CONMED Corporation (NYSE:CNMD) Q3 2023 Earnings Call Transcript

I think there’s also a category of procedures that used an alternate available instead of a prime tissue sample. They may have used a little bit different tissue sample and modified it to fit the exact case they needed because remember, they’re taking dimensions and they’re looking for age and characteristics of the donor to match the patient. So they may go a little bit off prime if they felt that was acceptable. So again, each one of those is an individual decision. To the question of our Orthopedics business, we feel really good about it. We think the business right now is better than the numbers in the quarter. U.S. Orthopedics specifically got a great taste of growth in the second quarter and that’s where everybody in that category wants to be.

We’re super excited by what’s going on with BioBrace. Just continues to be a really encouraging play for our team. And as I noted, the expansion of that globally is really important for CONMED Corporation, our patients and the surgeon community. So we’re very excited about what’s going on. And beyond MTF as Todd noted in his opening comments, there were a few supply constraints on just the single use consumables and implants that delayed our revenue in the quarter. So just working through all that, listening to other earnings calls out of non-med tech and GE and Boeing have supply chain challenges, it doesn’t surprise me that our industry is still having some supply chain challenges. And we just have had our head down and been fighting through those over the last 18 months, and we’ll continue to do that.

Rick Wise: Right. I assume a happier note, earlier this month California became the 15th state to pass a bill requiring the state to adopt, implement regulations to evacuate and remove smoke, which I’m sure you know. And I think those regulations are adopted like June 2027, so it’s not close at hand. At the same time, they are obviously a huge state. It seems like a big win. Again, does that – a big state like that making decision like that auger well for continued 20% plus smoke evacuation growth? Or does it accelerate legislation in other states? Just any high level pictures perspectives? Thanks a lot.

Curt Hartman: Sure. Great question and your stats were pretty accurate, Rick. 15 states, 10 are active, five are pending. The five pending go active anywhere between 2024 and 2027. And those 15 states cover roughly 44% of the population, 37% of the hospitals. And there are six on deck, West Virginia, Massachusetts, Florida, Texas, North Carolina, Pennsylvania. So the trend is favorable in terms of U.S. marketplace and smoke legislation. Our data would say where the legislation is in place, the growth rate is higher. Where the legislation is pending is the next level of growth rate, and where there’s no legislation is the lowest level of growth. And so a state like California, which also had a unique approach in that they did this through OSHA, whereas most states are doing it through standard legislation.

California did it through OSHA, so probably carries a little bit more gravitas with it. So that is encouraging and certainly was well received by the nurses associations in the State of California and CONMED is watching that working with that. And we’ll do everything we can to be a participant in those markets. So I think all of that bodes well for the continued growth of the overall smoke evacuation market.

Rick Wise: Thanks for that.

Operator: Thank you. Our next question comes from the line of Matt O’Brien of Piper Sandler.

Matt O’Brien: Great. Thanks for taking the questions, and my condolences as well to the Mishan family. The first one is a two parter, but it’s just more clarification. If you wouldn’t mind, Curt, can you be specific on what the impact was from the supply and MTF issues in Q3 and how much it’s going to impact Q4 just dollar wise in both periods? And then Todd, you said it, I know you don’t want to talk about next year, but you said it, you said double-digit growth is the anticipation for the next several quarters. Does that mean heading into 2024 that’s kind of the level we should be thinking about in terms of CONMED on the top line?