of the Board, President and
Chief Executive Officer
/s/ Todd W. Garner
Todd W. Garner
Executive Vice President and
Chief Financial Officer
United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
or
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended: December 31, 2022 Commission file number: 001-39218
CONMED CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Delaware
11311 Concept Boulevard
Largo, Florida
(Address of principal executive offices)
16-0977505
33773
(Zip Code)
(Registrant's telephone number, including area code)
(727) 392-6464
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Common Stock, $0.01 par value
CNMD
registered
NYSE
Name of each exchange on which
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☒ No ☐
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer", "accelerated filer", "smaller reporting company", and
"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of
the shares of voting common stock held by non-affiliates of the registrant was approximately $2.2 billion based upon the closing price of the
Company’s common stock on the NYSE Stock Market.
The number of shares of the registrant's $0.01 par value common stock outstanding as of February 15, 2023 was 30,499,439.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Definitive Proxy Statement and any other informational filings for the 2023 Annual Meeting of Shareholders are
incorporated by reference into Part III of this report.
11311 Concept Blvd.
Largo, Florida 33773
Toll Free: 1-866-4CONMED
International: 727-214-3000
www.CONMED.com
customerexperience@CONMED.com
internationalorders@CONMED.com
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