UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY 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 quarterly period ended			Commission File Number
~~June 30, 2021~~March 31, 2022			001-39218

CONMED CORPORATION

(Exact name of the registrant as specified in its charter)


Delaware			16-0977505
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

11311 Concept Blvd	Largo,	Florida	33773
(Address of principal executive offices)			(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 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, 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 (Check one).

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares outstanding of registrant's common stock, as of ~~July 26, 2021~~May 2, 2022 is ~~29,162,891~~29,526,009 shares.

CONMED CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~JUNE 30, 2021~~MARCH 31, 2022


PART I FINANCIAL INFORMATION
Item Number		Page

Item 1.	Financial Statements (unaudited)

	– Consolidated Condensed Statements of Comprehensive Income ~~(Loss)~~ for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	1

	– Consolidated Condensed Balance Sheets as of ~~June 30, 2021~~March 3 1 , 202 2 and December 31, ~~2020~~202 1	2

	– Consolidated Condensed Statements of Shareholders' Equity for the ~~six~~three months ended ~~June 30, 2021~~March 3 1 , 202 2 and ~~2020~~202 1	3

	– Consolidated Condensed Statements of Cash Flows for the ~~six~~three months ended ~~June 30, 2021~~March 3 1 , 202 2 and ~~2020~~202 1	4

	– Notes to Consolidated Condensed Financial Statements	5


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2120

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2825

Item 4.	Controls and Procedures	2825

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	2825

Item 6.	Exhibits	2925


Signatures		3027

Table of Contents

PART I FINANCIAL INFORMATION

Item 1.

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited, in thousands except per share amounts)


		Three Months Ended				Six Months Ended					Three Months Ended
		June 30,				June 30,					March 31,
		2021		2020		2021		2020			2022		2021
Net sales	Net sales	$	255,161	$	157,785	$	487,837	$	371,796	Net sales	$	242,327	$	232,677

Cost of sales	Cost of sales	113,737		85,856		217,964		180,707		Cost of sales	106,336		104,228

Gross profit	Gross profit	141,424		71,929		269,873		191,089		Gross profit	135,991		128,449

Selling and administrative expense	Selling and administrative expense	104,399		84,475		202,739		180,343		Selling and administrative expense	102,875		98,340

Research and development expense	Research and development expense	11,318		8,700		21,344		18,820		Research and development expense	10,672		10,027

Operating expenses	Operating expenses	115,717		93,175		224,083		199,163		Operating expenses	113,547		108,367

Income (loss) from operations		25,707		(21,246)		45,790		(8,074)
Income from operations										Income from operations	22,444		20,082

Interest expense	Interest expense	9,420		11,401		19,772		20,993		Interest expense	4,998		10,351

Other expense		0		89		0		178

Income (loss) before income taxes		16,287		(32,736)		26,018		(29,245)

Provision (benefit) for income taxes		2,997		(5,336)		2,868		(7,772)
Income before income taxes										Income before income taxes	17,446		9,731

Net income (loss)		$	13,290	$	(27,400)	$	23,150	$	(21,473)
Provision for (benefit from) income taxes										Provision for (benefit from) income taxes	2,471		(129)

Comprehensive income (loss)		$	17,743	$	(24,713)	$	28,486	$	(25,834)
Net income										Net income	$	14,975	$	9,860

Comprehensive income										Comprehensive income	$	16,415	$	10,743

Per share data:	Per share data:									Per share data:

Net income (loss)
Net income										Net income
Basic	Basic	$	0.46	$	(0.96)	$	0.80	$	(0.75)	Basic	$	0.51	$	0.34
Diluted	Diluted	0.41		(0.96)		0.72		(0.75)		Diluted	0.47		0.31

Weighted average common shares	Weighted average common shares									Weighted average common shares
Basic	Basic	29,125		28,542		29,052		28,506		Basic	29,428		28,972
Diluted	Diluted	32,464		28,542		31,964		28,506		Diluted	35,155		31,378

See notes to consolidated condensed financial statements.

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CONMED CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited, in thousands except share and per share amounts)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	46,388	$	27,356	Cash and cash equivalents	$	24,864	$	20,847
Accounts receivable, net	Accounts receivable, net	168,966		177,152		Accounts receivable, net	183,248		183,882
Inventories	Inventories	211,323		194,868		Inventories	253,729		231,644
Prepaid expenses and other current assets	Prepaid expenses and other current assets	16,503		17,278		Prepaid expenses and other current assets	26,459		23,750
Total current assets	Total current assets	443,180		416,654		Total current assets	488,300		460,123
Property, plant and equipment, net	Property, plant and equipment, net	107,722		111,407		Property, plant and equipment, net	108,526		108,863
Goodwill	Goodwill	618,280		618,440		Goodwill	617,534		617,528
Other intangible assets, net	Other intangible assets, net	486,623		501,537		Other intangible assets, net	463,421		471,049
Other assets	Other assets	106,169		103,635		Other assets	107,943		108,454
Total assets	Total assets	$	1,761,974	$	1,751,673	Total assets	$	1,785,724	$	1,766,017

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	21,868	$	18,415	Current portion of long-term debt	$	12,231	$	12,249
Accounts payable	Accounts payable	55,665		53,310		Accounts payable	67,458		58,197
Accrued compensation and benefits	Accrued compensation and benefits	49,192		50,171		Accrued compensation and benefits	45,423		60,488
Other current liabilities	Other current liabilities	71,733		68,305		Other current liabilities	62,485		65,712
Total current liabilities	Total current liabilities	198,458		190,201		Total current liabilities	187,597		196,646

Long-term debt	Long-term debt	707,808		735,221		Long-term debt	703,542		672,407
Deferred income taxes	Deferred income taxes	57,622		57,875		Deferred income taxes	63,226		68,537
Other long-term liabilities	Other long-term liabilities	53,587		59,338		Other long-term liabilities	41,813		42,992
Total liabilities	Total liabilities	1,017,475		1,042,635		Total liabilities	996,178		980,582

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0

Shareholders' equity:	Shareholders' equity:					Shareholders' equity:
Preferred stock, par value $0.01 per share;	Preferred stock, par value $0.01 per share;					Preferred stock, par value $0.01 per share;
authorized 500,000 shares; NaN outstanding		0		0
Common stock, par value $0.01 per share; 100,000,000 shares authorized; 31,299,194 shares issued in 2021 and 2020, respectively		313		313
authorized 500,000 shares; none outstanding						authorized 500,000 shares; none outstanding	—		—
Common stock, par value $0.01 per share; 100,000,000 shares authorized; 31,299,194 shares issued in 2022 and 2021, respectively						Common stock, par value $0.01 per share; 100,000,000 shares authorized; 31,299,194 shares issued in 2022 and 2021, respectively	313		313
Paid-in capital	Paid-in capital	393,663		382,628		Paid-in capital	365,555		396,771
Retained earnings	Retained earnings	468,924		457,417		Retained earnings	526,472		496,605
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(58,345)		(63,681)		Accumulated other comprehensive loss	(52,763)		(54,203)
Less: 2,139,851 and 2,410,045 shares of common stock in treasury, at cost in 2021 and 2020, respectively		(60,056)		(67,639)
Less: 1,782,667 and 1,925,893 shares of common stock in treasury, at cost in 2022 and 2021, respectively						Less: 1,782,667 and 1,925,893 shares of common stock in treasury, at cost in 2022 and 2021, respectively	(50,031)		(54,051)
Total shareholders’ equity	Total shareholders’ equity	744,499		709,038		Total shareholders’ equity	789,546		785,435
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	1,761,974	$	1,751,673	Total liabilities and shareholders’ equity	$	1,785,724	$	1,766,017

See notes to consolidated condensed financial statements.

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CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited, in thousands except per share amounts)


		Common Stock			Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Shareholders’ Equity			Common Stock			Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Shareholders’ Equity
		Shares	Amount													Shares	Amount
Balance at December 31, 2020		31,299	$	313	$	382,628	$	457,417	$	(63,681)	$	(67,639)	$	709,038
Balance at December 31, 2021															Balance at December 31, 2021	31,299	$	313	$	396,771	$	496,605	$	(54,203)	$	(54,051)	$	785,435
Common stock issued under employee plans	Common stock issued under employee plans				2,944						5,271		8,215		Common stock issued under employee plans				2,232						4,020		6,252
Stock-based compensation	Stock-based compensation				3,387								3,387		Stock-based compensation				4,463								4,463
Dividends on common stock ($0.20 per share)	Dividends on common stock ($0.20 per share)						(5,813)						(5,813)		Dividends on common stock ($0.20 per share)						(5,899)						(5,899)

Comprehensive income (loss):	Comprehensive income (loss):														Comprehensive income (loss):
Cash flow hedging gain, net	Cash flow hedging gain, net								3,926						Cash flow hedging gain, net								1,082
Pension liability, net	Pension liability, net								631						Pension liability, net								521
Foreign currency translation adjustments	Foreign currency translation adjustments								(3,674)						Foreign currency translation adjustments								(163)
Net income	Net income						9,860								Net income						14,975
Total comprehensive income	Total comprehensive income												10,743		Total comprehensive income												16,415
Balance at March 31, 2021		31,299	$	313	$	388,959	$	461,464	$	(62,798)	$	(62,368)	$	725,570
Common stock issued under employee plans					414						2,312		2,726
Stock-based compensation					4,290								4,290
Dividends on common stock ($0.20 per share)							(5,830)						(5,830)
Comprehensive income (loss):
Cash flow hedging gain, net									1,221
Pension liability, net									631
Foreign currency translation adjustments									2,601
Net income							13,290
Total comprehensive income													17,743
Balance at June 30, 2021		31,299	$	313	$	393,663	$	468,924	$	(58,345)	$	(60,056)	$	744,499
Cumulative effect of change in accounting principle(1)															Cumulative effect of change in accounting principle(1)				(37,911)		20,791						(17,120)
Balance at March 31, 2022															Balance at March 31, 2022	31,299	$	313	$	365,555	$	526,472	$	(52,763)	$	(50,031)	$	789,546


		Common Stock			Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Shareholders’ Equity			Common Stock			Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Shareholders’ Equity
		Shares	Amount													Shares	Amount
Balance at December 31, 2019		31,299	$	313	$	379,324	$	470,844	$	(59,277)	$	(80,737)	$	710,467
Balance at December 31, 2020															Balance at December 31, 2020	31,299	$	313	$	382,628	$	457,417	$	(63,681)	$	(67,639)	$	709,038
Common stock issued under employee plans	Common stock issued under employee plans				(7,736)						2,696		(5,040)		Common stock issued under employee plans				2,944						5,271		8,215
Stock-based compensation	Stock-based compensation				3,032								3,032		Stock-based compensation				3,387								3,387
Dividends on common stock ($0.20 per share)	Dividends on common stock ($0.20 per share)						(5,703)						(5,703)		Dividends on common stock ($0.20 per share)						(5,813)						(5,813)
Comprehensive income (loss):	Comprehensive income (loss):														Comprehensive income (loss):
Cash flow hedging gain, net	Cash flow hedging gain, net								2,405						Cash flow hedging gain, net								3,926
Pension liability, net	Pension liability, net								535						Pension liability, net								631
Foreign currency translation adjustments	Foreign currency translation adjustments								(9,988)						Foreign currency translation adjustments								(3,674)
Net income	Net income						5,927								Net income						9,860
Total comprehensive loss	Total comprehensive loss												(1,121)		Total comprehensive loss												10,743
Balance at March 31, 2020		31,299	$	313	$	374,620	$	471,068	$	(66,325)	$	(78,041)	$	701,635
Common stock issued under employee plans					(1,150)						1,283		133
Stock-based compensation					3,555								3,555
Dividends on common stock ($0.20 per share)							(5,712)						(5,712)
Comprehensive income (loss):
Cash flow hedging loss, net									(2,429)
Pension liability, net									535
Foreign currency translation adjustments									4,581
Net loss							(27,400)
Total comprehensive loss													(24,713)
Balance at June 30, 2020		31,299	$	313	$	377,025	$	437,956	$	(63,638)	$	(76,758)	$	674,898
Balance at March 31, 2021															Balance at March 31, 2021	31,299	$	313	$	388,959	$	461,464	$	(62,798)	$	(62,368)	$	725,570
(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 3 for further detail.															(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 3 for further detail.

