CONMED Corporation
Joseph J. Corasanti President and CEO
February 7, 2012
A World of Solutions
Forward-Looking
Statements
In connection with our discussion of the Company and its results, we may refer
to some forward-looking statements that we have previously given. Such
forward looking statements are current as of the date given in previous
Company disclosures. It is the Company’s policy not to update or confirm
guidance except in a Regulation FD compliant manner. It is possible that our
actual results may differ from the forward-looking statements. Additional
information regarding factors that could cause such a difference appears in our
most recently filed Forms 10-Q and 10-K.
Corporate Overview
Our History Corporate Overview
■ Headquartered in Utica, Central New York
■ Founded in 1973 to sell disposable
medical devices
■ Growth fueled via internal product development
& acquisitions
■ 24 years as a public company on NASDAQ
Corporate Overview
ConMed develops, manufactures and markets thousands of products used in:
■ Operating Rooms
■ Surgery Centers
■ Physicians’ Offices
■ Hospitals
Products sold in 100+ countries
50% of Sales from outside the U.S.
40% Europe, 25% Americas, 35% Middle East & Asia
3,400 World-wide employees
Corporate Overview
Corporate Overview
Focus
Surgical products:
■ 90% used in surgical applications
■ Single-use, disposables: 75% - 80% of revenue (annuity)
Minimally Invasive Surgery (MIS):
■ 50% of products sales derived from minimally invasive surgical products
Corporate Overview
Primary Markets of Activity
2010 Sales: $713.7 MM
Corporate Overview
Arthroscopy 40%
Powered Instruments 20%
Electrosurgery 14%
Patient Care 9%
Endosurgery 10%
Endoscopic Technologies 7%
AR
ET EN
PC
ES PI
Growth Strategy Corporate Overview
Growth Strategy
Organic Sales Growth Mfg. & Operational Efficiencies New Product Development
Leverage Structure Cost Improvement Leverage Structure
ROW Growth
Leverage Structure
Result: Leverage the structure and increase operating margin
Research and Development Corporate Overview
Research and Development
Emphasis on Internal
Product Development
135+ Employees
in R&D Functions
R&D Spend
Target = 4 %
Sales and Distribution - US Corporate Overview
Orthopedic
Electrosurgery
Patient Care
EndoSurgery
Endoscopic Technologies
US Sales Force = 460
270
40 40
50
60
US
OUS
Sales and Distribution - OUS Corporate Overview
■ Australia
■ Austria
■ Belgium
■ Canada
■ China
■ Denmark
■ Finland
■ France
■ Germany
■ Korea
■ Italy
■ Netherlands
Direct sales in 16 Countries
OUS Sales Force = 270
■ Poland
■ Spain
■ Sweden
■ United Kingdom
Nine Mos. 2011 Results
► Sales = $539.5
1.9% increase
► Adjusted* EPS = $1.05
12% increase
► Adjusted* operating margin = 9.9%
110 basis point improvement
• Free Cash Flow = $64.0 million ($2.23 per share)
* Adjusted for unusual items and amortization of debt discount. See reconciliation in October 27,
2011 press announcement.
Business Overview
ConMed Corporation
A World of Solutions
Arthroscopy – 40 % of sales
■ Products and services
■ Procedure specific instruments and repair implants
■ Tissue removal shaver blades and consoles
■ Fluid Management
■ Allograft tissue for sports medicine starting in 2012
■ Endoscopic Video systems
■ Approx. 80% are disposables for arthroscopic sports medicine.
