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
September 30, ~~2021~~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 October ~~25, 2021~~24, 2022 is ~~29,247,120~~30,482,412 shares.

CONMED CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, ~~2021~~2022


PART I FINANCIAL INFORMATION
Item Number		Page

Item 1.	Financial Statements (unaudited)

	– Consolidated Condensed Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021	1

	– Consolidated Condensed Balance Sheets as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021	2

	– Consolidated Condensed Statements of Shareholders' Equity for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021	3

	– Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021	5

	– Notes to Consolidated Condensed Financial Statements	6


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2225

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2932

Item 4.	Controls and Procedures	2932

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	2932

Item 6.	Exhibits	3033


Signatures		3134

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				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30,				September 30,					September 30,				September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net sales	Net sales	$	248,827	$	237,835	$	736,665	$	609,631	Net sales	$	275,088	$	248,827	$	794,605	$	736,665

Cost of sales	Cost of sales	106,521		104,137		324,485		284,845		Cost of sales	123,473		106,521		355,222		324,485

Gross profit	Gross profit	142,306		133,698		412,180		324,786		Gross profit	151,615		142,306		439,383		412,180

Selling and administrative expense	Selling and administrative expense	104,736		94,380		307,476		274,721		Selling and administrative expense	114,600		104,736		333,302		307,476

Research and development expense	Research and development expense	10,859		9,936		32,203		28,756		Research and development expense	12,767		10,859		34,932		32,203

Operating expenses	Operating expenses	115,595		104,316		339,679		303,477		Operating expenses	127,367		115,595		368,234		339,679

Income from operations	Income from operations	26,711		29,382		72,501		21,309		Income from operations	24,248		26,711		71,149		72,501

Interest expense	Interest expense	8,145		11,943		27,917		32,938		Interest expense	8,536		8,145		19,462		27,917

Other expense	Other expense	1,127		89		1,127		266		Other expense	—		1,127		112,011		1,127

Income (loss) before income taxes	Income (loss) before income taxes	17,439		17,350		43,457		(11,895)		Income (loss) before income taxes	15,712		17,439		(60,324)		43,457

Provision for income taxes		2,491		10,500		5,359		2,728
Provision (benefit) for income taxes										Provision (benefit) for income taxes	(30,438)		2,491		46,842		5,359

Net income (loss)	Net income (loss)	$	14,948	$	6,850	$	38,098	$	(14,623)	Net income (loss)	$	46,150	$	14,948	$	(107,166)	$	38,098

Comprehensive income (loss)	Comprehensive income (loss)	$	13,756	$	8,976	$	42,242	$	(16,858)	Comprehensive income (loss)	$	43,125	$	13,756	$	(113,096)	$	42,242

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

Net income (loss)	Net income (loss)									Net income (loss)
Basic	Basic	$	0.51	$	0.24	$	1.31	$	(0.51)	Basic	$	1.51	$	0.51	$	(3.59)	$	1.31
Diluted	Diluted	0.47		0.23		1.19		(0.51)		Diluted	1.48		0.47		(3.59)		1.19

Weighted average common shares	Weighted average common shares									Weighted average common shares
Basic	Basic	29,179		28,583		29,097		28,529		Basic	30,473		29,179		29,892		29,097
Diluted	Diluted	32,143		29,426		32,020		28,529		Diluted	31,103		32,143		29,892		32,020

See notes to consolidated condensed financial statements.

Table of Contents

CONMED CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

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


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	31,511	$	27,356	Cash and cash equivalents	$	33,354	$	20,847
Accounts receivable, net	Accounts receivable, net	165,433		177,152		Accounts receivable, net	197,287		183,882
Inventories	Inventories	228,572		194,868		Inventories	304,813		231,644
Prepaid expenses and other current assets	Prepaid expenses and other current assets	17,889		17,278		Prepaid expenses and other current assets	38,789		23,750
Total current assets	Total current assets	443,405		416,654		Total current assets	574,243		460,123
Property, plant and equipment, net	Property, plant and equipment, net	109,181		111,407		Property, plant and equipment, net	113,720		108,863
Goodwill	Goodwill	617,651		618,440		Goodwill	814,260		617,528
Other intangible assets, net	Other intangible assets, net	478,861		501,537		Other intangible assets, net	689,453		471,049
Other assets	Other assets	104,994		103,635		Other assets	100,368		108,454
Total assets	Total assets	$	1,754,092	$	1,751,673	Total assets	$	2,292,044	$	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	$	12,251	$	18,415	Current portion of long-term debt	$	237	$	12,249
Accounts payable	Accounts payable	46,596		53,310		Accounts payable	74,228		58,197
Accrued compensation and benefits	Accrued compensation and benefits	54,632		50,171		Accrued compensation and benefits	54,095		60,488
Other current liabilities	Other current liabilities	69,713		68,305		Other current liabilities	80,019		65,712
Total current liabilities	Total current liabilities	183,192		190,201		Total current liabilities	208,579		196,646

Long-term debt	Long-term debt	703,335		735,221		Long-term debt	1,036,438		672,407
Deferred income taxes	Deferred income taxes	58,940		57,875		Deferred income taxes	112,578		68,537
Other long-term liabilities	Other long-term liabilities	52,942		59,338		Other long-term liabilities	218,112		42,992
Total liabilities	Total liabilities	998,409		1,042,635		Total liabilities	1,575,707		980,582

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies

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; none outstanding	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 2021 and 2020, respectively		313		313
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	394,810		382,628		Paid-in capital	407,095		396,771
Retained earnings	Retained earnings	478,035		457,417		Retained earnings	392,144		496,605
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(59,537)		(63,681)		Accumulated other comprehensive loss	(60,133)		(54,203)
Less: 2,064,390 and 2,410,045 shares of common stock in treasury, at cost in 2021 and 2020, respectively		(57,938)		(67,639)
Less: 822,438 and 1,925,893 shares of common stock in treasury, at cost, in 2022 and 2021, respectively						Less: 822,438 and 1,925,893 shares of common stock in treasury, at cost, in 2022 and 2021, respectively	(23,082)		(54,051)
Total shareholders’ equity	Total shareholders’ equity	755,683		709,038		Total shareholders’ equity	716,337		785,435
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	1,754,092	$	1,751,673	Total liabilities and shareholders’ equity	$	2,292,044	$	1,766,017

See notes to consolidated condensed financial statements.

Table of Contents

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
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 issued under employee plans															Common stock issued under employee plans				611						633		1,244
Stock-based compensation															Stock-based compensation				5,755								5,755
Dividends on common stock ($0.20 per share)															Dividends on common stock ($0.20 per share)						(6,092)						(6,092)
Shares issued for the settlement of convertible notes															Shares issued for the settlement of convertible notes				(25,890)						25,890		—
Convertible note premium on extinguishment															Convertible note premium on extinguishment				103,125								103,125
Settlement of convertible notes hedge transactions															Settlement of convertible notes hedge transactions				118,912								118,912
Settlement of warrants															Settlement of warrants				(96,758)								(96,758)
Issuance of convertible notes hedge transactions, net of tax															Issuance of convertible notes hedge transactions, net of tax				(142,128)								(142,128)
Issuance of warrants															Issuance of warrants				72,000								72,000
Comprehensive income (loss):															Comprehensive income (loss):
Cash flow hedging gain, net															Cash flow hedging gain, net								4,662
Pension liability, net															Pension liability, net								490
Foreign currency translation adjustments															Foreign currency translation adjustments								(9,497)
Net loss															Net loss						(168,291)
Total comprehensive loss															Total comprehensive loss												(172,636)
Balance at June 30, 2022															Balance at June 30, 2022	31,299	$	313	$	401,182	$	352,089	$	(57,108)	$	(23,508)	$	672,968
Common stock issued under employee plans	Common stock issued under employee plans				414						2,312		2,726		Common stock issued under employee plans				159						426		585
Stock-based compensation	Stock-based compensation				4,290								4,290		Stock-based compensation				5,754								5,754
Dividends on common stock ($0.20 per share)	Dividends on common stock ($0.20 per share)						(5,830)						(5,830)		Dividends on common stock ($0.20 per share)						(6,095)						(6,095)
Comprehensive income (loss):	Comprehensive income (loss):														Comprehensive income (loss):
Cash flow hedging gain, net	Cash flow hedging gain, net								1,221						Cash flow hedging gain, net								4,833
Pension liability, net	Pension liability, net								631						Pension liability, net								490
Foreign currency translation adjustments	Foreign currency translation adjustments								2,601						Foreign currency translation adjustments								(8,348)
Net income	Net income						13,290								Net income						46,150
Total comprehensive income	Total comprehensive income												17,743		Total comprehensive income												43,125
Balance at June 30, 2021		31,299	$	313	$	393,663	$	468,924	$	(58,345)	$	(60,056)	$	744,499
Common stock issued under employee plans					(3,180)						2,118		(1,062)
Stock-based compensation					4,327								4,327
Dividends on common stock ($0.20 per share)							(5,837)						(5,837)
Comprehensive income (loss):
Cash flow hedging gain, net									2,917
Pension liability, net									631
Foreign currency translation adjustments									(4,740)
Net income							14,948
Total comprehensive income													13,756
Balance at September 30, 2021		31,299	$	313	$	394,810	$	478,035	$	(59,537)	$	(57,938)	$	755,683
Balance at September 30, 2022															Balance at September 30, 2022	31,299	$	313	$	407,095	$	392,144	$	(60,133)	$	(23,082)	$	716,337

(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.