See notes to consolidated condensed financial statements.

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CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


		Six Months Ended					Three Months Ended
		June 30,					March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	23,150	$	(21,473)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income						Net income	$	14,975	$	9,860
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	Depreciation	8,741		9,234		Depreciation	4,032		4,757
Amortization of debt discount	Amortization of debt discount	5,031		4,810		Amortization of debt discount	—		2,503
Amortization of deferred debt issuance costs	Amortization of deferred debt issuance costs	2,116		1,686		Amortization of deferred debt issuance costs	880		1,058
Amortization	Amortization	27,316		27,392		Amortization	12,799		13,519
Stock-based compensation	Stock-based compensation	7,676		6,587		Stock-based compensation	4,463		3,387

Deferred income taxes	Deferred income taxes	(1,781)		(9,490)		Deferred income taxes	177		(2,688)

Increase (decrease) in cash flows from changes in assets and liabilities:	Increase (decrease) in cash flows from changes in assets and liabilities:					Increase (decrease) in cash flows from changes in assets and liabilities:
Accounts receivable	Accounts receivable	7,780		43,732		Accounts receivable	(163)		11,957
Inventories	Inventories	(16,693)		(13,029)		Inventories	(21,857)		(11,638)
Accounts payable	Accounts payable	2,547		(15,703)		Accounts payable	9,205		2,804
Accrued compensation and benefits	Accrued compensation and benefits	(769)		(16,646)		Accrued compensation and benefits	(14,966)		(8,955)
Other assets	Other assets	(12,289)		(3,634)		Other assets	(6,129)		(6,002)
Other liabilities	Other liabilities	3,798		(4,206)		Other liabilities	(3,088)		1,782
Net cash provided by operating activities	Net cash provided by operating activities	56,623		9,260		Net cash provided by operating activities	328		22,344

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:

Purchases of property, plant and equipment	Purchases of property, plant and equipment	(6,103)		(6,577)		Purchases of property, plant and equipment	(3,687)		(3,109)
Payments related to business and asset acquisitions, net of cash acquired		0		(3,852)

Net cash used in investing activities	Net cash used in investing activities	(6,103)		(10,429)		Net cash used in investing activities	(3,687)		(3,109)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Payments on term loan	Payments on term loan	(8,281)		(6,625)		Payments on term loan	(2,981)		(3,313)

Payments on revolving line of credit	Payments on revolving line of credit	(161,000)		(70,000)		Payments on revolving line of credit	(99,000)		(72,000)
Proceeds from revolving line of credit	Proceeds from revolving line of credit	139,000		108,000		Proceeds from revolving line of credit	110,000		64,000

Payments related to contingent consideration	Payments related to contingent consideration	0		(2,071)		Payments related to contingent consideration	(798)		—
Payments related to debt issuance costs		0		(2,057)

Dividends paid on common stock	Dividends paid on common stock	(11,588)		(11,387)		Dividends paid on common stock	(5,874)		(5,775)

Other, net	Other, net	10,902		(5,090)		Other, net	6,142		8,216
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(30,967)		10,770		Net cash provided by (used in) financing activities	7,489		(8,872)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(521)		(474)		Effect of exchange rate changes on cash and cash equivalents	(113)		(950)

Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	19,032		9,127		Net increase in cash and cash equivalents	4,017		9,413

Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	27,356		25,856		Cash and cash equivalents at beginning of period	20,847		27,356

Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	46,388	$	34,983	Cash and cash equivalents at end of period	$	24,864	$	36,769

Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Dividends payable	Dividends payable	$	5,830	$	5,712	Dividends payable	$	5,899	$	5,813

See notes to consolidated condensed financial statements.

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CONMED CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited, in thousands except per share amounts)

Note 1 – Operations

CONMED Corporation (“CONMED”, the “Company”, “we” or “us”) is a medical technology company that provides surgical devices and equipment for minimally invasive 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.

Note 2 - Interim Financial Information

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary to fairly present the results for the periods presented. The consolidated condensed financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. Results for the period ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022.

The consolidated condensed financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, ~~2020~~2021 included in our Annual Report on Form 10-K.

Use of Estimates

Preparation of the consolidated condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amounts of revenue and expenses during the reporting period.

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. We are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of ~~July 29, 2021,~~May 5, 2022, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

Note 3 – New Accounting Pronouncements

Recently Adopted Accounting Standards

In August 2020, the FASB issued 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, 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 condensed balance sheets, to reflect the full principal amount of the convertible notes outstanding net of issuance costs, 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 convertible 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 by approximately $2.6 million during the three months ended March 31, 2022 and is expected to reduce interest expense by approximately $10.4 million for the year ended December 31, 2022.

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Additionally, the dilutive share count increased by approximately 2.5 million shares as a result of calculating the impact of dilution from the Company's convertible notes using the if-converted method. Diluted EPS increased by approximately $0.07 in the quarter ended March 31, 2022 as a result of adoption of this new standard.

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 is effective as of March 12, 2020 through December 31, 2022. The Company has not adopted this ASU as of March 31, 2022. Our seventh amended and restated senior credit agreement includes language to address the change from LIBOR to an alternative base rate, therefore we do not believe reference rate reform will have a significant impact on our consolidated financial statements, however will continue to monitor our transition away from LIBOR and the potential to elect to apply this guidance in our consolidated financial statements in the event that we are impacted by reference rate reform.

Note 34 - Revenues

The following tables present revenue disaggregated by primary geographic market where the products are sold, by product line and timing of revenue recognition:


		Three Months Ended						Three Months Ended							Three Months Ended						Three Months Ended
		June 30, 2021						June 30, 2020							March 31, 2022						March 31, 2021
		Orthopedic Surgery		General Surgery		Total		Orthopedic Surgery		General Surgery		Total			Orthopedic Surgery		General Surgery		Total		Orthopedic Surgery		General Surgery		Total
Primary Geographic Markets	Primary Geographic Markets													Primary Geographic Markets
United States	United States	$	40,777	$	102,813	$	143,590	$	21,387	$	66,038	$	87,425	United States	$	37,947	$	93,280	$	131,227	$	37,131	$	86,812	$	123,943
Europe, Middle East & Africa	Europe, Middle East & Africa	27,120		20,143		47,263		13,715		16,146		29,861		Europe, Middle East & Africa	29,980		20,326		50,306		26,052		18,544		44,596
Asia Pacific	Asia Pacific	26,284		16,136		42,420		19,799		10,481		30,280		Asia Pacific	23,418		12,954		36,372		26,602		12,662		39,264
Americas (excluding the United States)	Americas (excluding the United States)	13,712		8,176		21,888		5,582		4,637		10,219		Americas (excluding the United States)	16,172		8,250		24,422		17,381		7,493		24,874
Total sales from contracts with customers	Total sales from contracts with customers	$	107,893	$	147,268	$	255,161	$	60,483	$	97,302	$	157,785	Total sales from contracts with customers	$	107,517	$	134,810	$	242,327	$	107,166	$	125,511	$	232,677

Timing of Revenue Recognition	Timing of Revenue Recognition													Timing of Revenue Recognition
Goods transferred at a point in time	Goods transferred at a point in time	$	97,649	$	146,105	$	243,754	$	53,670	$	96,422	$	150,092	Goods transferred at a point in time	$	98,204	$	133,322	$	231,526	$	97,690	$	124,394	$	222,084
Services transferred over time	Services transferred over time	10,244		1,163		11,407		6,813		880		7,693		Services transferred over time	9,313		1,488		10,801		9,476		1,117		10,593
Total sales from contracts with customers	Total sales from contracts with customers	$	107,893	$	147,268	$	255,161	$	60,483	$	97,302	$	157,785	Total sales from contracts with customers	$	107,517	$	134,810	$	242,327	$	107,166	$	125,511	$	232,677

Six Months Ended Six Months Ended
June 30, 2021 June 30, 2020
Orthopedic Surgery General Surgery Total Orthopedic Surgery General Surgery Total
Primary Geographic Markets
United States $ 77,907 $ 189,625 $ 267,532 $ 58,426 $ 147,847 $ 206,273
Europe, Middle East & Africa 53,172 38,688 91,860 39,622 32,761 72,383
Asia Pacific 52,886 28,798 81,684 40,333 18,805 59,138
Americas (excluding the United States) 31,093 15,668 46,761 21,385 12,617 34,002
Total sales from contracts with customers $ 215,058 $ 272,779 $ 487,837 $ 159,766 $ 212,030 $ 371,796
Timing of Revenue Recognition
Goods transferred at a point in time $ 195,339 $ 270,499 $ 465,838 $ 144,222 $ 210,324 $ 354,546
Services transferred over time 19,719 2,280 21,999 15,544 1,706 17,250
Total sales from contracts with customers $ 215,058 $ 272,779 $ 487,837 $ 159,766 $ 212,030 $ 371,796

Contract liability balances related to the sale of extended warranties to customers are as follows:

June 30, 2021 December 31, 2020
Contract liability $ 15,076 $ 13,666


	March 31, 2022		December 31, 2021

Contract liability	$	17,534	$	16,760

Revenue recognized during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020~~ from amounts included in contract liabilities at the beginning of the period were ~~$6.1~~$3.9 million and ~~$5.5~~$3.4 million, respectively. There were no material contract assets as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

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Note 45 – Comprehensive Income ~~(Loss)~~

