CONMED Corporation CNMD announced that it has completed the acquisition of privately-held start-up, Biorez, in an all-cash deal worth $85 million. The company had signed a definitive agreement earlier this month to acquire this start-up, which develops implant technology for healing soft tissue on a cash-free, debt-free basis. Per the terms of the deal, CONMED will pay Biorez up to an additional $165 million in growth-based earnout payments over a four-year period.
CONMED’s acquisition will add Biorez’s proprietary, innovative bioinductive scaffold — BioBrace Implant technology — that is intended to reinforce soft tissue where weakness exists and facilitate healing. The FDA has already approved the use of BioBrace, which is available in multiple product sizes.
CONMED believes that the addition of BioBrace Implant technology represents an important step forward for its sports medicine portfolio as it will add the next generation of healing in sports medicine that fits seamlessly into CONMED’s existing suite of products.
Financial Impact of the Transaction
CONMED expects the acquisition of Biorez to add approximately $1 million in revenues in 2022. However, the acquisition will dilute the company’s adjusted earnings by approximately 10 cents to 15 cents in 2022 and 2023. The Biorez acquisition will start to be accretive to CONMED’s adjusted earnings from 2024.
Shares of CONMED have lost 31.3% so far this year compared with the industry’s decline of 10.4%.
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CONMED recently acquired another privately-held company, In2Bones Global, in June for $145 million, expanding its orthopedic portfolio. CONMED will also pay an additional $110 million in growth-based earnout payments over four years. In2Bones Global’s all-inclusive product portfolio includes implants, fracture systems, biologics and related hardware.
Per management at CONMED, the buyout is a natural strategic expansion of its Orthopedic portfolio. Given the expertise shown by the leadership team, extensive sales channel and broad portfolio, In2Bones Global presents a great platform for CONMED to move into the extremities market.
In July 2022, the company reported in-line second-quarter 2022 earnings. It witnessed strong performance across its Orthopedic and General Surgery units while delivering sales growth in both its domestic and overseas markets. However, ongoing unfavorable foreign currency movements have been hurting domestic sales growth, which led the company to lower its revenue and earnings outlook for 2022. Meanwhile, the continued inflationary and supply chain challenges in the second quarter do not augur well.
CONMED Corporation Price
CONMED Corporation price | CONMED Corporation Quote
Zacks Rank and Stock to Consider
Currently, CONMED has a Zacks Rank #4 (Sell).
Some better-ranked stocks from the pharma/biotech sector include ShockWave Medical SWAV, Patterson Companies PDCO and Alkermes ALKS. While ShockWave Medical sports a Zacks Rank #1 (Strong Buy), Patterson Companies and Alkermes carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ShockWave Medical’s earnings per share estimates have improved from $1.84 to $2.02 for 2022 and from $2.82 to $2.95 for 2023 in the past 60 days. SWAV has gained 23% so far this year.
ShockWave Medical delivered an earnings surprise of 189.99%, on average, in the last four quarters.
Estimates for Patterson Companies have improved from earnings of $2.25 to $2.30 for 2022 and $2.42 to $2.48 for 2023 in the past 60 days. PDCO stock has risen 7.9% so far this year.
Patterson Companies delivered an earnings surprise of 16.49%, on average, in the last four quarters.
Alkermes’ earnings per share estimates have improved from a loss of 17 cents to earnings of 20 cents for 2022 and from 31 cents to 50 cents for 2023 in the past 60 days. ALKS has gained 9.3% so far this year.
Alkermes delivered an earnings surprise of 325.48%, on average, in the last four quarters.
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