Table of Contents


		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													(1,121)
Balance at March 31, 2020		31,299	$	313	$	374,620	$	471,068	$	(66,325)	$	(78,041)	$	701,635
Total comprehensive income															Total comprehensive income												10,743
Balance at March 31, 2021															Balance at March 31, 2021	31,299	$	313	$	388,959	$	461,464	$	(62,798)	$	(62,368)	$	725,570
Common stock issued under employee plans	Common stock issued under employee plans				(1,150)						1,283		133		Common stock issued under employee plans				414						2,312		2,726
Stock-based compensation	Stock-based compensation				3,555								3,555		Stock-based compensation				4,290								4,290
Dividends on common stock ($0.20 per share)	Dividends on common stock ($0.20 per share)						(5,712)						(5,712)		Dividends on common stock ($0.20 per share)						(5,830)						(5,830)
Comprehensive income (loss):	Comprehensive income (loss):														Comprehensive income (loss):
Cash flow hedging loss, net									(2,429)
Cash flow hedging gains, net															Cash flow hedging gains, net								1,221
Pension liability, net	Pension liability, net								535						Pension liability, net								631
Foreign currency translation adjustments	Foreign currency translation adjustments								4,581						Foreign currency translation adjustments								2,601
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
Net income															Net income						13,290
Total comprehensive income															Total comprehensive income												17,743
Balance at June 30, 2021															Balance at June 30, 2021	31,299	$	313	$	393,663	$	468,924	$	(58,345)	$	(60,056)	$	744,499
Common stock issued under employee plans	Common stock issued under employee plans				562						893		1,455		Common stock issued under employee plans				(3,180)						2,118		(1,062)
Stock-based compensation	Stock-based compensation				3,532								3,532		Stock-based compensation				4,327								4,327
Dividends on common stock ($0.20 per share)	Dividends on common stock ($0.20 per share)						(5,720)						(5,720)		Dividends on common stock ($0.20 per share)						(5,837)						(5,837)
Comprehensive income (loss):	Comprehensive income (loss):														Comprehensive income (loss):
Cash flow hedging loss, net									(3,026)
Cash flow hedging gain, net															Cash flow hedging gain, net								2,917
Pension liability, net	Pension liability, net								535						Pension liability, net								631
Foreign currency translation adjustments	Foreign currency translation adjustments								4,617						Foreign currency translation adjustments								(4,740)
Net income	Net income						6,850								Net income						14,948
Total comprehensive income	Total comprehensive income												8,976		Total comprehensive income												13,756
Balance at September 30, 2020		31,299	$	313	$	381,119	$	439,086	$	(61,512)	$	(75,865)	$	683,141
Balance at September 30, 2021															Balance at September 30, 2021	31,299	$	313	$	394,810	$	478,035	$	(59,537)	$	(57,938)	$	755,683

See notes to consolidated condensed financial statements.

Table of Contents

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


		Nine Months Ended					Nine Months Ended
		September 30,					September 30,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	38,098	$	(14,623)	Net income (loss)	$	(107,166)	$	38,098
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	Depreciation	12,519		13,617		Depreciation	12,028		12,519
Amortization of debt discount	Amortization of debt discount	7,611		7,239		Amortization of debt discount	—		7,611
Amortization of deferred debt issuance costs	Amortization of deferred debt issuance costs	2,946		2,697		Amortization of deferred debt issuance costs	3,404		2,946
Amortization	Amortization	40,747		40,973		Amortization	39,754		40,747
Stock-based compensation	Stock-based compensation	12,003		10,119		Stock-based compensation	15,972		12,003

Deferred income taxes	Deferred income taxes	(1,311)		(786)		Deferred income taxes	38,442		(1,311)
Loss on early extinguishment of debt	Loss on early extinguishment of debt	899		—		Loss on early extinguishment of debt	3,426		899
Loss on convertible notes conversion premium						Loss on convertible notes conversion premium	103,125		—
Loss on convertible notes hedge transactions settlement						Loss on convertible notes hedge transactions settlement	5,460		—
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	9,890		21,574		Accounts receivable	(16,092)		9,890
Inventories	Inventories	(34,679)		(19,396)		Inventories	(52,126)		(34,679)
Accounts payable	Accounts payable	(6,223)		1,477		Accounts payable	14,475		(6,223)
Accrued compensation and benefits	Accrued compensation and benefits	5,030		(8,864)		Accrued compensation and benefits	(8,261)		5,030
Other assets	Other assets	(15,915)		(6,013)		Other assets	(11,710)		(15,915)
Other liabilities	Other liabilities	6,370		(3,628)		Other liabilities	4,232		6,370
Net cash provided by operating activities	Net cash provided by operating activities	77,985		44,386		Net cash provided by operating activities	44,963		77,985

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from sale of a facility		—		3,227

Purchases of property, plant and equipment	Purchases of property, plant and equipment	(11,678)		(9,864)		Purchases of property, plant and equipment	(16,109)		(11,678)
Payments related to business and asset acquisitions, net of cash acquired		—		(3,852)
Payments related to business acquisition, net of cash acquired						Payments related to business acquisition, net of cash acquired	(227,102)		—
Net cash used in investing activities	Net cash used in investing activities	(11,678)		(10,489)		Net cash used in investing activities	(243,211)		(11,678)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Payments on term loan	Payments on term loan	(63,673)		(9,938)		Payments on term loan	(92,981)		(63,673)
Proceeds from term loan	Proceeds from term loan	52,411		—		Proceeds from term loan	—		52,411

Payments on revolving line of credit	Payments on revolving line of credit	(272,753)		(142,000)		Payments on revolving line of credit	(404,000)		(272,753)
Proceeds from revolving line of credit	Proceeds from revolving line of credit	236,753		152,000		Proceeds from revolving line of credit	317,000		236,753
Payments to redeem convertible notes						Payments to redeem convertible notes	(275,000)		—
Proceeds from issuance of convertible notes						Proceeds from issuance of convertible notes	800,000		—

Payments related to contingent consideration		(3,536)		(2,071)
Payments related to debt issuance costs	Payments related to debt issuance costs	(2,000)		(2,057)		Payments related to debt issuance costs	(21,830)		(2,000)
Dividends paid on common stock	Dividends paid on common stock	(17,418)		(17,099)		Dividends paid on common stock	(17,865)		(17,418)

Purchases of convertible notes hedge transactions						Purchases of convertible notes hedge transactions	(187,600)		—
Proceeds from issuance of warrants						Proceeds from issuance of warrants	72,000		—
Proceeds from settlement of convertible notes hedge transactions						Proceeds from settlement of convertible notes hedge transactions	86,228		—
Payment for settlement of warrants						Payment for settlement of warrants	(69,534)		—
Other, net	Other, net	9,457		(3,730)		Other, net	7,067		5,921
Net cash used in financing activities		(60,759)		(24,895)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	213,485		(60,759)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(1,393)		740		Effect of exchange rate changes on cash and cash equivalents	(2,730)		(1,393)

Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	4,155		9,742		Net increase in cash and cash equivalents	12,507		4,155

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	$	31,511	$	35,598	Cash and cash equivalents at end of period	$	33,354	$	31,511

Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Contingent consideration						Contingent consideration	$	183,914	$	—
Dividends payable	Dividends payable	$	5,837	$	5,720	Dividends payable	$	6,095	$	5,837

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 September 30, ~~2021~~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 October ~~28, 2021,~~27, 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 then outstanding net of issuance costs (the "2.625% Notes" described more fully in Note 11);

•a reduction of approximately $37.9 million to additional paid-in capital, net of income tax effects, to remove the equity component separately recorded for the conversion features associated with the 2.625% Notes;

•a decrease to deferred income tax liabilities of approximately $5.5 million, and

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•a cumulative-effect adjustment of approximately $20.8 million, net of income tax effects, to the beginning balance of retained earnings as of January 1, 2022.

The adoption of this new guidance reduced interest expense related to amortization of debt discount on the 2.625% Notes by approximately $2.6 million during the three months ended March 31, 2022. Additionally, the dilutive share count increased by approximately 2.5 million shares as a result of calculating the impact of dilution from the 2.625% Notes using the if-converted method. During the nine months ended September 30, 2022, the Company repurchased and extinguished $275.0 million principal value of the 2.625% Notes as further discussed in Note 11. Concurrently, the Company entered into a Supplemental Indenture related to the remaining $70.0 million in 2.625% Notes, pursuant to which the Company irrevocably elected to settle the principal value of those 2.625% Notesin cash. As a result, in periods in which the Company has net income, only the conversion premium will affect the dilutive share count. During the three months ended September 30, 2022, our average share price exceeded the conversion price of the 2.625% Notes and we included such shares assumed to be issued if the Notes were converted in our diluted share count. Refer to Note 9 for further details. As the Company was in a net loss position for the nine months ended September 30, 2022, there were no dilutive potential shares included in the computation of diluted shares outstanding for the nine months ended September 30, 2022.