Comprehensive income ~~(loss)~~ consists of the following:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Net income (loss) $ 13,290 $ (27,400) $ 23,150 $ (21,473)
Other comprehensive income (loss):
Cash flow hedging gain (loss), net of income tax (income tax expense (benefit) of $388 and $(774) for the three months ended June 30, 2021 and 2020, respectively, and $1,639 and $(8) for the six months ended June 30, 2021 and 2020, respectively) 1,221 (2,429) 5,147 (24)
Pension liability, net of income tax (income tax expense of $201 and $170 for the three months ended June 30, 2021 and 2020, respectively, and $402 and $340 for the six months ended June 30, 2021 and 2020, respectively) 631 535 1,262 1,070
Foreign currency translation adjustment 2,601 4,581 (1,073) (5,407)
Comprehensive income (loss) $ 17,743 $ (24,713) $ 28,486 $ (25,834)


	Three Months Ended March 31,
	2022		2021
Net income	$	14,975	$	9,860

Other comprehensive income (loss):
Cash flow hedging gain, net of income tax (income tax expense of $346 and $1,250 for the three months ended March 31, 2022 and 2021, respectively)	1,082		3,926
Pension liability, net of income tax (income tax expense of $127 and $201 for the three months ended March 31, 2022 and 2021, respectively)	521		631
Foreign currency translation adjustment	(163)		(3,674)

Comprehensive income	$	16,415	$	10,743

Accumulated other comprehensive loss consists of the following:


		Cash Flow Hedging Gain (Loss)		Pension Liability		Cumulative Translation Adjustments		Accumulated Other Comprehensive Income (Loss)			Cash Flow Hedging Gain (Loss)		Pension Liability		Cumulative Translation Adjustments		Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2020		$	(5,945)	$	(36,620)	$	(21,116)	$	(63,681)
Balance, December 31, 2021										Balance, December 31, 2021	$	3,656	$	(29,671)	$	(28,188)	$	(54,203)

Other comprehensive income (loss) before reclassifications, net of tax	Other comprehensive income (loss) before reclassifications, net of tax	2,723		0		(1,073)		1,650		Other comprehensive income (loss) before reclassifications, net of tax	2,460		—		(163)		2,297
Amounts reclassified from accumulated other comprehensive income (loss) before taxa	Amounts reclassified from accumulated other comprehensive income (loss) before taxa	3,196		1,664		0		4,860		Amounts reclassified from accumulated other comprehensive income (loss) before taxa	(1,819)		648		—		(1,171)
Income tax	Income tax	(772)		(402)		0		(1,174)		Income tax	441		(127)		—		314

Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	5,147		1,262		(1,073)		5,336		Net current-period other comprehensive income (loss)	1,082		521		(163)		1,440

Balance, June 30, 2021		$	(798)	$	(35,358)	$	(22,189)	$	(58,345)
Balance, March 31, 2022										Balance, March 31, 2022	$	4,738	$	(29,150)	$	(28,351)	$	(52,763)


		Cash Flow Hedging Gain (Loss)		Pension Liability		Cumulative Translation Adjustments		Accumulated Other Comprehensive Income (Loss)			Cash Flow Hedging Gain (Loss)		Pension Liability		Cumulative Translation Adjustments		Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2019		$	493	$	(31,691)	$	(28,079)	$	(59,277)
Balance, December 31, 2020										Balance, December 31, 2020	$	(5,945)	$	(36,620)	$	(21,116)	$	(63,681)

Other comprehensive income (loss) before reclassifications, net of tax	Other comprehensive income (loss) before reclassifications, net of tax	770		0		(5,407)		(4,637)		Other comprehensive income (loss) before reclassifications, net of tax	2,725		—		(3,674)		(949)
Amounts reclassified from accumulated other comprehensive income (loss) before taxa	Amounts reclassified from accumulated other comprehensive income (loss) before taxa	(1,048)		1,410		0		362		Amounts reclassified from accumulated other comprehensive income (loss) before taxa	1,584		832		—		2,416
Income tax	Income tax	254		(340)		0		(86)		Income tax	(383)		(201)		—		(584)

Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	(24)		1,070		(5,407)		(4,361)		Net current-period other comprehensive income (loss)	3,926		631		(3,674)		883

Balance, June 30, 2020		$	469	$	(30,621)	$	(33,486)	$	(63,638)
Balance, March 31, 2021										Balance, March 31, 2021	$	(2,019)	$	(35,989)	$	(24,790)	$	(62,798)

(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 56 and Note ~~11,~~12, respectively, for further details.

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~~Note 5 – Fair Value of Financial Instruments~~

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 on intercompany receivables designated 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.

~~The following table presents the notional contract amounts for forward contracts outstanding:~~

As of
FASB ASC Topic 815 Designation June 30, 2021 December 31, 2020
Forward exchange contracts Cash flow hedge $ 172,705 $ 154,504
Forward exchange contracts Non-designated 39,270 42,380

~~The remaining time to maturity as of June 30, 2021 is within two years for hedge designated foreign exchange contracts and approximately one month for non-hedge designated forward exchange contracts.~~

~~Table of Contents~~

~~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) and net earnings on our consolidated condensed statements of comprehensive income (loss) and our consolidated condensed balance sheets:

Amount of Gain (Loss) Recognized in AOCI Consolidated Condensed Statements of Comprehensive Income (Loss) Amount of Gain (Loss) Reclassified from AOCI
Three Months Ended June 30,
Total Amount of Line Item Presented
Derivative Instrument 2021 2020 Location of amount reclassified 2021 2020 2021 2020
Foreign exchange contracts $ (3) $ (3,279) Net Sales $ 255,161 $ 157,785 $ (2,022) $ 342
Cost of Sales 113,737 85,856 410 (418)
Pre-tax loss $ (3) $ (3,279) $ (1,612) $ (76)
Tax benefit (1) (792) (389) (18)
Net loss $ (2) $ (2,487) $ (1,223) $ (58)

Amount of Gain (Loss) Recognized in AOCI Consolidated Condensed Statements of Comprehensive Income (Loss) Amount of Gain (Loss) Reclassified from AOCI
Six Months Ended June 30,
Total Amount of Line Item Presented
Derivative Instrument 2021 2020 Location of amount reclassified 2021 2020 2021 2020
Foreign exchange contracts $ 3,590 $ 1,015 Net Sales $ 487,837 $ 371,796 $ (3,871) $ 1,543
Cost of Sales 217,964 180,707 675 (495)
Pre-tax gain (loss) $ 3,590 $ 1,015 $ (3,196) $ 1,048
Tax expense (benefit) 867 245 (772) 254
Net gain (loss) $ 2,723 $ 770 $ (2,424) $ 794

At June 30, 2021, $1.2 million of net unrealized losses 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.

~~Table of Contents~~

~~Derivatives not designated as cash flow hedges~~

~~Net losses from derivative instruments not accounted for as hedges and gains and losses on our intercompany receivables on our consolidated condensed statements of comprehensive income (loss) were:~~

Three Months Ended June 30, Six Months Ended June 30,
Derivative Instrument Location on Consolidated Condensed Statements of Comprehensive Income (Loss) 2021 2020 2021 2020

Net loss on currency forward contracts Selling and administrative expense $ (809) $ (302) $ (350) $ (547)
Net gain (loss) on currency transaction exposures Selling and administrative expense $ 243 $ 22 $ (879) $ (169)

~~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 June 30, 2021 and December 31, 2020:

June 30, 2021 Location on Consolidated Condensed Balance Sheet Asset Fair Value Liabilities Fair Value Net
Fair
Value
Derivatives designated as hedged instruments:
Foreign exchange contracts Other current liabilities $ 1,885 $ (3,411) $ (1,526)
Foreign exchange contracts Other long-term assets 745 (271) 474
$ 2,630 $ (3,682) $ (1,052)
Derivatives not designated as hedging instruments:
Foreign exchange contracts Other current liabilities 40 (71) (31)
Total derivatives $ 2,670 $ (3,753) $ (1,083)

December 31, 2020 Location on Consolidated Condensed Balance Sheet Asset Fair Value Liabilities Fair Value Net
Fair
Value
Derivatives designated as hedged instruments:
Foreign exchange contracts Other current liabilities $ 1,500 $ (8,826) $ (7,326)
Foreign exchange contracts Other long-term liabilities 23 (535) (512)
$ 1,523 $ (9,361) $ (7,838)
Derivatives not designated as hedging instruments:
Foreign exchange contracts Other current liabilities 25 (150) (125)
Total derivatives $ 1,548 $ (9,511) $ (7,963)

~~Our forward foreign exchange contracts are subject to a master netting agreement and qualify for netting in the consolidated condensed balance sheets.~~

~~Table of Contents~~

~~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.

~~Valuation Techniques.~~ Assets and liabilities carried at fair value and measured on a recurring basis as of June 30, 2021 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 carrying amounts reported in our consolidated condensed balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term debt approximate fair value.~~

~~Note 6 - Inventories~~

~~Inventories consist of the following:~~

June 30,
2021 December 31,
2020
Raw materials $ 72,090 $ 71,807
Work-in-process 17,828 15,864
Finished goods 121,405 107,197
Total $ 211,323 $ 194,868

~~Note 7 – 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 outstanding resulting from employee stock options, restricted stock units, performance share units and stock appreciation rights ("SARs") as well as the Notes and related hedge transactions during the period.

~~Table of Contents~~

~~The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2021 and 2020:~~

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Net income (loss) $ 13,290 $ (27,400) $ 23,150 $ (21,473)
Basic – weighted average shares outstanding 29,125 28,542 29,052 28,506
Effect of dilutive potential securities 3,339 0 2,912 0
Diluted – weighted average shares outstanding 32,464 28,542 31,964 28,506
Net income (loss) (per share)
Basic $ 0.46 $ (0.96) $ 0.80 $ (0.75)
Diluted 0.41 (0.96) 0.72 (0.75)

The shares used in the calculation of diluted EPS exclude options and SARs to purchase shares where the exercise price was greater than the average market price of common shares for the period and the effect of the inclusion would be anti-dilutive. Such shares aggregated approximately 0.7 million and 0.5 million for the three and six months ended June 30, 2021, respectively. As the Company was in a net loss position for the three and six months ended June 30, 2020, there were no anti-dilutive shares. Our 2.625% convertible notes due in 2024 (the “Notes”) are convertible under certain circumstances, as defined in the indenture, into a combination of cash and CONMED common stock.

The following is intended to describe the impact of the 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 maturity.

~~The calculation of diluted EPS includes~~potential diluted shares upon conversion of the Notes when the average market price per share of our common stock for the period is greater than the conversion price of the Notes of $88.80. We intend to settle in cash the principal outstanding and use the treasury stock method when calculating their potential dilutive effect, if any.