■ Growth – constant currency
■ 9 Mos. 2011 ■ Single-use: + 4.9%
■ Capital: -19.3%
WW Market: $1.8 BN
Market Position: 2
Normal Expected Market Growth
Rate: 6-8%
Business Overview
CONMED & MTF for
Sports Medicine
■ CONMED has become MTF’s exclusive distribution
partner for Sports Medicine
■ Effective January 3, 2012
■ Enhances CONMED’s sports medicine franchise
■ Opportunities for cross selling
■ Expansion into world-wide markets for MTF
■ Accretive on a cash basis and GAAP basis
Musculoskeletal Transplant
Foundation (MTF)
■ World’s largest tissue bank
■ Recover, process and distribute
■ Musculoskeletal tissues
■ Bone, ligaments & cartilage
■ Dermis
■ Cell based tissue forms
■ Other MedTech distribution partners for spine, dermis,
dental, non-sports medicine ortho
MTF Details
■ MTF will continue to source, process, deliver and invoice for tissue forms
■ CONMED will promote, educate and train physicians & hospitals on allograft
use
■ MTF will compensate CONMED with 50% of its tissue service revenue
■ CONMED will distribute and sell the Cascade Platelet-Rich-Plasma (PRP)
therapy product
■ Collaboration with MTF on development of new sports medicine tissue
forms
■ Initial payment of $63 million to MTF with contingent payments of up to $84
million over four years
2012 Expected Financial
Metrics from MTF
($ in millions)
Service revenue from tissue promotion $32.0 - $37.0
and PRP sales
PRP cost of sales $2.0
Selling and marketing expense $15.0 - $17.0
EBITDA $15.0 - $18.0
Amortization $6.0
Financing $2.0
Pre-Tax income $7.0 - $10.0
Tax provision $3.0 - $4.0
Net income $4.0 - $6.0
EPS $0.15 - $0.18
New Product of Note:
Sequent™ Meniscal
Repair System
Continuous stitch
technology for repair of
meniscal tears
Knotless
Simplifies the procedure
Powered Instruments
20% of sales
■ Products
■ Powered surgical instruments (e.g. as drills and saws) for orthopedic,
otolaryngology (“ENT”), neurosurgery and other surgical specialties.
■ Growth – constant currency
■ 9 Mos. 2011 ■ Single-use -0.3%
■ Capital: +8.7%
Business Overview
WW Market: $500 MM
Market Position: 2
Normal Expected Market Growth
Rate: 4-5%
New Product of Note:
Mpower ™ Large and Small Bone Handpiece
Business Overview
■ Battery powered orthopedic handpiece
■ Robust power and torque for Large bone procedures
■ High speed for Small bone procedures
■ Also suitable for delicate Small bone procedures
■ Provides technology leadership in Large and Small
bone markets
Electrosurgery
14% of sales
■ Products
■ Radio frequency (“RF”) electrosurgery systems used routinely to
cut and cauterize tissue in nearly all types of surgical procedures worldwide.
■ Growth – constant currency
■ 9 Mos. 2011 + 2.3% ■ Single-use: - 3.6%
■ Capital: +20.1%
Business Overview
WW Market: $400 MM
Market Position: 2
Normal Expected Market Growth
Rate: 3-5%
Altrus®
New Product of Note:
Thermal tissue fusion system
Seals
Cuts
Grasps
Dissects
Thermal technology permits
use in fluid environments
Models for open and minimally
invasive procedures
Current market approximates
$1.5 billion
EndoSurgery
10% of sales
■ Products
■ Endomechanical products such as trocars, clip appliers,
scissors and surgical staplers
■ Growth – constant currency
■ 9 Mos. 2011 + 6.7%
Business Overview
WW Market: $1 BN
Market Position: 3
Normal Expected Market Growth
Rate: 4-6%
Patient Care
9% of sales
■ Products
■ Full line of electrocardiogram (“ECG”) electrodes for heart monitoring,
surgical suction instruments, IV controllers, pulse oximetry, and other
clinical care products
■ Growth – constant currency
■ 9 Mos. 2011 – 4.7%
Business Overview
Market Position: 2 (ECG)
Normal Expected Market Growth
Rate: 2-3%
Endoscopic Technologies
7% of sales
■ Products: a full range of single-use gastro-intestinal (GI) and pulmonary
endoscopy products such as biopsy forceps, polypectomy snares,
hemostasis devices, biliary stents and other devices.