Recently Issued Accounting Standards, Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance if certain criteria are met for entities that have contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued as a result of reference rate reform. This ASU is effective as of March 12, 2020 through December 31, 2022. The Company has not adopted this ASU as of September 30, 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 4 - Business Combinations

On June 13, 2022, we acquired In2Bones Global, Inc. ("In2Bones") and all of its stock (the "In2Bones Acquisition") for an aggregate upfront payment of $145.2 million in cash. In addition, there are potential earn-out payments to In2Bones’ equity holders in an amount up to $110.0 million based on the achievement of certain revenue targets for In2Bones products during the sixteen (16) successive quarters commencing on July 1, 2022. In2Bones is a global developer, manufacturer and distributor of medical devices for the treatment of disorders and injuries of the upper (hand, wrist and elbow) and lower (foot and ankle) extremities. The In2Bones Acquisition was funded through a combination of cash on hand and long-term borrowings as further described in Note 11.

On August 9, 2022, we acquired Biorez, Inc. ("Biorez") and all of its stock (the "Biorez Acquisition") for an aggregate upfront payment of $85.9 million in cash. We paid $83.1 million upon closing, with a $2.8 million purchase price adjustment holdback, pursuant to the merger agreement for the Biorez Acquisition. In addition, there are potential earn-out payments to Biorez’ equity holders in an amount up to $165.0 million based on the achievement of certain revenue targets for Biorez products during the sixteen (16) successive quarters commencing on October 1, 2022. Biorez is a medical device start-up focused on advancing the healing of soft tissue using its proprietary BioBrace® implant technology. The Biorez Acquisition was funded through a combination of cash on hand and long-term borrowings.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as a result of the In2Bones and Biorez Acquisitions that were accounted for as business combinations. The assessment of fair value is based on preliminary valuations and estimates that were available to management at the time the consolidated condensed financial statements were prepared. Accordingly, the allocation of purchase price is preliminary and therefore subject to adjustment during the measurement adjustment period.

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	In2Bones		Biorez

Cash	$	445	$	742
Accounts receivable, net	5,036		318
Inventories	24,247		61
Prepaid expenses and other current assets	403		118
Current assets	30,131		1,239
Goodwill	139,816		59,176
Developed technology	37,300		176,300
Distributor relationships	27,600		—
Trademarks and tradenames	—		1,600
Other long-term assets	2,875		112
Total assets acquired	$	237,722	$	238,427

Current liabilities assumed	5,972		1,441
Deferred income taxes	16,699		36,621
Contingent consideration	69,402		114,512
Other long-term liabilities	466		—
Total liabilities assumed	$	92,539	$	152,574
Net assets acquired	$	145,183	$	85,853

The goodwill recorded as part of the In2Bones Acquisition primarily represents revenue synergies, the related cost to enter into this new product offering and the In2Bones assembled workforce. Goodwill is not deductible for tax purposes. In2Bones distributor relationships and developed technology are each being amortized over a weighted average life of 15 years.

The goodwill recorded as part of the Biorez Acquisition primarily represents revenue synergies, the related cost to enter into this new product offering and the Biorez assembled workforce. Goodwill is not deductible for tax purposes. Biorez developed technology and trademarks and tradenames are each being amortized over a weighted average life of 20 years.

The contingent consideration was recorded at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value. The fair value of contingent consideration is measured using projected payment dates, discount rates, probabilities of payment, and projected revenues. The recurring Level 3 fair value measurements of contingent consideration for which the liability is recorded include the following significant unobservable inputs:


	Assumptions
Unobservable Input	In2Bones	Biorez

Discount rate	5.67%	10.34%
Revenue volatility	12.75%	18.87%
Projected year of payment	2023-2026	2023-2026

We recorded $10.0 million in net sales for In2Bones products during the third quarter and a total of $12.1 million in net sales since the date of acquisition, June 13, 2022. The net sales were recorded in the consolidated condensed statements of comprehensive income (loss) for the three and nine months ended September 30, 2022, respectively. Earnings recorded in the consolidated condensed statements of comprehensive income (loss) for the three and nine months ended September 30, 2022 were not material. We also believe the proforma information is immaterial for disclosure for the three and nine months ended September 30, 2022 and 2021.

Net sales and earnings for Biorez were immaterial to both the three and nine months ended September 30, 2022. We also believe the proforma information is immaterial for disclosure for the three and nine months ended September 30, 2022 and 2021.

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Note 35 - 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
		September 30, 2021						September 30, 2020							September 30, 2022						September 30, 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	$	37,957	$	98,444	$	136,401	$	38,913	$	95,292	$	134,205	United States	$	45,688	$	110,033	$	155,721	$	37,957	$	98,444	$	136,401
Europe, Middle East & Africa	Europe, Middle East & Africa	24,155		19,905		44,060		23,104		17,584		40,688		Europe, Middle East & Africa	26,914		20,300		47,214		24,155		19,905		44,060
Asia Pacific	Asia Pacific	27,517		16,113		43,630		26,403		15,405		41,808		Asia Pacific	28,242		17,223		45,465		27,517		16,113		43,630
Americas (excluding the United States)	Americas (excluding the United States)	16,122		8,614		24,736		13,767		7,367		21,134		Americas (excluding the United States)	17,774		8,914		26,688		16,122		8,614		24,736
Total sales from contracts with customers	Total sales from contracts with customers	$	105,751	$	143,076	$	248,827	$	102,187	$	135,648	$	237,835	Total sales from contracts with customers	$	118,618	$	156,470	$	275,088	$	105,751	$	143,076	$	248,827

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	$	96,389	$	141,798	$	238,187	$	93,000	$	134,745	$	227,745	Goods transferred at a point in time	$	108,875	$	154,856	$	263,731	$	96,389	$	141,798	$	238,187
Services transferred over time	Services transferred over time	9,362		1,278		10,640		9,187		903		10,090		Services transferred over time	9,743		1,614		11,357		9,362		1,278		10,640
Total sales from contracts with customers	Total sales from contracts with customers	$	105,751	$	143,076	$	248,827	$	102,187	$	135,648	$	237,835	Total sales from contracts with customers	$	118,618	$	156,470	$	275,088	$	105,751	$	143,076	$	248,827


		Nine Months Ended						Nine Months Ended							Nine Months Ended						Nine Months Ended
		September 30, 2021						September 30, 2020							September 30, 2022						September 30, 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	$	115,864	$	288,069	$	403,933	$	97,339	$	243,137	$	340,476	United States	$	124,097	$	312,034	$	436,131	$	115,864	$	288,069	$	403,933
Europe, Middle East & Africa	Europe, Middle East & Africa	77,327		58,594		135,921		62,726		50,345		113,071		Europe, Middle East & Africa	88,955		63,093		152,048		77,327		58,594		135,921
Asia Pacific	Asia Pacific	80,403		44,911		125,314		66,737		34,211		100,948		Asia Pacific	79,333		46,379		125,712		80,403		44,911		125,314
Americas (excluding the United States)	Americas (excluding the United States)	47,215		24,282		71,497		35,152		19,984		55,136		Americas (excluding the United States)	53,932		26,782		80,714		47,215		24,282		71,497
Total sales from contracts with customers	Total sales from contracts with customers	$	320,809	$	415,856	$	736,665	$	261,954	$	347,677	$	609,631	Total sales from contracts with customers	$	346,317	$	448,288	$	794,605	$	320,809	$	415,856	$	736,665

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	$	291,728	$	412,298	$	704,026	$	237,224	$	345,068	$	582,292	Goods transferred at a point in time	$	317,140	$	443,629	$	760,769	$	291,728	$	412,298	$	704,026
Services transferred over time	Services transferred over time	29,081		3,558		32,639		24,730		2,609		27,339		Services transferred over time	29,177		4,659		33,836		29,081		3,558		32,639
Total sales from contracts with customers	Total sales from contracts with customers	$	320,809	$	415,856	$	736,665	$	261,954	$	347,677	$	609,631	Total sales from contracts with customers	$	346,317	$	448,288	$	794,605	$	320,809	$	415,856	$	736,665

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

September 30, 2021 December 31, 2020
Contract liability $ 15,833 $ 13,666


	September 30, 2022		December 31, 2021

Contract liability	$	17,551	$	16,760

Revenue recognized during the nine months ended September 30, ~~2021~~2022 and September 30, ~~2020~~2021 from amounts included in contract liabilities at the beginning of the period were ~~$8.4~~$9.5 million and ~~$7.6~~$8.4 million, respectively. There were no material contract assets as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

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Note 46 – Comprehensive Income (Loss)

Comprehensive income (loss) consists of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income (loss)	Net income (loss)	$	14,948	$	6,850	$	38,098	$	(14,623)	Net income (loss)	$	46,150	$	14,948	$	(107,166)	$	38,098

Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Cash flow hedging gain (loss), net of income tax (income tax expense (benefit) of $929 and $(964) for the three months ended September 30, 2021 and 2020, respectively, and $2,568 and $(972) for the nine months ended September 30, 2021 and 2020, respectively)		2,917		(3,026)		8,064		(3,050)
Pension liability, net of income tax (income tax expense of $201 and $170 for the three months ended September 30, 2021 and 2020, respectively, and $603 and $510 for the nine months ended September 30, 2021 and 2020, respectively)		631		535		1,893		1,605
Cash flow hedging gain, net of income tax (income tax expense of $1,546 and $929 for the three months ended September 30, 2022 and 2021, respectively, and $3,384 and $2,568 for the nine months ended September 30, 2022 and 2021, respectively)										Cash flow hedging gain, net of income tax (income tax expense of $1,546 and $929 for the three months ended September 30, 2022 and 2021, respectively, and $3,384 and $2,568 for the nine months ended September 30, 2022 and 2021, respectively)	4,833		2,917		10,577		8,064
Pension liability, net of income tax (income tax expense of $157 and $201 for the three months ended September 30, 2022 and 2021, respectively, and $439 and $603 for the nine months ended September 30, 2022 and 2021, respectively)										Pension liability, net of income tax (income tax expense of $157 and $201 for the three months ended September 30, 2022 and 2021, respectively, and $439 and $603 for the nine months ended September 30, 2022 and 2021, respectively)	490		631		1,502		1,893
Foreign currency translation adjustment	Foreign currency translation adjustment	(4,740)		4,617		(5,813)		(790)		Foreign currency translation adjustment	(8,348)		(4,740)		(18,009)		(5,813)

Comprehensive income (loss)	Comprehensive income (loss)	$	13,756	$	8,976	$	42,242	$	(16,858)	Comprehensive income (loss)	$	43,125	$	13,756	$	(113,096)	$	42,242

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	5,141		—		(5,813)		(672)		Other comprehensive income (loss) before reclassifications, net of tax	18,711		—		(18,009)		702
Amounts reclassified from accumulated other comprehensive income (loss) before taxa	Amounts reclassified from accumulated other comprehensive income (loss) before taxa	3,854		2,496		—		6,350		Amounts reclassified from accumulated other comprehensive income (loss) before taxa	(10,736)		1,941		—		(8,795)
Income tax	Income tax	(931)		(603)		—		(1,534)		Income tax	2,602		(439)		—		2,163

Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	8,064		1,893		(5,813)		4,144		Net current-period other comprehensive income (loss)	10,577		1,502		(18,009)		(5,930)

Balance, September 30, 2021		$	2,119	$	(34,727)	$	(26,929)	$	(59,537)
Balance, September 30, 2022										Balance, September 30, 2022	$	14,233	$	(28,169)	$	(46,197)	$	(60,133)

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)
Other comprehensive income (loss) before reclassifications, net of tax (1,916) — (790) (2,706)
Amounts reclassified from accumulated other comprehensive income (loss) before taxa
(1,496) 2,115 — 619
Income tax 362 (510) — (148)
Net current-period other comprehensive income (loss) (3,050) 1,605 (790) (2,235)
Balance, September 30, 2020 $ (2,557) $ (30,086) $ (28,869) $ (61,512)


	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)

Other comprehensive income (loss) before reclassifications, net of tax	5,141		—		(5,813)		(672)
Amounts reclassified from accumulated other comprehensive income before taxa	3,854		2,496		—		6,350
Income tax	(931)		(603)		—		(1,534)

Net current-period other comprehensive income (loss)	8,064		1,893		(5,813)		4,144

Balance, September 30, 2021	$	2,119	$	(34,727)	$	(26,929)	$	(59,537)

(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 57 and Note ~~11,~~13, respectively, for further details.

810

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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 September 30, 2021 December 31, 2020
Forward exchange contracts Cash flow hedge $ 178,908 $ 154,504
Forward exchange contracts Non-designated 37,254 42,380

The remaining time to maturity as of September 30, 2021 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 (loss) presentation~~

~~Derivatives designated as cash flow hedges~~

Foreign exchange contracts designated as cash flow hedges had the following effects on accumulated other comprehensive income (loss) ("AOCI") and net earnings on our consolidated 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 September 30,
Total Amount of Line Item Presented
Derivative Instrument 2021 2020 Location of amount reclassified 2021 2020 2021 2020
Foreign exchange contracts $ 3,188 $ (3,542) Net Sales $ 248,827 $ 237,835 $ (1,077) $ 663
Cost of Sales 106,521 104,137 419 (215)
Pre-tax gain (loss) $ 3,188 $ (3,542) $ (658) $ 448
Tax expense (benefit) 770 (856) (159) 108
Net gain (loss) $ 2,418 $ (2,686) $ (499) $ 340

Amount of Gain (Loss) Recognized in AOCI Consolidated Condensed Statements of Comprehensive Income (Loss) Amount of Gain (Loss) Reclassified from AOCI
Nine Months Ended September 30,
Total Amount of Line Item Presented
Derivative Instrument 2021 2020 Location of amount reclassified 2021 2020 2021 2020
Foreign exchange contracts $ 6,778 $ (2,526) Net Sales $ 736,665 $ 609,631 $ (4,948) $ 2,206
Cost of Sales 324,485 284,845 1,094 (710)
Pre-tax gain (loss) $ 6,778 $ (2,526) $ (3,854) $ 1,496
Tax expense (benefit) 1,637 (610) (931) 362
Net gain (loss) $ 5,141 $ (1,916) $ (2,923) $ 1,134

At September 30, 2021, $1.5 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.

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~~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 September 30, Nine Months Ended September 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 $ (48) $ (682) $ (398) $ (1,224)
Net gain (loss) on currency transaction exposures Selling and administrative expense $ (441) $ 312 $ (1,320) $ 143

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

September 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 Prepaid expenses and other current assets $ 3,319 $ (1,311) $ 2,008
Foreign exchange contracts Other long-term assets 932 (145) 787
$ 4,251 $ (1,456) $ 2,795
Derivatives not designated as hedging instruments:
Foreign exchange contracts Other current liabilities 21 (160) (139)
Total derivatives $ 4,272 $ (1,616) $ 2,656

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.~~

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~~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 September 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:~~

September 30,
2021 December 31,
2020
Raw materials $ 76,637 $ 71,807
Work-in-process 17,658 15,864
Finished goods 134,277 107,197
Total $ 228,572 $ 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 (loss) per share for the three and nine months ended September 30, 2021 and 2020:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net income (loss) $ 14,948 $ 6,850 $ 38,098 $ (14,623)
Basic – weighted average shares outstanding 29,179 28,583 29,097 28,529
Effect of dilutive potential securities 2,964 843 2,923 —
Diluted – weighted average shares outstanding 32,143 29,426 32,020 28,529
Net income (loss) (per share)
Basic $ 0.51 $ 0.24 $ 1.31 $ (0.51)
Diluted 0.47 0.23 1.19 (0.51)

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 nine months ended September 30, 2021, respectively, and 1.6 million for the three months ended September 30, 2020. As the Company was in a net loss position for the nine months ended September 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 nine months ended September 30, 2021, our average share price exceeded the conversion price of the Notes and we included in our diluted share count 1.2 million shares, for both periods, assumed to be issued if the Notes were converted. During the three and nine months ended September 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 nine months ended September 30, 2021, our average share price exceeded $114.92 and we therefore included in our diluted share count an additional 0.5 million and 0.4 million shares, respectively, assumed to be issued under the warrants. During the three and nine months ended September 30, 2020, our average share price had not exceeded $114.92; therefore, there were no potential shares issuable under the warrants to be used in the calculation of diluted EPS.

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Note 7 – 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	September 30, 2022		December 31, 2021
Forward exchange contracts	Cash flow hedge	$	196,749	$	172,894
Forward exchange contracts	Non-designated	37,057		38,897

The remaining time to maturity as of September 30, 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 (loss) presentation

Derivatives designated as cash flow hedges

Foreign exchange contracts designated as cash flow hedges had the following effects on accumulated other comprehensive income (loss) ("AOCI") and net earnings (loss) on our consolidated condensed statements of comprehensive income (loss) and our consolidated condensed balance sheets:


	Amount of Gain Recognized in AOCI				Consolidated Condensed Statements of Comprehensive Income (Loss)					Amount of Gain (Loss) Reclassified from AOCI
	Three Months Ended September 30,
						Total Amount of Line Item Presented
Derivative Instrument	2022		2021		Location of amount reclassified	2022		2021		2022		2021

Foreign exchange contracts	$	11,695	$	3,188	Net Sales	$	275,088	$	248,827	$	5,090	$	(1,077)
					Cost of Sales	123,473		106,521		225		419
Pre-tax gain (loss)	$	11,695	$	3,188						$	5,315	$	(658)
Tax expense (benefit)	2,835		770							1,288		(159)
Net gain (loss)	$	8,860	$	2,418						$	4,027	$	(499)


	Amount of Gain Recognized in AOCI				Consolidated Condensed Statements of Comprehensive Income (Loss)					Amount of Gain (Loss) Reclassified from AOCI
	Nine Months Ended September 30,
						Total Amount of Line Item Presented
Derivative Instrument	2022		2021		Location of amount reclassified	2022		2021		2022		2021

Foreign exchange contracts	$	24,698	$	6,778	Net Sales	$	794,605	$	736,665	$	10,237	$	(4,948)
					Cost of Sales	355,222		324,485		499		1,094
Pre-tax gain (loss)	$	24,698	$	6,778						$	10,736	$	(3,854)
Tax expense (benefit)	5,987		1,637							2,602		(931)
Net gain (loss)	$	18,711	$	5,141						$	8,134	$	(2,923)

At September 30, 2022, $11.9 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.