During the three and six months ended June 30, 2021, our average share price exceeded the conversion price of the Notes and we included in our diluted share count 1.4 million and 1.2 million shares, respectively, assumed to be issued if the Notes were converted. During the three and six months ended June 30, 2020, our average share price had not exceeded the conversion price of the Notes; therefore, under the net share settlement method, there were no potential shares issuable under the Notes to be used in the calculation of diluted EPS.

We previously entered into convertible notes hedge transactions to increase the effective conversion price of the Notes to $114.92. However, our convertible notes hedges are not included when calculating potential dilutive shares since their effect is always anti-dilutive.

~~Concurrently with entering into the hedge transactions, we also previously entered into warrant transactions under which we agreed to sell shares of our common stock at $114.92.~~

~~The calculation of diluted EPS also 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. During the three and six months ended June 30, 2021, our average share price exceeded $114.92 and we therefore included in our diluted share count an additional 0.6 million and 0.4 million shares, respectively, assumed to be issued under the warrants.

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Note 6 – Fair Value of Financial Instruments

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.

The following table presents the notional contract amounts for forward contracts outstanding:


		As of
	FASB ASC Topic 815 Designation	March 31, 2022		December 31, 2021
Forward exchange contracts	Cash flow hedge	$	189,696	$	172,894
Forward exchange contracts	Non-designated	57,255		38,897

The remaining time to maturity as of March 31, 2022 is within two years for hedge designated foreign exchange contracts and approximately one month for non-hedge designated forward exchange contracts.

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Statement of comprehensive income 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 condensed statements of comprehensive income and our consolidated condensed balance sheets:


	Amount of Gain Recognized in AOCI				Consolidated Condensed Statements of Comprehensive Income					Amount of Gain (Loss) Reclassified from AOCI
	Three Months Ended March 31,
						Total Amount of Line Item Presented
Derivative Instrument	2022		2021		Location of amount reclassified	2022		2021		2022		2021

Foreign exchange contracts	$	3,247	$	3,593	Net Sales	$	242,327	$	232,677	$	1,744	$	(1,849)
					Cost of Sales	106,336		104,228		75		265
Pre-tax gain (loss)	$	3,247	$	3,593						$	1,819	$	(1,584)
Tax expense (benefit)	787		868							441		(383)
Net gain (loss)	$	2,460	$	2,725						$	1,378	$	(1,201)

At March 31, 2022, $4.5 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 and gains and losses on our intercompany receivables on our consolidated condensed statements of comprehensive income were:


		Three Months Ended March 31,
Derivative Instrument	Location on Consolidated Condensed Statements of Comprehensive Income	2022		2021

Net gain (loss) on currency forward contracts	Selling and administrative expense	$	(958)	$	458
Net gain (loss) on currency transaction exposures	Selling and administrative expense	$	415	$	(1,123)

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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 March 31, 2022 and December 31, 2021:


March 31, 2022	Location on Consolidated Condensed Balance Sheet	Asset Fair Value		Liabilities Fair Value		Net Fair Value
Derivatives designated as hedged instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	$	6,518	$	(570)	$	5,948
Foreign exchange contracts	Other long-term assets	651		(344)		307
		$	7,169	$	(914)	$	6,255

Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	46		(213)		(167)

Total derivatives		$	7,215	$	(1,127)	$	6,088


December 31, 2021	Location on Consolidated Condensed Balance Sheet	Asset Fair Value		Liabilities Fair Value		Net Fair Value
Derivatives designated as hedged instruments:
Foreign exchange contracts	Prepaid expenses and other current assets	$	5,331	$	(430)	$	4,901
Foreign exchange contracts	Other long-term liabilities	82		(161)		(79)
		$	5,413	$	(591)	$	4,822

Derivatives not designated as hedging instruments:
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 condensed 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.

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Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of March 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 carrying amounts reported in our consolidated condensed balance sheets for cash and cash equivalents, accounts receivable, accounts payable and variable long-term debt approximate fair value.

Note 7 - Inventories

Inventories consist of the following:


	March 31, 2022		December 31, 2021
Raw materials	$	89,986	$	83,386
Work-in-process	22,210		17,449
Finished goods	141,533		130,809
Total	$	253,729	$	231,644

Note 8 – Earnings Per Share

Basic earnings per share (“basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding resulting from employee stock compensation as well as the 2.625% convertible notes due in 2024 (the “Notes”) and related hedge transactions during the period.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31, 2022
	Basic EPS		Adjustments		Diluted EPS
Net income	$	14,975	$	1,715	$	16,690

Weighted average shares outstanding	29,428		—		29,428

Employee stock compensation	—		1,158		1,158

Warrants	—		684		684

Convertible notes	—		3,885		3,885

	29,428		5,727		35,155

EPS	$	0.51			$	0.47

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	Three Months Ended March 31, 2021
	Basic EPS		Adjustments		Diluted EPS
Net income	$	9,860	$	—	$	9,860

Weighted average shares outstanding	28,972		—		28,972

Employee stock compensation	—		1,221		1,221

Warrants	—		170		170

Convertible notes	—		1,015		1,015

	28,972		2,406		31,378

EPS	$	0.34			$	0.31

The shares used in the calculation of diluted EPS exclude employee stock options and stock appreciation rights to purchase shares where the exercise price was greater than the average market price of common shares for the period and the effect of the inclusion would be anti-dilutive.

The Notes are convertible under certain circumstances, as defined in the indenture, into a combination of cash and CONMED common stock. The following is intended to describe the impact of the 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 maturity.

Effective with our adoption of ASU 2020-06 on January 1, 2022 (refer to Note 3 for further detail), 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.

For periods prior to adoption of ASU 2020-06, the calculation of diluted EPS includespotential diluted shares upon conversion of the Notes only when the average market price per share of our common stock for the period is greater than the conversion price of the Notes of $88.80 and only for the conversion premium with the principal portion of the Notes assumed to be settled in cash.

We previously entered into convertible notes hedge transactions to increase the effective conversion price of the 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. The calculation of diluted EPS includespotential 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.

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Note 9 – Goodwill and Other Intangible Assets

The changes in the net carrying amount of goodwill for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 are as follows:


Balance as of December 31, ~~2020~~2021	$	~~618,440~~617,528



Foreign currency translation	~~(160)~~6

Balance as of ~~June 30, 2021~~March 31, 2022	$	~~618,280~~617,534

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.

Other intangible assets consist of the following:


		June 30, 2021					December 31, 2020					March 31, 2022					December 31, 2021
		Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization			Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible assets with definite lives:	Intangible assets with definite lives:										Intangible assets with definite lives:	22

Customer and distributor relationships	Customer and distributor relationships	24	$	342,575	$	(143,738)	$	342,639	$	(134,555)	Customer and distributor relationships	25	$	342,391	$	(157,285)	$	342,452	$	(152,934)

Sales representation, marketing and promotional rights	Sales representation, marketing and promotional rights	25	149,376		(57,000)		149,376		(54,000)		Sales representation, marketing and promotional rights	25	149,376		(61,500)		149,376		(60,000)

Developed technology	Developed technology	16	106,604		(23,112)		106,604		(19,705)		Developed technology	16	106,604		(28,266)		106,604		(26,495)

Patents and other intangible assets	Patents and other intangible assets	16	75,235		(49,861)		73,516		(48,882)		Patents and other intangible assets	15	76,849		(51,292)		76,392		(50,890)

Intangible assets with indefinite lives:	Intangible assets with indefinite lives:										Intangible assets with indefinite lives:

Trademarks and tradenames	Trademarks and tradenames		86,544		—		86,544		—		Trademarks and tradenames		86,544		—		86,544		—

		22	$	760,334	$	(273,711)	$	758,679	$	(257,142)			$	761,764	$	(298,343)	$	761,368	$	(290,319)

Customer and distributor relationships, trademarks and tradenames, developed technology and 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”).

Amortization expense related to intangible assets which are subject to amortization totaled ~~$8.2~~$8.0 million and ~~$8.5~~$8.3 million in the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $16.6 million and $17.0 million in the six months ended June 30, 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 condensed statements of comprehensive income (loss). Included in developed technology is $6.0 million of earn-out consideration that is considered probable as of June 30, 2021 associated with a prior asset acquisition. This is recorded in other current liabilities at June 30, 2021.income.

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The estimated intangible asset amortization expense remaining for the year ending December 31, ~~2021~~2022 and for each of the five succeeding years is as follows:


		Amortization included in expense		Amortization recorded as a reduction of revenue		Total			Amortization included in expense		Amortization recorded as a reduction of revenue		Total
Remaining, 2021		$	13,909	$	3,000	$	16,909
2022		26,474		6,000		32,474
Remaining, 2022								Remaining, 2022	$	18,321	$	4,500	$	22,821
2023	2023	25,609		6,000		31,609		2023	25,729		6,000		31,729
2024	2024	24,884		6,000		30,884		2024	25,205		6,000		31,205
2025	2025	25,105		6,000		31,105		2025	25,400		6,000		31,400
2026	2026	24,576		6,000		30,576		2026	24,889		6,000		30,889
2027								2027	24,499		6,000		30,499

Note 910 - Long-Term Debt

Long-term debt consists of the following:

June 30, 2021 December 31, 2020
Revolving line of credit $ 185,000 $ 207,000
Term loan, net of deferred debt issuance costs of $1,373 and $1,668 in 2021 and 2020, respectively 232,158 240,145
2.625% convertible notes, net of deferred debt issuance costs of $4,588 and $5,475 in 2021 and 2020, respectively, and unamortized discount of $28,589 and $33,620 in 2021 and 2020, respectively 311,823 305,904
Financing leases 695 587
Total debt 729,676 753,636
Less: Current portion 21,868 18,415
Total long-term debt $ 707,808 $ 735,221

On February 7, 2019 we entered into a sixth amended and restated senior credit agreement consisting of: (a) a $265.0 million term loan facility and (b) a $585.0 million revolving credit facility. The revolving credit facility then in effect was due to terminate and the loans outstanding under the term loan facility then in effect were scheduled to mature on the earlier of (i) February 7, 2024 or (ii) 91 days prior to the earliest scheduled maturity date of the 2.625% convertible notes due in 2024 described below, (if, as of such date, more than $150.0 million in aggregate principal amount of such convertible notes (or any refinancing thereof) remained outstanding). The term loan facility was payable in quarterly installments increasing over the term of the facility. Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement and in part to finance the acquisition of Buffalo Filter. On April 17, 2020, we amended our sixth amended and restated senior credit agreement to suspend our required leverage ratios for up to four quarters as a result of the potential impact from the COVID-19 pandemic. On November 20, 2020, we entered into a third amendment under our senior credit agreement to lower the applicable margin on the loans and lower the interest floor on Eurocurrency loans agreed upon in April 2020. On April 15, 2021, we terminated the suspension period, thus reinstating our required leverage ratios. The applicable margin depended upon CONMED’s consolidated senior secured leverage ratio, using the pricing grid set forth in the November 2020 amendment. Interest rates were at LIBOR (subject to 0.125% floor) plus an interest rate margin of 2.50% (2.625% at June 30, 2021).