■ Administrative office consolidated ■ 2010 saving of $4 million
■ Growth – constant currency
■ 9 Mos. 2011 +0.6%
Normal Expected Market
Growth Rate: 5-7%
WW Market: $900 MM
Business Overview
Trends, Growth Drivers, Long-Term View
ConMed Corporation
A World of Solutions
Demographics:
Driving Growth Trends, Growth Drivers, Long-Term View
Demographics
Increase in Surgical Procedures Increase in Ave. Life Expectancy
Longer, Active Lives
More Injuries at Earlier Ages Aging Population
Technological Advancements
90% of ConMed Sales are Surgical Products
Growth in Minimally
Invasive Technologies Trends, Growth Drivers, Long-Term View
Minimally Invasive Technologies
Reduces Patient Trauma Increases Recovery Time
50% of ConMed’s Products Are
Designed For MIS Procedures
Cost Containment
Increased Demand for
Single-Use Disposables Trends, Growth Drivers, Long-Term View
Demand for Single-Use Disposables
Reduces Costs Eliminate Risk of Cross Contamination
75% - 80% of ConMed’s Sales Are Derived
From Single-Use Disposables
Health Cost Pressures:
Driving Growth Trends, Growth Drivers, Long-Term View
Economics of Healthcare
Comprehensive
Purchasing Agreements Broader Array of Products
ConMed Offers a Diverse,
Yet Integrated Product Portfolio
GPO’s, IDN’s
Leveraging Purchasing Power
Fewer Suppliers
Global Demand Trends, Growth Drivers, Long-Term View
Global Demand
ROW Medical Spend Increasing
(Demographics Mirror US)
ROW Shifting to
Single-Use Disposables
CONMED Markets to Over 100 Foreign Countries
ROW Sales Represent approximately 50% of Total Revenue
Financial Review
ConMed Corporation
A World of Solutions
Outlook For 2012 Financial Review
We expect improved profitability over 2011 due to:
■ New products gain traction
■ MTF distribution financial benefit
■ We realize economic benefit of cost efficiencies
■ Manufacturing consolidation ■ Lean manufacturing initiatives
■ Product line moves to Mexican plant
■ Leverage the fixed cost structure
Revenue (in millions) Financial Review
Forecast as of October 28, 2011 press announcement plus
anticipated effect of MTF.
$0
$100
$200
$300
$400
$500
$600
$700
$800
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Est.
2012 Est.
Earnings Per Share Financial Review
As of October 27, 2011 press release plus anticipated effect of MTF
Estimates exclude unusual charges and additional non-cash interest expense on
convertible notes required by FASB.
$0.00
$0.50
$1.00
$1.50
$2.00
20062007
20082009
20102011 Est.
2012 Est.
Non-GAAP
Strong Cash Flow
9 Mos 2010* 9 Mos. 2011
(millions)
Cash From Operations* $44.3 $76.7
Capital Expenditures 10.9 12.7
Free Cash Flow* $33.4 $64.0
Cash flow per share* $1.15 $ 2.23
EPS per share $ .80 $ 0.90
Cash greater than EPS $0.35 $ 1.33
*Non-GAAP measurement for 2010. See reconciliation in October 27, 2011 press announcement.
Capitalization Financial Review
($ in Millions) December 2010 September 2011
Cash and Equivalents $ 12.4 $ 39.9
Total Assets $ 985.8 $ 999.2
Total Debt $ 195.6 $ 175.5
Total Equity $ 586.6 $ 609.8
TD / Book Cap 25.0% 22.3%
Our Strengths Financial Review
Intense focus on growing markets
■ Strong brand
■ Leading market positions
■ Superior technologies
Solid Infrastructure
■ Extensive marketing and distribution capabilities
■ Vertically integrated manufacturing
■ Research and development expertise
■ Positive free cash flow
■ Operating margin expansion
Q&A