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Derivatives not designated as cash flow hedges

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


		Three Months Ended September 30,				Nine Months Ended September 30,
Derivative Instrument	Location on Consolidated Condensed Statements of Comprehensive Income (Loss)	2022		2021		2022		2021

Net gain (loss) on currency forward contracts	Selling and administrative expense	$	892	$	(48)	$	1,088	$	(398)
Net loss on currency transaction exposures	Selling and administrative expense	$	(1,110)	$	(441)	$	(2,874)	$	(1,320)

Balance sheet presentation


September 30, 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	$	15,922	$	(172)	$	15,750
Foreign exchange contracts	Other long-term assets	3,097		(59)		3,038
		$	19,019	$	(231)	$	18,788

Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current liabilities	53		(124)		(71)

Total derivatives		$	19,072	$	(355)	$	18,717


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

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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.

Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of September 30, 2022 consist of forward foreign exchange contracts. The Company values its forward foreign exchange contracts using quoted prices for similar assets. The most significant assumption is quoted currency rates. The value of the forward foreign exchange contract assets and liabilities were valued using Level 2 inputs and are listed in the table above. The Company values contingent consideration using Level 3 inputs. These include pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input that is unobservable.

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 8 - Inventories

Inventories consist of the following:


	September 30, 2022		December 31, 2021
Raw materials	$	111,431	$	83,386
Work-in-process	26,967		17,449
Finished goods	166,415		130,809
Total	$	304,813	$	231,644

Note 9 – Earnings (Loss) Per Share

Basic earnings (loss) per share (“basic EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the reporting period. Diluted earnings (loss) per share (“diluted EPS”) gives effect to all dilutive potential shares. As the Company was in a net loss position for the nine months ended September 30, 2022, there were no dilutive potential shares included in the computation of diluted shares outstanding for the nine months ended September 30, 2022.

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The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30, 2022					Three Months Ended September 30, 2021
	Basic EPS		Adjustments	Diluted EPS		Basic EPS		Adjustments	Diluted EPS
Net income	$	46,150	—	$	46,150	$	14,948	—	$	14,948

Weighted average shares outstanding	30,473		—	30,473		29,179		—	29,179

Employee stock compensation	—		585	585		—		1,252	1,252

Warrants	—		—	—		—		468	468

Convertible notes	—		45	45		—		1,244	1,244

	30,473		630	31,103		29,179		2,964	32,143

EPS	$	1.51		$	1.48	$	0.51		$	0.47


	Nine Months Ended September 30, 2022					Nine Months Ended September 30, 2021
	Basic EPS		Adjustments	Diluted EPS		Basic EPS		Adjustments	Diluted EPS
Net income (loss)	$	(107,166)	—	$	(107,166)	$	38,098	—	$	38,098

Weighted average shares outstanding	29,892		—	29,892		29,097		—	29,097

Employee stock compensation	—		—	—		—		1,283	1,283

Warrants	—		—	—		—		427	427

Convertible notes	—		—	—		—		1,213	1,213

	29,892		—	29,892		29,097		2,923	32,020

EPS	$	(3.59)		$	(3.59)	$	1.31		$	1.19

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. Such shares aggregated approximately 2.0 million for the three months ended September 30, 2022 and 0.7 million and 0.5 million for the three and nine months ended September 30, 2021, respectively. As the Company was in a net loss position for the nine months ended September 30, 2022, there were no anti-dilutive shares.

The 2.625% Notes and 2.250% convertible notes due in 2027 (the "2.250% Notes"), more fully described in Note 11, are convertible under certain circumstances, as defined in the respective indentures for each series of notes, into a combination of cash and CONMED common stock. The following is intended to describe the impact of the 2.625% Notes and 2.250% Notes and related hedge transactions on the calculation of diluted EPS. Additional shares to be issued pursuant to the terms of the 2.625% Notes, the 2.250% Notes and related hedge transactions, if any, would occur at settlement.

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Effective with our adoption of ASU 2020-06 on January 1, 2022 (see Note 3), the Company began using the if-converted method to compute diluted EPS. Under the if-converted method, in the calculation of diluted EPS, the numerator is adjusted for interest expense applicable to the convertible notes (net of tax) and the denominator is adjusted to include additional common shares assuming the principal portion of the notes and the conversion premium are settled in common shares, when permitted or required.Under the if-converted method, when convertible notes require the principal to be paid in cash, then only the conversion premium affects the calculation of diluted EPS.

On June 6, 2022, the Company repurchased and extinguished $275.0 million principal value of 2.625% Notes as further discussed in Note 11. Concurrently, the Company entered into a Supplemental Indenture related to the remaining $70.0 million in 2.625% Notes, pursuant to which the Company irrevocably elected to settle the principal value of the 2.625% Notes in cash. Similarly, the 2.250% Notes, issued on June 6, 2022, require the principal to be paid in cash. As a result, in periods in which the Company has net income, only the conversion premium will affect dilutive share count. Accordingly, for periods prior to adoption of ASU 2020-06 on January 1, 2022 and after June 6, 2022, in periods in which the Company has net income, the calculation of diluted EPS includes potential diluted shares upon conversion of the 2.625% Notes and the 2.250% Notes, only when the average market price per share of our common stock for the period is greater than the conversion price and only for the conversion premium, with the principal portion required to be settled in cash.

We have entered into convertible notes hedge transactions to increase the effective conversion price of the 2.625% Notes from $88.80 to $114.92. However, our convertible notes hedges are not included when calculating potential dilutive shares since their effect is always anti-dilutive. Concurrent with entering into the hedge transactions, we entered into warrant transactions under which we agreed to sell shares of our common stock at $114.92. In periods in which the Company has net income, the calculation of diluted EPS includes potential diluted shares to be issued under the warrants when the average market price per share of our common stock for the period is greater than $114.92, calculated under the treasury stock method.

On June 6, 2022, we entered into convertible notes hedge transactions to increase the effective conversion price of the 2.250% Notes from $145.33 to $251.53. However, our convertible notes hedges are not included when calculating potential dilutive shares since their effect is always anti-dilutive. Concurrent with entering into the hedge transactions, we entered into warrant transactions under which we agreed to sell shares of our common stock at $251.53. In periods in which the Company has net income, the calculation of diluted EPS includes potential diluted shares to be issued under the warrants when the average market price per share of our common stock for the period is greater than $251.53, calculated under the treasury stock method.

Note 10 – Goodwill and Other Intangible Assets

The changes in the net carrying amount of goodwill for the nine months ended September 30, ~~2021~~2022 are as follows:


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

Goodwill resulting from business acquisitions	198,992

Foreign currency translation	~~(789)~~(2,260)

Balance as of September 30, ~~2021~~2022	$	~~617,651~~814,260

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. During the nine months ended September 30, 2022, the Company acquired In2Bones Global, Inc. and Biorez, Inc. as further described in Note 4. Goodwill resulting from the In2Bones Acquisition amounted to $139.8 million and acquired intangible assets including distributor relationships and developed technology amounted to $64.9 million. Goodwill resulting from the Biorez Acquisition amounted to $59.2 million and acquired intangible assets including developed technology and trademarks and tradenames amounted to $177.9 million.

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Other intangible assets consist of the following:


		September 30, 2021					December 31, 2020					September 30, 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:	22									Intangible assets with definite lives:	21

Customer and distributor relationships	Customer and distributor relationships	24	$	342,501	$	(148,330)	$	342,639	$	(134,555)	Customer and distributor relationships	24	$	369,643	$	(166,190)	$	342,452	$	(152,934)

Sales representation, marketing and promotional rights	Sales representation, marketing and promotional rights	25	149,376		(58,500)		149,376		(54,000)		Sales representation, marketing and promotional rights	25	149,376		(64,500)		149,376		(60,000)

Developed technology	Developed technology	16	106,604		(24,801)		106,604		(19,705)		Developed technology	18	320,204		(32,368)		106,604		(26,495)

Patents and other intangible assets	Patents and other intangible assets	16	75,836		(50,369)		73,516		(48,882)		Patents and other intangible assets	15	78,808		(52,064)		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		—

			$	760,861	$	(282,000)	$	758,679	$	(257,142)			$	1,004,575	$	(315,122)	$	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 $8.7 million and $8.3 million ~~and $8.6 million in~~for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and $24.9 million ~~and $25.6 million~~ in both the nine months ended September 30, ~~2021~~2022 and ~~2020, respectively,~~2021 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 $3.5 million of earn-out consideration that was paid during the third quarter of 2021 and an additional accrual of $2.4 million of earn-out consideration that is considered probable as of September 30, 2021 associated with a prior asset acquisition. This is recorded in other current liabilities at September 30, 2021.