There were $233.5 million in borrowings outstanding on the term loan facility as of June 30, 2021. There were $185.0 million in borrowings outstanding under the revolving credit facility as of June 30, 2021. Our available borrowings on the revolving credit facility at June 30, 2021 were $397.4 million with approximately $2.6 million of the facility set aside for outstanding letters of credit.

The sixth amended and restated senior credit agreement was collateralized by substantially all of our personal property and assets. The sixth amended and restated senior credit agreement contained covenants and restrictions which, among other things, required the maintenance of certain financial ratios and restricted dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and

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~~restrictions as of June 30, 2021. We were also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.~~


	March 31, 2022		December 31, 2021
Revolving line of credit	$	151,000	$	140,000
Term loan, net of deferred debt issuance costs of $1,297 and $1,373 in 2022 and 2021, respectively	223,290		226,196
2.625% convertible notes, net of deferred debt issuance costs of $3,986 and $3,700 in 2022 and 2021, respectively, and unamortized discount of $23,404 in 2021	341,014		317,896
Financing leases	469		564
Total debt	715,773		684,656
Less: Current portion	12,231		12,249
Total long-term debt	$	703,542	$	672,407

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 ~~the fifth anniversary of the closing date.~~July 16, 2026. The term loan is payable in quarterly installments increasing over the term of the facility. ~~Initial interest~~Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement. Interest rates are at LIBOR (0.50% at March 31, 2022) plus an interest rate margin of ~~1.75%~~1.25% (1.750% at March 31, 2022). For ~~those~~ borrowings where we elect to use the alternate base rate, the initial base rate ~~will be~~is the greatest of (i) the Prime Rate, (ii) the Federal Funds Rate plus 0.50% or (iii) the one-month Adjusted LIBOR plus 1.00%, plus, in each case, an interest rate margin.

There were $224.6 million in borrowings outstanding on the term loan facility as of March 31, 2022. There were $151.0 million in borrowings outstanding under the revolving credit facility as of March 31, 2022. Our available borrowings on the revolving credit facility at March 31, 2022 were $431.8 million with approximately $2.2 million of the facility set aside for outstanding letters of credit.

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 March 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 January 29, 2019, we issued $345.0 million in 2.625% convertible notes due in 2024 (the "Notes"). Interest is payable semi-annually in arrears on February 1 and August 1 of each year, commencing August 1, 2019. The Notes will mature on February 1, 2024, unless earlier repurchased or converted. The Notes represent subordinated unsecured obligations and are convertible under certain circumstances, as defined in the indenture, into a combination of cash and CONMED common

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stock. The Notes may be converted at an initial conversion rate of 11.2608 shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $88.80 per share of common stock). Holders of the Notes may convert the 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 Notes will also have the right to convert the 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 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.

Our effective borrowing rate for nonconvertible debt at the time of issuance of the Notes was estimated to be 6.14%, which resulted in $51.6 million of the $345.0 million aggregate principal amount of Notes issued, or $39.1 million after taxes, being attributable to equity. For ~~both~~ the three months ended ~~June 30,~~March 31, 2021, ~~and 2020,~~ we ~~have~~ recorded interest expense related to the amortization of debt discount on the Notes of $2.5 million ~~and for the six months ended June 30, 2021 and 2020, we have recorded interest expense related to the amortization of debt discount on the Notes of $5.0 million and $4.8 million, respectively,~~ at the effective interest rate of 6.14%. ~~The~~On January 1, 2022, we adopted ASU 2020-06 using the modified retrospective approach as further described in Note 3. This ASU eliminated the equity component separately recorded for the conversion features associated with the convertible notes and related debt ~~discount on the Notes is being amortized through February 2024.~~discount. For both the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we have recorded interest expense on the Notes of $2.3 million ~~and for both the six months ended June 30, 2021 and 2020, we have recorded interest expense on the Notes of $4.5 million~~ at the contractual coupon rate of 2.625%.

The estimated fair value of the Notes was approximately $596.9 million as of March 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 Notes in an over-the-counter market transaction on the last business day of the period.

In connection with the offering of the 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 Notes, the number of shares of our common stock underlying the Notes. Concurrently 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.

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) 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 7,8, unless we elect to settle the warrants in cash.

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The scheduled maturities of long-term debt outstanding at ~~June 30, 2021~~March 31, 2022 are as follows:


Remaining 2021		$	9,937
2022		24,844
Remaining 2022				Remaining 2022	$	8,944
2023	2023	383,750		2023	14,906
2024	2024	345,000		2024	365,869
2025	2025	0		2025	23,850
2026				2026	307,018
2027				2027	—

The above amounts exclude ~~debt discount,~~ deferred debt issuance costs and financing leases.

Note 1011 – 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.

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Changes in the liability for standard warranties for the ~~six~~three months ended ~~June 30,~~March 31, are as follows:


		2021		2020			2022		2021
Balance as of January 1,	Balance as of January 1,	$	1,826	$	2,186	Balance as of January 1,	$	2,344	$	1,826

Provision for warranties	Provision for warranties	864		427		Provision for warranties	197		291
Claims made	Claims made	(440)		(584)		Claims made	(187)		(206)

Balance as of June 30,		$	2,250	$	2,029
Balance as of March 31,						Balance as of March 31,	$	2,354	$	1,911

Costs associated with extended warranty repairs are recorded as incurred and amounted to ~~$3.4 million and $3.0~~$1.6 million for both the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020, respectively.~~2021.

Note 1112 – Pension Plan

Net periodic pension cost consists of the following:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Service cost	Service cost	$	248	$	179	$	496	$	358	Service cost	$	269	$	248

Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	451		639		902		1,278		Interest cost on projected benefit obligation	537		451

Expected return on plan assets	Expected return on plan assets	(1,289)		(1,255)		(2,578)		(2,510)		Expected return on plan assets	(1,324)		(1,289)

Net amortization and deferral	Net amortization and deferral	832		705		1,664		1,410		Net amortization and deferral	648		832

Net periodic pension cost	Net periodic pension cost	$	242	$	268	$	484	$	536	Net periodic pension cost	$	130	$	242

We do not expect to make any pension contributions during 2021. Non-service cost of $0.1 million and $0.2 million for the three and six months ended June 30, 2020, respectively, is included in other expense in the consolidated condensed statements of comprehensive income (loss).2022. Non-service pension ~~cost~~cost/(benefit) was immaterial for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021.

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Note 1213 – ~~Acquisition and~~ Other Expense

~~Acquisition and other~~Other expense ~~consist~~consists of the following, which ~~are~~is included in ~~cost of sales or~~ selling and administrative ~~expense depending on the nature of the charge:~~expense:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Plant underutilization costs $ 0 $ 6,586 $ 0 $ 6,586
Product rationalization costs - inventory 0 2,169 0 2,169
Restructuring costs 0 1,087 0 1,087
Manufacturing consolidation costs 0 1,602 0 3,387
Acquisition and integration costs 0 652 0 1,457
Acquisition and other expense included in cost of sales $ 0 $ 12,096 $ 0 $ 14,686
Restructuring and related costs $ 0 $ 2,124 $ 414 $ 2,124
Product rationalization costs - field inventory 0 2,095 0 2,095
Acquisition and integration costs 0 439 0 1,192
Acquisition and other expense included in selling and administrative expense $ 0 $ 4,658 $ 414 $ 5,411


	Three Months Ended March 31,
	2022		2021










Restructuring and related costs	$	—	$	414


Other expense included in selling and administrative expense	$	—	$	414

During the second quarter of 2020, we recorded a $6.6 million charge to cost of sales related to plant underutilization due to abnormally low production as a result of decreased sales caused by the COVID-19 pandemic.

During the second quarter of 2020, we performed an analysis of our product lines and determined certain catalog numbers, principally related to capital equipment, would be discontinued and consolidated into existing product offerings. We consequently recorded a $2.2 million charge to cost of sales to write-off inventory of the discontinued products. In addition, we incurred $2.1 million in costs related to the write-off of field inventory used for customer demonstration and evaluation of the discontinued products which we charged to selling and administrative expense.

During the second quarter of 2020, we incurred $1.1 million in restructuring costs related to a voluntary separation arrangement with employees as a result of the COVID-19 pandemic that were charged to cost of sales based on the job function of the affected employees. We additionally recorded a charge of $2.1 million primarily related to the restructuring of our Orthopedic sales force and a voluntary separation arrangement with employees as a result of the COVID-19 pandemic that was charged to selling and administrative expenses based on the nature of the costs and function of the affected employees. During the sixthree months ended ~~June 30,~~March 31, 2021 we recorded a charge of $0.4 million related to the restructuring of our sales force which consisted primarily of termination payments to Orthopedic distributors made in exchange for ongoing assistance to transition to employee-based sales representatives and ~~severance that was~~severance. These costs were charged to selling and administrative ~~expenses.~~

During the three and six months ended June 30, 2020, we incurred $1.6 million and $3.4 million, respectively, in costs related to the consolidation of certain manufacturing operations which were charged to cost of sales. These costs related to winding down operations at certain locations and moving production lines to other facilities.

During the three and six months ended June 30, 2020, we incurred costs for inventory step-up adjustments and other costs of $0.7 million and $1.5 million, respectively, related to a previous acquisition, which were charged to cost of sales.

During the three and six months ended June 30, 2020, we incurred $0.4 million and $1.2 million, respectively, in severance and integration costs mainly related to the Buffalo Filter acquisition which were included in selling and administrative expense.

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Note 1314 — Business Segment

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 surgery procedures and fees related to the 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 are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Orthopedic surgery	Orthopedic surgery	$	107,893	$	60,483	$	215,058	$	159,766	Orthopedic surgery	$	107,517	$	107,166
General surgery	General surgery	147,268		97,302		272,779		212,030		General surgery	134,810		125,511
Consolidated net sales	Consolidated net sales	$	255,161	$	157,785	$	487,837	$	371,796	Consolidated net sales	$	242,327	$	232,677

~~Note 14 – Legal Proceedings~~

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.

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 $30 million per incident and $30 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

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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 represents 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. We believe that there was a substantive contractual basis to support the Company's decision to redesign the product, such that there was no legitimate basis for seeking the liquidated damages. In the third quarter of 2018, the Company decided to halt the development of the EndoDynamix clip applier. We previously recorded a charge to write off assets and released a previously accrued contingent consideration liability. In a pre-trial filing 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. The parties have submitted post-trial briefs, and the Court will hear oral arguments at a hearing scheduled for September 2021, with the Court to issue a ruling at some point thereafter. The Company 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. We expect to defend the claims asserted by the sellers of EndoDynamix, although there can be no assurance that we will prevail in the trial and/or any resulting appeals.

CONMED is defending two Georgia State Court actions. The first was filed by various employees, former employees, contract workers and others against CONMED, and against a contract sterilizer. The second action is against CONMED’s landlord and other related entities. 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. CONMED has submitted all of the claims for insurance coverage. One insurer is providing coverage for certain of the claims asserted directly against the Company. CONMED is currently in litigation with one of the other insurers regarding coverage for one of the indemnification claims and is waiting for the carrier to make a coverage determination for the other indemnification claim. The Company is unable to estimate any 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.

Both actions are in their early stages and discovery has not yet started. CONMED believes it has strong defenses to the claims 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.

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.

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Note 15 – ~~New Accounting Pronouncements~~Legal Proceedings

~~Recently Issued Accounting Standards, Not Yet Adopted~~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 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.

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In ~~March 2020,~~2014, the ~~FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation~~Company acquired EndoDynamix, Inc. The agreement governing the terms of the ~~Effects of Reference Rate Reform on Financial Reporting, which~~acquisition provides ~~optional guidance~~that, if ~~certain criteria~~various conditions are met, ~~for entities~~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 ~~have contracts, hedging relationships,~~there was a need to redesign the product, and ~~other transactions~~ that, ~~reference LIBOR or other reference rates expected to be discontinued~~ as a ~~result~~consequence, the first commercial sale had been delayed. Consequently, the payment of ~~reference rate reform. This ASU is effective~~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 represents 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. We believe that there was a substantive contractual basis to support the Company's decision to redesign the product, such that there was no legitimate basis for seeking the liquidated damages. 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 ~~12, 2020 through December 31,~~18, 2021, and testimony concluded on April 7, 2021. The parties have submitted post-trial briefs and the Court heard oral arguments at a hearing on September 16, 2021 and requested additional briefs which were filed in March 2022. The Court has not issued a ruling. The Company has not ~~adopted~~recorded any expense related to potential damages in connection with this ~~ASU as~~matter because the Company does not believe any potential loss is probable. We expect to defend the claims asserted by the sellers of ~~June 30, 2021, however~~EndoDynamix, although there can be no assurance that we will ~~continue~~prevail in the trial and/or any resulting appeals.

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 ~~monitor~~exposure to Ethylene Oxide, a chemical used to sterilize certain products. CONMED is defending the ~~impact of reference rates~~claims asserted directly against it and is providing indemnification for certain other defendants for these claims based on contractual provisions.

Both actions are in their early stages and discovery has not yet started. The Company's motion to dismiss in the Cobb County action was heard on January 10, 2022. CONMED believes it has strong defenses to the claims and will ~~elect~~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 ~~apply~~the defense of the underlying claims, or with respect to securing adequate insurance coverage for the indemnification claims. The Company is unable to estimate any range of possible loss at this ~~guidance~~time, and has not recorded any expense related to potential damages in ~~our consolidated financial statements~~connection with this matter because the Company does not believe any potential loss is probable.

CONMED has submitted the foregoing claims for insurance coverage. One insurer is providing coverage for certain of the claims asserted directly against the Company. CONMED is currently litigating two lawsuits in the ~~event~~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 has filed a motion for reconsideration, and may also appeal. CONMED believes its position is well-grounded in the facts and the law, and expects a similar ruling in the coverage case concerning the Douglas County Action, but there can be no assurance that ~~we are impacted by reference rate reform.~~CONMED will prevail in either of the two coverage cases.

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.

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We are currently defending one such claim, which we expect to be fully covered by ~~using the if-converted method. The ASU is effective for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020.~~insurance, involving potentially significant personal injuries. The Company is ~~currently assessing~~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 ~~impact~~resolution of ~~this guidance~~any pending claims, investigations or reports of alleged misconduct will have a material adverse effect on our ~~consolidated~~ financial ~~statements.~~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 16 – Subsequent Events

On ~~July 16, 2021,~~May 4, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among CONMED, Odyssey Merger Sub, Inc., a ~~seventh amended~~Delaware corporation and ~~restated senior credit agreement consisting of: (a)~~newly formed wholly-owned subsidiary of CONMED (“Merger Sub”), In2Bones Global, Inc., a ~~$233.5 million term loan facility~~Delaware corporation (“In2Bones”), and ~~(b)~~Sheryl Moroschak, solely in her capacity as representative of In2Bones’ equity holders (the “Holder Representative”). Pursuant to the Merger Agreement, CONMED will acquire In2Bones by way of a ~~$585.0 million revolving credit facility. The revolving credit facility will terminate~~merger of Merger Sub with and into In2Bones (the “Merger”), with In2Bones surviving the ~~loans outstanding under the term loan facility will expire on the fifth anniversary~~Merger as a wholly-owned subsidiary of the closing date. The term loan is payable in quarterly installments increasing over the term of the facility. Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement. Initial interest rates are at LIBOR plus an interest rate margin of 1.75%. For those borrowings where we elect to use the alternate base rate, the initial base rate will be the greatest of (i) the Prime Rate, (ii) the Federal Funds Rate plus 0.50% or (iii) the one-month Adjusted LIBOR plus 1.00%, plus, in each case, an interest rate margin. 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.CONMED.

Pursuant to the Merger Agreement, upon consummation of the Merger (the “Closing”), CONMED will pay In2Bones’ equity holders an aggregate upfront payment of $145 million in cash, as adjusted and payable pursuant to the Merger Agreement (the “Closing Purchase Price”). The adjustments to the Closing Purchase Price include, among others, (i) an upward adjustment for any cash held by In2Bones at the Closing, (ii) a downward adjustment for In2Bones’ outstanding indebtedness, transaction expenses and other related fees and expenses and (iii) an upward or downward adjustment, as applicable, networking adjustment based on a target range. The Merger Agreement also provides for earn-out payments to In2Bones’ equity holders in an amount up to $110 million based on the achievement of certain revenue targets for In2Bones products during the sixteen (16) successive quarters commencing on the first day of the first full quarter following the Closing date.

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Item 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

In this Report on Form 10-Q, we make forward-looking statements about our financial condition, results of operations and business. Forward-looking statements are statements made by us concerning events that may or may not occur in the future. These statements may be made directly in this document or may be “incorporated by reference” from other documents. Such statements may be identified by the use of words such as “anticipates”, “expects”, “estimates”, “intends” and “believes” and variations thereof and other terms of similar meaning.

Forward-Looking Statements are not Guarantees of Future Performance

Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that 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 those identified under “Risk Factors” in our Annual Report on Form 10-K for the year-ended December 31, ~~2020~~2021 and the following, among others:

•general economic and business conditions;

•compliance with and changes in regulatory requirements;

•the COVID-19 global pandemic poses significant risks to our business, financial condition and results of operations, which may be heightened ifas the pandemic, government and ~~various government~~hospital responses to it, ~~continue for~~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 risk of an ~~extended period~~information security breach, including a cybersecurity breach;

•competition;

•changes in customer preferences;

•changes in technology;

•the availability and cost of ~~time;~~materials, including inflation and ongoing supply chain challenges;

•cyclical customer purchasing patterns due to budgetary 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 ~~possibility that United States or foreign regulatory and/or administrative agencies may initiate enforcement actions against us or our distributors;~~

•~~competition;~~

•~~changes in customer preferences;~~

•~~changes in technology;~~

•~~the introduction and acceptance of new products;~~

•~~the availability and cost of materials;~~

•~~the risk of an information security breach, including a cybersecurity breach;~~

•~~cyclical customer purchasing patterns due to budgetary and other constraints;~~

•~~the~~ quality of our management and business abilities and the judgment of our ~~personnel;~~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;

•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; ~~and~~

•trade protection measures, tariffs and other border taxes, and import or export licensing ~~requirements.~~requirements; and

•weather related events which may disrupt our operations.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below and “Risk Factors” and “Business” in our Annual Report on Form 10-K for the year-ended December 31, ~~2020~~2021 for a further discussion of these factors. You are cautioned not to place undue reliance 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 Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

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Overview

CONMED Corporation (“CONMED”, the “Company”, “we” or “us”) is a medical technology company that provides ~~surgical~~ devices and equipment for ~~minimally invasive~~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 surgery procedures and service 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:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Orthopedic surgery	Orthopedic surgery	42	%	38	%	44	%	43	%	Orthopedic surgery	44	%	46	%
General surgery	General surgery	58	%	62	%	56	%	57	%	General surgery	56	%	54	%
Consolidated net sales	Consolidated net sales	100	%	100	%	100	%	100	%	Consolidated net sales	100	%	100	%

A significant amount of our products are used in surgical procedures with ~~approximately 81%~~approximately 83% 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% during both~~46% and 47% of our consolidated net sales during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020.~~respectively.

Business Environment

Our business ~~was, and~~continues to ~~a lesser extent continues today to~~ be ~~significantly~~ impacted by the ~~emergence~~COVID-19 pandemic as variants of the ~~COVID-19 pandemic, first in the Asia Pacific geography and later in the United States, Europe and elsewhere~~virus, such as ~~temporary closures occurred~~omicron, emerge and hospitals and surgery centers ~~postponed many~~reduce the number of, or postpone, non-urgent surgical procedures in order to minimize the risk of ~~infection. In compliance with various governmental orders, beginning in March 2020 we restricted~~infection and allow for proper staffing. We continue to restrict access to our ~~main~~ facilities ~~to only essential personnel required to be onsite~~ while maintaining production and distribution. Although such restrictions continued to be in place as of June 30, 2021, we are developing plans in certain of our facilities to ease such restrictions as the number of COVID-19 cases decline and vaccination rates increase. During the first six months of 2021, revenues increased compared to the first six months of 2020. We ~~have seen and~~ believe we will continue to experience market variability as a result of the pandemic that could influence sales, suppliers, patients and customers. ~~We also have seen and continue to expect general surgery to rebound faster than orthopedic surgery due to the nature of the products. However, there~~There remains significant uncertainty related to the COVID-19 pandemic, including the duration and severity of future impacts to the ~~business. See additional discussion~~business and we continue to see our customers and suppliers impacted in ~~Liquidity~~a variety of ways such as staffing shortages in the U.S. and ~~Capital Resources below.~~ stay at home orders in China. 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 throughout 2022. This will likely impact our results of operations.

During the first quarter of 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 ($0.6 million as of March 31, 2022). 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.

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 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year-ended December 31, ~~2020~~2021 describes the significant accounting policies used in preparation of the Consolidated Financial Statements. On an ongoing basis, we evaluate the critical accounting policies used to prepare our consolidated financial statements, including, but not limited to, those related to goodwill and intangible assets and our pension benefit obligation.