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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		$	7,187	$	1,500	$	8,687
2022		26,554		6,000		32,554
Remaining, 2022								Remaining, 2022	$	7,487	$	1,500	$	8,987
2023	2023	25,679		6,000		31,679		2023	29,263		6,000		35,263
2024	2024	24,929		6,000		30,929		2024	28,947		6,000		34,947
2025	2025	25,145		6,000		31,145		2025	29,423		6,000		35,423
2026	2026	24,652		6,000		30,652		2026	29,196		6,000		35,196
2027								2027	30,235		6,000		36,235

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Note 911 - Long-Term Debt

Long-term debt consists of the following:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Revolving line of credit	Revolving line of credit	$	171,000	$	207,000	Revolving line of credit	$	53,000	$	140,000
Term loan, net of deferred debt issuance costs of $1,448 and $1,668 in 2021 and 2020, respectively		229,102		240,145
2.625% convertible notes, net of deferred debt issuance costs of $4,144 and $5,475 in 2021 and 2020, respectively, and unamortized discount of $26,009 and $33,620 in 2021 and 2020, respectively		314,846		305,904
Term loan, net of deferred debt issuance costs of $781 and $1,373 in 2022 and 2021, respectively						Term loan, net of deferred debt issuance costs of $781 and $1,373 in 2022 and 2021, respectively	133,807		226,196
2.625% convertible notes, net of deferred debt issuance costs of $531 and $3,700 in 2022 and 2021, respectively, and unamortized discount of $23,404 in 2021						2.625% convertible notes, net of deferred debt issuance costs of $531 and $3,700 in 2022 and 2021, respectively, and unamortized discount of $23,404 in 2021	69,469		317,896
2.250% convertible notes, net of deferred debt issuance costs of $19,898 in 2022						2.250% convertible notes, net of deferred debt issuance costs of $19,898 in 2022	780,102		—
Financing leases	Financing leases	638		587		Financing leases	297		564
Total debt	Total debt	715,586		753,636		Total debt	1,036,675		684,656
Less: Current portion	Less: Current portion	12,251		18,415		Less: Current portion	237		12,249
Total long-term debt	Total long-term debt	$	703,335	$	735,221	Total long-term debt	$	1,036,438	$	672,407

Seventh Amended and Restated Senior Credit Agreement

On July 16, 2021, we entered into a seventh amended and restated senior credit agreement consisting of: (a) a $233.5 million term loan facility and (b) a $585.0 million revolving credit facility. The revolving credit facility will terminate and the loans outstanding under the term loan facility will expire on July 16, 2026. The term loan iswas payable in quarterly installments increasing over the term of the facility. During the nine months ended September 30, 2022 we made a $90.0 million prepayment on the term loan facility resulting in the elimination of such quarterly payments with the remaining balance due upon the expiration of the term loan facility. The $90.0 million prepayment was accounted for as an extinguishment and resulted in a write-off to other expense of unamortized debt issuance costs of $0.5 million. Proceeds from the term loan facility and borrowings under the revolving credit facility were used to repay the then existing senior credit agreement. Interest rates are at LIBOR ~~(subject to 0.125% floor)~~(3.125% at September 30, 2022) plus an interest rate margin of ~~1.50% (1.625%~~1.125% (4.250% at September 30, ~~2021)~~2022). For borrowings where we elect to use the alternate base rate, the initial base rate is the greatest of (i) the Prime Rate, (ii) the Federal Funds Rate plus 0.50% or (iii) the one-month Adjusted LIBOR plus 1.00%, plus, in each case, an interest rate margin.

There were ~~$230.5~~$134.6 million in borrowings outstanding on the term loan facility as of September 30, ~~2021.~~2022. There were ~~$171.0~~$53.0 million in borrowings outstanding under the revolving credit facility as of September 30, ~~2021.~~2022. Our available borrowings on the revolving credit facility at September 30, ~~2021~~2022 were ~~$411.5~~$530.2 million with approximately ~~$2.5~~$1.8 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 September 30, ~~2021.~~2022. We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.

2.625% Convertible Notes

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

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stock. The 2.625% Notes may be converted at an initial conversion rate of 11.2608 shares of our common stock per $1,000 principal amount of 2.625% Notes (equivalent to an initial conversion price of approximately $88.80 per share of common stock). Holders of the 2.625% Notes may convert the 2.625% Notes at their option at any time on or after November 1, 2023 through the second scheduled trading day preceding the maturity date. Holders of the 2.625% Notes will also have the right to convert the 2.625% Notes prior to November 1, 2023, but only upon the occurrence of specified events. The conversion rate is subject to anti-dilution adjustments if certain events occur. A portion of the net proceeds from the offering of the 2.625% Notes were used as part of the financing for the Buffalo Filter acquisition and $21.0 million were used to pay the cost of certain convertible notes hedge transactions as further described below.

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On June 6, 2022, the Company repurchased and extinguished $275.0 million principal amount of the 2.625% Notes for aggregate consideration consisting of $275.0 million in cash and approximately 0.9 million shares of the Company's common stock. During the nine months ended September 30, 2022, the Company recorded a loss on extinguishment of $103.1 million to other expense based on the fair value of the shares of the Company’s common stock issued in connection with the extinguishment. This loss was not deductible for tax purposes.We also recorded a write-off to other expense of unamortized debt issuance costs related to the 2.625% Notes of $2.9 million. Concurrently, the Company entered into a Supplemental Indenture related to the remaining $70.0 million in 2.625% Notes, in which the Company irrevocably elected to settle the principal value of those 2.625% Notes in cash.

Our effective borrowing rate for nonconvertible debt at the time of issuance of the 2.625% Notes was estimated to be 6.14%, which resulted in $51.6 million of the $345.0 million aggregate principal amount of Notes issued, or $39.1 million after taxes, being attributable to equity. For the three and nine months ended September 30, 2021, ~~and 2020,~~ we ~~have~~ recorded interest expense related to the amortization of debt discount on the 2.625% Notes of $2.6 million and ~~$2.4~~$7.6 million, respectively, at the effective interest rate of 6.14%. On January 1, 2022, we adopted ASU 2020-06 using the modified retrospective approach as further described in Note 3. This ASU eliminated the equity component separately recorded for the conversion features associated with the convertible notes and related debt discount. For the three months ended September 30, 2022 and 2021, we have recorded interest expense on the 2.625% Notes of $0.5 million and $2.3 million, respectively, and for the nine months ended September 30, ~~2021~~2022 and 2020, we have recorded interest expense related to the amortization of debt discount on the Notes of $7.6 million and $7.2 million, respectively, at the effective interest rate of 6.14%. The debt discount on the Notes is being amortized through February 2024. For both the three months ended September 30, 2021 ~~and 2020,~~ we have recorded interest expense on the 2.625% Notes of ~~$2.3~~$4.4 million and ~~for both the nine months ended September 30, 2021 and 2020, we have recorded interest expense on the Notes of~~ $6.8 million, respectively, at the contractual coupon rate of 2.625%.

The estimated fair value of the 2.625% Notes was approximately $77.1 million as of September 30, 2022 based on a market approach which represents a Level 2 valuation in the fair value hierarchy. The estimated fair value was determined based on the estimated or actual bids and offers of the 2.625% Notes in an over-the-counter market transaction on the last business day of the period.

2.250% Convertible Notes

On June 6, 2022, we issued $800.0 million in 2.250% Notes.Interest is payable semi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2022.The 2.250% Notes will mature on June 15, 2027, unless earlier repurchased or converted. The 2.250% Notes represent subordinated unsecured obligations and are convertible under certain circumstances, as defined in the indenture, into a combination of cash and CONMED common stock, with the principal required to be paid in cash. The 2.250% Notes may be converted at an initial conversion rate of 6.8810 shares of our common stock per $1,000 principal amount of the 2.250% Notes (equivalent to an initial conversion price of approximately $145.33 per share of common stock). Holders of the 2.250% Notes may convert the 2.250% Notes at their option at any time on or after March 15, 2027 through the second scheduled trading day preceding the maturity date. Holders of the 2.250% Notes will also have the right to convert the 2.250% Notes prior to March 15, 2027, but only upon the occurrence of specified events. The conversion rate is subject to anti-dilution adjustments if certain events occur. A portion of these proceeds were used to repurchase and extinguish a portion of the 2.625% Notes, pay off our then outstanding balance on our revolving line of credit, pay down of $90.0 million of our term loan and partially pay for the In2Bones Acquisition. In addition, approximately $115.6 million of the proceeds were used to pay the cost of certain convertible notes hedge transactions related to the 2.250% Notes.

For the three and nine months ended September 30, 2022, we have recorded interest expense on the 2.250% Notes of$4.5 million and $5.8 million, respectively, at the contractual coupon rate of 2.250%.

The estimated fair value of the 2.250% Notes was approximately $690.3 million as of September 30, 2022 based on a market approach which represents a Level 2 valuation in the fair value hierarchy.The estimated fair value was determined based on the estimated or actual bids and offers of the 2.250% Notes in an over-the-counter market transaction on the last business day of the period.