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Consolidated Results of Operations

The following table presents, as a percentage of net sales, certain categories included in our consolidated condensed statements of comprehensive income for the periods indicated:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Net sales	Net sales	100.0	%	100.0	%	100.0	%	100.0	%	Net sales	100.0	%	100.0	%
Cost of sales	Cost of sales	44.6		54.4		44.7		48.6		Cost of sales	43.9		44.8
Gross profit	Gross profit	55.4		45.6		55.3		51.4		Gross profit	56.1		55.2
Selling and administrative expense	Selling and administrative expense	40.9		53.5		41.6		48.5		Selling and administrative expense	42.5		42.3
Research and development expense	Research and development expense	4.4		5.5		4.4		5.1		Research and development expense	4.4		4.3
Income (loss) from operations		10.1		(13.5)		9.4		(2.2)
Income from operations										Income from operations	9.3		8.6
Interest expense	Interest expense	3.7		7.2		4.1		5.6		Interest expense	2.1		4.4
Other expense		—		0.1		—		—
Income (loss) before income taxes		6.4		(20.7)		5.3		(7.9)
Provision (benefit) for income taxes		1.2		(3.4)		0.6		(2.1)
Net income (loss)		5.2	%	(17.4)	%	4.7	%	(5.8)	%

Income before income taxes										Income before income taxes	7.2		4.2
Provision for (benefit from) income taxes										Provision for (benefit from) income taxes	1.0		(0.1)
Net income										Net income	6.2	%	4.2	%

Net Sales

The following table presents net sales by product line for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Three Months Ended
% Change
2021 2020 As Reported Impact of Foreign Currency Constant Currency
Orthopedic surgery $ 107.9 $ 60.5 78.4 % -5.5 % 72.9 %
General surgery 147.3 97.3 51.4 % -2.3 % 49.1 %
   Net sales $ 255.2 $ 157.8 61.7 % -3.5 % 58.2 %
Single-use products $ 208.9 $ 128.5 62.6 % -3.6 % 59.0 %
Capital products 46.3 29.3 58.0 % -3.4 % 54.6 %
   Net sales $ 255.2 $ 157.8 61.7 % -3.5 % 58.2 %
Six Months Ended
% Change
2021 2020 As Reported Impact of Foreign Currency Constant Currency
Orthopedic surgery $ 215.0 $ 159.8 34.6 % -3.3 % 31.3 %
General surgery 272.8 212.0 28.7 % -1.7 % 27.0 %
   Net sales $ 487.8 $ 371.8 31.2 % -2.3 % 28.9 %
Single-use products $ 396.3 $ 306.2 29.4 % -2.2 % 27.2 %
Capital products 91.5 65.6 39.6 % -2.8 % 36.8 %
   Net sales $ 487.8 $ 371.8 31.2 % -2.3 % 28.9 %

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	Three Months Ended
					% Change
	2022		2021		As Reported		Impact of Foreign Currency		Constant Currency
Orthopedic surgery	$	107.5	$	107.2	0.3	%	0.1	%	0.4	%
General surgery	134.8		125.5		7.4	%	0.3	%	7.7	%
Net sales	$	242.3	$	232.7	4.1	%	0.2	%	4.3	%

Single-use products	$	201.5	$	187.4	7.5	%	0.2	%	7.7	%
Capital products	40.8		45.3		-9.7	%	0.1	%	-9.6	%
Net sales	$	242.3	$	232.7	4.1	%	0.2	%	4.3	%

Net sales increased ~~61.7% and 31.2%~~4.1% in the three ~~and six~~ months ended ~~June 30, 2021, respectively,~~March 31, 2022 compared to the same ~~periods~~period a year ago primarily driven by increases ~~across all~~in our general surgery product ~~lines as~~line. General surgery sales increased 7.4% in the ~~COVID-19 pandemic had a significant impact on sales during~~three months ended March 31, 2022 primarily driven by the ~~second quarter of 2020.~~

•continued growth in our AirSeal and advanced endoscopic technologies products. Orthopedic surgery sales increased ~~78.4% and 34.6%~~0.3% in the three ~~and six~~ months ended ~~June 30, 2021, respectively. 2020 was significantly~~March 31, 2022 primarily related to an increase in single-use product sales. Our sales continued to be impacted by ~~the~~ COVID-19 pandemic as hospitals and surgery centers deferred non-urgent surgeries and customers also deferred capital equipment purchases. Sales have increased since the first quarter of 2021 with growth in single-use products as non-urgent surgeries continue to increase.

•~~General surgery sales increased 51.4% and 28.7%~~ in the three ~~and six~~ months ended ~~June 30, 2021, respectively. 2020 was significantly impacted by~~March 31, 2022, as the ~~COVID-19 pandemic~~omicron variant emerged, and we saw our customers affected in a variety of ways such as ~~hospitals~~staffing shortages in the U.S. and ~~surgery centers deferred non-urgent surgeries. General surgery sales increased from the first quarter of 2021 mainly driven by continued growth~~stay at home orders in our advanced surgical products, including in our Buffalo Filter and AirSeal products, as well as growth in our advanced endoscopic technologies products. We believe the deferral of non-urgent procedures has had a lesser impact on our general surgery products as a result of the nature of the products and procedures in which they are used.China.

Cost of Sales

Cost of sales increased to ~~$113.7~~$106.3 million in the three months ended ~~June 30, 2021~~March 31, 2022 as compared to ~~$85.9~~$104.2 million in the three months ended ~~June 30, 2020 and increased to $218.0 million in the six months ended June 30, 2021 as compared to $180.7 million in the six months ended June 30, 2020.~~March 31, 2021. Gross profit margins increased ~~980~~90 basis points to ~~55.4%~~56.1% in the three months ended ~~June 30, 2021~~March 31, 2022 as compared to ~~45.6%~~55.2% in the three months ended ~~June 30, 2020 and increased 390 basis points to 55.3% in the six months ended June 30, 2021 as compared to 51.4% in the six months ended June 30, 2020.~~

March 31, 2021. The increase in gross profit margin of ~~980~~90 basis points in the three months ended ~~June 30, 2021 and 390 basis points in the six months ended June 30, 2021~~March 31, 2022 was driven by an increase in sales ~~as well as the absence in 2021~~and improved product mix. We experienced unfavorable production variances of ~~certain costs incurred in 2020 including the following:~~

•~~$6.6~~$10.0 million in ~~costs related to plant underutilization due to abnormally low production~~the three months ended March 31, 2022 as a result of ~~decreased~~cost increases and inflation in raw materials, freight and other costs of production which we have deferred to inventory and expect to

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recognize as cost of sales ~~caused by~~as the ~~COVID-19 pandemic~~underlying inventory is sold. These unfavorable production variances will cause gross margins to decrease in the ~~second quarter of 2020;~~

•~~$2.2 million~~periods in ~~costs related to product rationalization in the second quarter of 2020;~~

•~~$1.1 million in restructuring costs related to a voluntary separation arrangement as a result of the COVID-19 pandemic in the second quarter of 2020;~~

•$1.6 million and $3.4 million for the three and six months ended June 30, 2020, respectively, in costs related to the consolidation of certain manufacturing operations related to winding down operations at certain locations and moving production lines to other facilities; and

•~~$0.7 million and $1.5 million for the three and six months ended June 30, 2020, respectively, related inventory step-up adjustments from a previous acquisition.~~

~~Refer to Note 12 for further details on the above items.~~which they are recognized.

Selling and Administrative Expense

Selling and administrative expense increased to ~~$104.4~~$102.9 million in the three months ended ~~June 30, 2021~~March 31, 2022 as compared to ~~$84.5~~$98.3 million in the three months ended ~~June 30, 2020 and increased to $202.7 million in the six months ended June 30, 2021 as compared to $180.3 million in the six months ended June 30, 2020.~~March 31, 2021. Selling and administrative expense as a percentage of net sales ~~decreased~~increased to ~~40.9%~~42.5% in the three months ended ~~June 30, 2021~~March 31, 2022 as compared to ~~53.5%~~42.3% in the three months ended ~~June 30, 2020 and decreased to 41.6% in the six months ended June 30, 2021 as compared to 48.5% in the six months ended June 30, 2020.~~March 31, 2021.

The ~~decrease~~increase in selling and administrative expense as a percentage of net sales for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 was ~~mainly~~caused by increased marketing expenses driven by ~~higher sales~~a return to travel and trade show attendance as well as salesforce expansions that occurred in the later part of 2021. These increases were partially offset by the three months ended March 31, 2021 ~~while continuing to monitor our expenses in response to the COVID-19 pandemic. In addition, 2020 included the following expenses:~~

•~~$2.1~~including $0.4 million in ~~severance costs related to a voluntary termination program and~~ costs associated with the restructuring of our Orthopedic sales force which did not reoccur in ~~the second quarter of 2020;~~

•~~a $2.1 million write-off of field inventory used for customer demonstration and evaluation of products resulting from the product rationalization initiative in the second quarter of 2020; and~~

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•~~$0.4 million and $1.2 million, respectively, in severance and integration costs mainly related to the Buffalo Filter acquisition in the three and six months ended June 30, 2020.~~2022.

Research and Development Expense

Research and development expense increased to ~~$11.3~~$10.7 million in the three months ended ~~June 30, 2021~~March 31, 2022 as compared to ~~$8.7~~$10.0 million in the three months ended ~~June 30, 2020. Research and development expense increased to $21.3 million in the six months ended June 30, 2021 as compared to $18.8 million in the six months ended June 30, 2020.~~March 31, 2021. As a percentage of net sales, research and development expense ~~decreased 110~~increased 10 basis points to 4.4% in the three months ended ~~June 30, 2021~~March 31, 2022 as compared to ~~5.5%~~4.3% in the three months ended ~~June 30, 2020 and decreased 70 basis points to 4.4% in the six months ended June 30, 2021 as compared to 5.1% in the six months ended June 30, 2020.~~March 31, 2021. The ~~lower~~higher spend as a percentage of sales isfor the three months ended March 31, 2022 was driven by ~~higher sales in 2021.~~timing of projects.

Interest Expense

Interest expense decreased to ~~$9.4~~$5.0 million in the three months ended ~~June 30, 2021~~March 31, 2022 from ~~$11.4~~$10.4 million in the three months ended ~~June 30, 2020 and decreased to $19.8 million in the six months ended June 30, 2021 from $21.0 million in the six months ended June 30, 2020.~~March 31, 2021. The weighted average interest rates on our borrowings decreased to ~~2.97%~~2.22% in the three months ended ~~June 30, 2021~~March 31, 2022 as compared to ~~3.75%~~3.37% in the three months ended ~~June 30, 2020 and 3.17% in the six months ended June 30, 2021 as compared to 3.44% in the six months ended June 30, 2020.~~March 31, 2021. The decrease in interest expense is primarily due to ~~lower borrowings and~~decreases in our borrowings; decreases in our weighted average interest rates compared to the same periods a year ~~ago.~~

~~Other Expense~~

~~Other expense in~~ago as a result of the seventh amended and restated senior credit agreement; and the three ~~and six~~ months ended ~~June 30, 2020 is~~March 31, 2021 including $2.5 million in interest expense related to ~~non-service pension costs~~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 ~~11.~~3.

Provision ~~(Benefit)~~ for Income Taxes

Income tax expense has been recorded at an effective tax rate of ~~18.4%~~14.2% for the three months ended ~~June 30, 2021~~March 31, 2022 compared to an income tax benefit at an effective tax rate of ~~16.3%~~(1.3)% for the three months ended ~~June 30, 2020. Income tax expense has been recorded at an~~March 31, 2021. The higher effective tax rate of 11.0% for the six months ended June 30, 2021 compared to income tax benefit at an effective tax rate of 26.6% for the six months ended June 30, 2020. We calculate our estimated tax liability each quarter based on the level of income and tax liability on a year-to-date basis. The tax rates for the three months ~~and six months~~ ended ~~June 30, 2020 were~~March 31, 2022 as compared to the same period in the prior year was primarily the result of ~~our second quarter loss position. The~~higher income in 2022 and discrete tax items. Federal tax deductions related to stock option exercises provided a discrete tax benefit which decreased the effective rate by 9.8% for the three months ended ~~June 30, 2020 included a discrete income tax benefit associated with stock options which increased the effective tax rate by 1.2%. The six months ended June 30, 2020 included~~March 31, 2022 as compared to discrete income tax benefit associated with stock options and ~~other~~ federal ~~income tax items which increased the effective tax rate by 10.9%. Our income position for the three and six months ended June 30, 2021 generated tax expense which was offset by discrete income~~ tax benefit ~~from federal~~related to the issuance of tax ~~deductions relating to stock option exercises that~~regulations regarding US tax of foreign earnings at different rates which decreased the effective tax rate by ~~9.8% and 15.1%, respectively.~~28.1% for the three months ended March 31, 2021. A reconciliation of the United States statutory income tax rate to our effective tax rate is included in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, under Note 8 to the consolidated financial statements.

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 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.

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Liquidity and Capital Resources

Our liquidity needs arise primarily from capital investments, working capital requirements and payments on indebtedness under the ~~sixth~~seventh amended and restated senior credit ~~agreement, described below.~~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 ~~sixth~~seventh 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.

AsOperating cash flows

Our net working capital position was $300.7 million at March 31, 2022. Net cash provided by operating activities was $0.3 million and $22.3 million in the three months ended March 31, 2022 and 2021, respectively, generated on net income of $15.0 million and $9.9 million for the three months ended March 31, 2022 and 2021, respectively. The decrease in cash provided by operating activities in 2022 as compared to 2021 was mainly driven by:

•A decrease in cash flows from accounts receivable based on the timing of sales and cash receipts;

•A decrease in cash flows from inventory as we increased inventory levels to mitigate supply chain challenges; and

•A decrease in cash flows from higher incentive compensation payments.

These decreases were offset by higher net income in 2022 compared to 2021.

Investing cash flows

Net cash used in investing activities in the three months ended March 31, 2022 increased $0.6 million from the same period a ~~result~~year ago primarily due to capital expenditures being higher at $3.7 million in the three months ended March 31, 2022 compared to $3.1 million in the same period a year ago.

Financing cash flows

Net cash provided by financing activities in the three months ended March 31, 2022 was $7.5 million compared to net cash used in financing activities of $8.9 million during 2021. Below is a summary of the ~~COVID-19 pandemic, we experienced lower sales~~significant financing activities impacting the change during the three months ended March 31, 2022 compared to 2021:

•We had net borrowings on our revolving line of credit of $11.0 million, compared to $8.0 million in ~~2020. On April 17, 2020 we amended~~net payments during the three months ended March 31, 2021.

•We had net payments on our ~~senior credit agreement~~term loan of $3.0 million compared to ~~suspend~~$3.3 million in payments during the three months ended March 31, 2021.

•We paid $0.8 million in contingent consideration related to a prior acquisition.

•We had net cash proceeds of $8.0 million related to stock issued under employee plans for the three months ended March 31, 2022 compared to $9.7 million in the same period a year ago.

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 required leverage ratios for up to four quarters. We continued to have certain minimum liquidity and fixed charge coverage ratio requirements. On November 20, 2020, we entered into a third amendment under our senior credit agreement to lower the applicable margin on loans and lower the interest floor on Eurocurrency loans agreed upon in April 2020. On April 15, 2021, we terminated the suspension period, thus reinstating our required leverage ratios.shareholders. Management believes that cash flow from operations, including cash and cash equivalents on hand and available borrowing capacity under our ~~revolving~~seventh amended and restated senior credit ~~facility,~~agreement, will be adequate to meet our ~~liquidity needs for~~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.

As noted above, there remains significant 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 as well as stay at home orders in China. 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 continue to monitor our spending and expenses in light of our expectation that our revenues will continue to be impacted by the pandemic. While the results of operations support continued recovery, there remains uncertainty in the financial markets related to the COVID-19 pandemic which may have an impact on the demand for post-pandemic surgery levels that are difficult to predict. If the downturn is more severe and prolonged than we currently expect,these factors. However, we may need to take further steps to reduce our costs, or to refinance our debt.

~~Operating cash flows~~

~~Our net working capital position was $244.7 million at June 30, 2021. Net cash provided by operating activities was $56.6 million and $9.3 million~~ See “Item 1A. Risk Factors" in ~~the six months ended June 30, 2021 and 2020, respectively, generated~~our Annual Report on ~~net income (loss) of $23.2 million and $(21.5) million~~Form 10-K for the six months ended June 30, 2021 and 2020, respectively. The increase in cash provided by operating activities in 2021 as compared to 2020 was mainly driven by higher net income in 2021 compared to the same period a year ago.

~~Investing cash flows~~

Net cash used in investing activities in the six months ended June 30, 2021 decreased $4.3 million from the same period a year ago due to $3.9 million in payments mainly related to the acquisition of a distributor in 2020. Capital expenditures were $6.1 million in the six months ended June 30, 2021 compared to $6.6 million in the same period a year ago.

~~Financing cash flows~~

Net cash used in financing activities in the six months ended June 30, 2021 was $31.0 million compared to cash provided by financing activities of $10.8 million during 2020. Below is a summary of the significant financing activities impacting the change during the six months ended June 30, 2021 compared to 2020:

•~~We had net payments on our revolving line of credit of $22.0 million compared to $38.0 million in net borrowings during the six months ended June 30, 2020.~~

•~~We had net cash proceeds of $13.1 million related to stock issued under employee plans for the six months ended June 30, 2021 compared to $2.2 million in the same period a year ago.~~

•~~We paid $2.1 million in contingent consideration related to a prior acquisition during the six months ended June 30, 2020.~~

•~~We paid $2.1 million in debt issuance costs related to the April 2020 amendment to our sixth amended and restated senior credit agreement during the six months ended June 30, 2020.~~

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quarters. We continued to have certain minimum liquidity and fixed charge coverage ratio requirements. On November 20, 2020, we entered into a third amendment under our senior credit agreement to lower the applicable margin on the loans and lower the interest floor on Eurocurrency loans agreed upon in April 2020. On April 15,December 31, 2021, we terminated the suspension period, thus reinstating our required leverage ratios. The applicable margin depended upon CONMED’s consolidated senior secured leverage ratio, using the pricing grid set forth in the November 2020 amendment. Interest rates were at LIBOR (subject to 0.125% floor) plus an interest rate margin of 2.50% (2.625% at June 30, 2021).for further discussion.

There were ~~$233.5~~$224.6 million in borrowings outstanding on the term loan facility as of ~~June 30, 2021.~~March 31, 2022. There were ~~$185.0~~$151.0 million in borrowings outstanding under the revolving credit facility as of ~~June 30, 2021.~~March 31, 2022. Our available borrowings on the revolving credit facility at ~~June 30, 2021~~March 31, 2022 were ~~$397.4~~$431.8 million with approximately ~~$2.6~~$2.2 million of the facility set aside for outstanding letters of credit.

The ~~sixth~~seventh amended and restated senior credit agreement ~~was~~is collateralized by substantially all of our personal property and assets. The sixth amended and restated senior credit agreement contained covenants and restrictions which, among other things, required the maintenance of certain financial ratios and restricted 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 June 30, 2021. We were also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.

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 the fifth anniversary of the closing date. The term loan is payable in quarterly installments increasing over the term of the facility. Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement. Initial interest rates are at LIBOR plus an interest rate margin of 1.75%. For those borrowings where we elect to use the alternate base rate, the initial base rate will be the greatest of (i) the Prime Rate, (ii) the Federal Funds Rate plus 0.50% or (iii) the one-month Adjusted LIBOR plus 1.00%, plus, in each case, an interest rate margin. 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 March 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 January 29, 2019, we issued $345.0 million in 2.625% convertible notes due in 2024 (the "Notes"). Interest is payable semi-annually in arrears~~See Note 10 for further information on ~~February 1~~our financing agreements and August 1 of each year, commencing August 1, 2019. The Notes will mature on February 1, 2024, unless earlier repurchased or converted. The 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 Notes may be converted at an initial conversion rate of 11.2608 shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $88.80 per share of common stock). Holders of the Notes may convert the 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 Notes will also have the right to convert the 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 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.

Our Board of Directors has authorized a $200.0 million share repurchase program. Through ~~June 30, 2021,~~March 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

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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 ~~2021.~~2022. We have financed the repurchases and may finance additional repurchases through operating cash flow and from available borrowings under our revolving credit facility.

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.

New accounting pronouncements

See Note 153 to the consolidated condensed financial statements for a discussion of new accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in our primary market risk exposures or in how these exposures are managed during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. Reference is made to Item 7A. of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for a description of Qualitative and Quantitative Disclosures About Market Risk.

Item 4. 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) and 15d-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(f) and 15d-15(f) under the Securities Exchange Act of 1934) occurred during the quarter ended ~~June 30, 2021~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Reference is made to Item 3 of the Company’s Annual Report on Form 10-K for the year-ended December 31, ~~2020~~2021 and to Note 1415 of the Notes to Consolidated Condensed Financial Statements included in Part I of this Report for a description of certain legal matters.

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Item 6. Exhibits


Exhibit Index

Exhibit No.			Description of Exhibit

31.1			Certification of Curt R. Hartman pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Todd W. Garner pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			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.

101.INS			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.

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			XBRL Taxonomy Extension Label Linkbase Document

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

104			Cover Page - Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101)

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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 on the date indicated below.


						CONMED CORPORATION



						By: /s/ Todd W. Garner
						Todd W. Garner
						Executive Vice President and
						Chief Financial Officer

						Date:
						~~July 29, 2021~~May 5, 2022

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