Convertible Notes Hedge Transactions

In connection with the offering of the 2.625% and 2.250% Notes, we entered into convertible ~~note~~notes hedge transactions with a number of financial institutions (each, an “option counterparty”). The convertible ~~note~~notes hedge transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the respective Notes, the number of shares of our common stock underlying the 2.625% and 2.250% Notes. ~~Concurrently~~Concurrent with entering into the convertible ~~note~~notes hedge transactions, we also entered into separate warrant transactions with each option counterparty whereby we sold to such option counterparty warrants to purchase, subject to customary anti-dilution adjustments, the same number of shares of our common stock.

In connection with the repurchase and extinguishment of $275.0 million principal amount of the 2.625% Notes, the

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Company entered into agreements with the option counterparties to terminate a corresponding portion of the hedges on the 2.625% Notes. The transactions had a net fair value due the Company on execution date of $22.2 million which was recorded as an adjustment to Paid-in Capital. The Company recorded a $5.5 million charge to other expense as a result of a subsequent decline in fair value between execution date and settlement date with the Company receiving net cash of $16.7 million. The termination of the convertible notes hedge resulted in the release of the related deferred tax asset. In connection with the issuance of 2.250% Notes, the Company purchased hedges for $187.6 million ($142.1 million net of tax) and received proceeds from the issuance of warrants totaling $72.0 million, recorded to paid-in capital.

The convertible ~~note~~notes 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~~notes 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)~~114.92 for the 2.625% Notes and $251.53 for the 2.250% Notes) of the warrants, there would nevertheless be dilution to the extent that such market price exceeds the strike price of the warrants as noted in Note 7,9, unless we elect to settle the warrants in cash.

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


Remaining 2021		$	2,981
2022		11,925
Remaining 2022				Remaining 2022	$	—
2023	2023	14,906		2023	—
2024	2024	365,869		2024	70,000
2025	2025	23,850		2025	—
2026	2026	327,018		2026	187,588
2027				2027	800,000

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

Note 1012 – 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 nine months ended September 30, 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	1,235		616		Provision for warranties	297		1,235
Claims made	Claims made	(683)		(932)		Claims made	(624)		(683)

Balance as of September 30,	Balance as of September 30,	$	2,378	$	1,870	Balance as of September 30,	$	2,017	$	2,378

Costs associated with extended warranty repairs are recorded as incurred and amounted to ~~$5.2~~$4.6 million and ~~$4.4~~$5.2 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

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Note 1113 – Pension Plan

Net periodic pension cost consists of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Service cost	Service cost	$	248	$	179	$	744	$	537	Service cost	$	269	$	248	$	807	$	744

Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	451		639		1,353		1,917		Interest cost on projected benefit obligation	537		451		1,611		1,353

Expected return on plan assets	Expected return on plan assets	(1,289)		(1,255)		(3,867)		(3,765)		Expected return on plan assets	(1,324)		(1,289)		(3,972)		(3,867)

Net amortization and deferral	Net amortization and deferral	832		705		2,496		2,115		Net amortization and deferral	647		832		1,941		2,496

Net periodic pension cost	Net periodic pension cost	$	242	$	268	$	726	$	804	Net periodic pension cost	$	129	$	242	$	387	$	726

We do not expect to make any pension contributions during 2021. Non-service cost of $0.1 million and $0.3 million for the three and nine months ended September 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 nine months ended September 30, 2022 and 2021.

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~~Note 12 – Acquisition and Other Expense~~

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

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Plant underutilization costs $ — $ — $ — $ 6,586
Product rationalization costs - inventory — — — 2,169
Restructuring costs — — — 1,087
Manufacturing consolidation costs — 606 — 3,993
Acquisition and integration costs — 796 — 2,253
Acquisition and other expense included in cost of sales $ — $ 1,402 $ — $ 16,088
Restructuring and related costs $ — $ 1,009 $ 414 $ 3,133
Product rationalization costs - field inventory — — — 2,095
Acquisition and integration costs — — — 1,192
Acquisition and other expense included in selling and administrative expense $ — $ 1,009 $ 414 $ 6,420
Debt refinancing costs included in other expense $ 1,127 $ — $ 1,127 $ —

During the nine months ended September 30, 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 nine months ended September 30, 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 nine months ended September 30, 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.

During the three and nine months ended September 30, 2020, we incurred $0.6 million and $4.0 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 nine months ended September 30, 2020, we incurred costs for inventory step-up adjustments and other costs of $0.8 million and $2.3 million, respectively, related to a previous acquisition, which were charged to cost of sales.

During the three and nine months ended September 30, 2020 we recorded charges of $1.0 million and $2.3 million, respectively, primarily related to the restructuring of our Orthopedic sales force that was charged to selling and administrative expenses based on the nature of the costs and function of the affected employees. During the nine months ended September 30, 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 charged to selling and administrative expenses.

During the nine months ended September 30, 2020, we incurred $0.8 million in restructuring charges principally related to a voluntary separation arrangement with employees as a result of the COVID-19 pandemic which were charged to selling and administrative expense based on the nature of the costs and function of the affected employees.

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

During the three and nine months ended September 30, 2021, we recorded $1.1 million related to a loss on early extinguishment and third party fees associated with the seventh amended and restated senior credit agreement as further described in Note 9. These costs were included in other expense.

~~Note 13 — 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 September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Orthopedic surgery $ 105,751 $ 102,187 $ 320,809 $ 261,954
General surgery 143,076 135,648 415,856 347,677
Consolidated net sales $ 248,827 $ 237,835 $ 736,665 $ 609,631

Note 14 – Acquisition and Other Expense

Acquisition and other expense consists of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021







Acquisition costs included in cost of sales	$	2,096	$	—	$	2,445	$	—


Acquisition costs	$	3,706	$	—	$	6,306	$	—

Legal matters	—		—		775		—
Restructuring and related costs	—		—		—		414

Acquisition and other costs included in selling and administrative expense	$	3,706	$	—	$	7,081	$	414





Convertible notes premium on extinguishment	$	—	$	—	$	103,125	$	—
Change in fair value of convertible notes hedges upon settlement	—		—		5,460		—
Loss on early extinguishment of debt	—		1,127		3,426		1,127
Debt related costs included in other expense	$	—	$	1,127	$	112,011	$	1,127

During the three and nine months ended September 30, 2022 we recognized $2.1 million and $2.4 million, respectively, in costs for inventory step-up adjustments associated with the In2Bones Acquisition, as further described in Note 4.

During the three and nine months ended September 30, 2022 we recognized $3.7 million and $6.3 million, respectively, in consulting fees, legal fees and other integration related costs associated with the acquisitions of In2Bones and Biorez, as further described in Note 4. These costs were included in selling and administrative expense.

During the nine months ended September 30, 2022, we recognized $0.8 million in costs related to the settlement of litigation. These costs were included in selling and administrative expense.

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During the nine months ended September 30, 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. These costs were charged to selling and administrative expense.

During the nine months ended September 30, 2022, we recorded expense of $103.1 million related to the conversion premium on the repurchase and extinguishment of $275.0 million of the 2.625% Notes, $5.5 million related to the settlement of the associated convertible notes hedge transactions and $3.4 million related to the write-off of deferred financing fees associated with the repurchase and extinguishment of $275.0 million of the 2.625% Notes and the pay down of $90.0 million on our term loan. These costs were recorded in other expense as further discussed in Note 11.

During the three and nine months ended ended September 30, 2021, we recorded $1.1 million related to a loss on early extinguishment and third party fees associated with the seventh amended and restated senior credit agreement. These costs were included in other expense.

Note 15 — Business Segment


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Orthopedic surgery	$	118,618	$	105,751	$	346,317	$	320,809
General surgery	156,470		143,076		448,288		415,856
Consolidated net sales	$	275,088	$	248,827	$	794,605	$	736,665

Note 16 – 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

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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 $35 million per incident and $35 million in the aggregate annually, which we believe is adequate. This coverage is

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on a claims-made basis. There can be no assurance that claims will not exceed insurance coverage, that the carriers will be solvent or that such insurance will be available to us in the future at a reasonable cost.

Our operations are subject, and in the past have been subject, to a number of environmental laws and regulations governing, among other things, air emissions; wastewater discharges; the use, handling and disposal of hazardous substances and wastes; soil and groundwater remediation and employee health and safety. Likewise, the operations of our suppliers and sterilizers are subject to similar environmental laws and regulations. In some jurisdictions, environmental requirements may be expected to become more stringent in the future. In the United States, certain environmental laws can impose liability for the entire cost of site restoration upon each of the parties that may have contributed to conditions at the site regardless of fault or the lawfulness of the party’s activities. While we do not believe that the present costs of environmental compliance and remediation are material, there can be no assurance that future compliance or remedial obligations would not have a material adverse effect on our financial condition, results of operations or cash flows.

In 2014, the Company acquired EndoDynamix, Inc. The agreement governing the terms of the acquisition provides that, if various conditions are met, certain contingent payments relating to the first commercial sale of the products (the milestone payment), as well as royalties based on sales (the revenue based payments), are due to the seller. In 2016, we notified the seller that there was a need to redesign the product, and that, as a consequence, the first commercial sale had been delayed. Consequently, the payment of contingent milestone and revenue-based payments were delayed. On January 18, 2017, the seller provided notice (the "Notice") seeking $12.7 million under a liquidated damages clause, which essentially ~~represents~~represented the seller's view as to the sum of the projected contingent milestone and revenue-based payments on an accelerated basis. CONMED responded to the Notice denying that there was any basis for acceleration of the payments due under the acquisition agreement. On February 22, 2017, the representative of the former shareholders of EndoDynamix filed a complaint in Delaware Chancery Court claiming breach of contract with respect to the duty to commercialize the product and seeking the contingent payments on an accelerated basis. ~~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 18, 2021, and testimony concluded on April 7, 2021. ~~The parties have submitted post-trial briefs, and~~On June 30, 2022, the Court ~~heard oral arguments at a hearing on September 16, 2021. The Court has not yet~~ issued a ~~ruling.~~ruling that CONMED had presented overwhelming evidence that it had not breached its obligations under the acquisition agreement, and that CONMED was entitled to judgement on all claims asserted against it. The Company ~~has~~had not recorded any expense related to potential damages in connection with this matter ~~because~~and the ~~Company does not believe any potential loss is probable. We expect to defend~~period within which the ~~claims asserted by the sellers~~former shareholders of EndoDynamix ~~although there can be no assurance that we will prevail in the trial and/or~~could have appealed expired without any ~~resulting appeals.~~appeal being filed.

CONMED is defending two Georgia State Court actions. The first action was filed in Cobb County by various employees, former employees, contract workers and others against CONMED and against a contract ~~sterilizer.~~sterilizer (the "Cobb County Action"). The second action iswas filed in Douglas County against CONMED’s landlord and other allegedly related ~~entities.~~entities (the "Douglas County Action"). Plaintiffs in the lawsuits allege personal injury and related claims purportedly arising from or relating to exposure to Ethylene Oxide, a chemical used to sterilize certain products. CONMED is defending the claims asserted directly against it and is providing indemnification for certain other defendants for these claims based on contractual provisions. ~~CONMED has submitted all~~

Both actions are in their early stages. The Company's motion to dismiss in the Cobb County action was heard on January 10, 2022, and the Court issued a ruling on June 15, 2022 dismissing 44 of the 53 plaintiffs' claims ~~for~~as precluded by the exclusive workers' compensation remedy, as well as one claim from a non-employee plaintiff. As to the remaining claims that were not the subject of the motion to dismiss, CONMED believes it has strong defenses and will vigorously defend itself and all parties it is indemnifying. As with any litigation, there are risks, including the risk that CONMED may not prevail with respect to the defense of the underlying claims, or with respect to securing adequate insurance ~~coverage. 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 certain of~~ the indemnification claims. 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~~CONMED has ~~not yet started. CONMED believes it has strong defenses to~~submitted the foregoing claims for insurance coverage. One insurer is providing coverage for certain of the claims ~~and will vigorously defend itself and all parties it~~asserted directly against the Company. CONMED is ~~indemnifying. As~~currently litigating two lawsuits in the United States District

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Court for the Northern District of New York 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~~Federal Insurance Company (“Chubb”): one involving CONMED’s claim for coverage for the indemnification claims arising from the Cobb County Action, and the other concerning CONMED’s claim for coverage for the indemnification claims arising from the Douglas County Action. On March 10, 2022, the Court ruled in favor of CONMED with respect to coverage for the indemnification claims arising from the Cobb County Action. Chubb's motion for reconsideration was denied, and Chubb filed a notice of appeal. On August 9, 2022, CONMED won a similar ruling finding in its favor and against Chubb as to the coverage case concerning the Douglas County Action. Chubb has appealed that decision as well. CONMED believes its position is well-grounded in the facts and the law, but there can be no assurance that CONMED will prevail in either of the two coverage cases.

In addition, one of CONMED’s contract sterilizers, which is defending toxic tort claims asserted by various residents in the areas around its processing facility, has placed CONMED on notice of a claim for indemnification relating to some of those claims. CONMED is reviewing the notice, and has not at this time taken any position on the notice.

From time to time, we are also subject to negligence and other claims arising out of the ordinary conduct of our business, including, for example, accidents our employees may experience within the course of their employment or otherwise. We are currently defending one such claim, which we expect to be fully covered by insurance, involving potentially significant personal injuries. The Company is unable to estimate any range of possible loss at this time, and therefore has not recorded any liability related to potential damages in connection with this matter.

We record reserves sufficient to cover probable and estimable losses associated with any such pending claims. We do not expect that the resolution of any pending claims, investigations or reports of alleged misconduct will have a material adverse effect on our financial condition, results of operations or cash flows. There can be no assurance, however, that future claims or investigations, or the costs associated with responding to such claims, investigations or reports of misconduct, especially claims and investigations not covered by insurance, will not have a material adverse effect on our financial condition, results of operations or cash flows.

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~~Note 15 – New Accounting Pronouncements~~

~~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 September 30, 2021, however will continue to monitor the impact of reference rates and will elect to apply this guidance in our consolidated financial statements in the event that we are impacted by reference rate reform.

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, 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 will adopt this standard on January 1, 2022 using the modified retrospective method. The estimated impacts include the convertible debt instrument being accounted for as a single liability measured at its amortized cost and elimination of the non-cash interest expense as the Company will not separately present the equity embedded conversion feature in such debt. The Company also expects to adopt the if-converted method for earnings per share.

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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, 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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Orthopedic surgery	Orthopedic surgery	42	%	43	%	44	%	43	%	Orthopedic surgery	43	%	42	%	44	%	44	%
General surgery	General surgery	58	%	57	%	56	%	57	%	General surgery	57	%	58	%	56	%	56	%
Consolidated net sales	Consolidated net sales	100	%	100	%	100	%	100	%	Consolidated net sales	100	%	100	%	100	%	100	%

A significant amount of our products are used in surgical procedures with approximately ~~81%~~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% and~~ ~~44%~~45% of our consolidated net sales during both the nine months ended September 30, ~~2021~~2022 and ~~2020, respectively.~~2021.

Business Environment

On June 13, 2022, we acquired In2Bones Global, Inc. ("In2Bones") and all of its stock (the "In2Bones Acquisition") for an aggregate upfront payment of $145.2 million in cash. In addition, there are potential earn-out payments to In2Bones’ equity holders in an amount up to $110.0 million based on the achievement of certain revenue targets for In2Bones products during the sixteen (16) successive quarters commencing on July 1, 2022. We financed the purchase through a combination of the issuance of $800.0 million in 2.250% Notes due in 2027 as further described in Note 11 and cash on hand.

On August 9, 2022, we acquired Biorez, Inc. ("Biorez") and all of its stock (the "Biorez Acquisition") for an aggregate upfront payment of $85.9 million in cash. We paid $83.1 million upon closing, with a $2.8 million purchase price adjustment holdback, pursuant to the merger agreement for the Biorez Acquisition. In addition, there are potential earn-out payments to Biorez’ equity holders in an amount up to $165.0 million based on the achievement of certain revenue targets for Biorez products during the sixteen (16) successive quarters commencing on October 1, 2022. The Biorez Acquisition was funded through a combination of cash on hand and long-term borrowings.

Refer to Note 4 for further information on the business acquisitions.

Our business ~~was,~~has been and ~~to a lesser extent continues today~~may continue 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 as temporary closures occurred and hospitals and surgery centers postponed many non-urgent surgical procedures in order to minimize the risk of infection. In compliance with various governmental orders, beginning in March 2020 we restricted 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 September 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 nine months of 2021, revenues increased compared to the first nine months of 2020.virus emerge. 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 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. The Company is also being impacted by the macro-economic environment and ~~Capital Resources below.~~ 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 three quarters 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

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territories which are not material. We will continue to monitor and adjust our business strategy in this region as necessary. While the direct impact on the Company of Russia's invasion of Ukraine is limited, we are being affected by increases in the price of oil as a result of sanctions on Russia, which contributes to overall inflation and increased costs.

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, contingent consideration and our pension benefit obligation.

As described above and in Note 4, the In2Bones and Biorez Acquisitions involve potential payments of future consideration that is contingent upon the acquired business reaching certain performance milestones. The Company records contingent consideration at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value. The fair value of contingent consideration is measured using projected payment dates, discount rates, probabilities of payment, and projected revenues. Projected revenues are based on the Company’s most recent internal operational budgets and long-range strategic plans. The discount rate used is determined at the time of measurement in accordance with accepted valuation methodologies. Changes in projected revenues, probabilities of payment, discount rates, and projected payment dates may result in adjustments to the fair value measurements. Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized as income or expense within operating expense in the consolidated condensed statements of comprehensive income. Contingent consideration payments made soon after the acquisition date are classified as investing activities in the consolidated condensed statements of cash flows. Contingent consideration payments not made soon after the acquisition date that are related to the acquisition date fair value are reported as financing activities in the consolidated statements of cash flows, and amounts paid in excess of the original acquisition date fair value are reported as operating activities in the consolidated statements of cash flows.

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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 (loss) for the periods indicated:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net sales	Net sales	100.0	%	100.0	%	100.0	%	100.0	%	Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	Cost of sales	42.8		43.8		44.0		46.7		Cost of sales	44.9		42.8		44.7		44.0
Gross profit	Gross profit	57.2		56.2		56.0		53.3		Gross profit	55.1		57.2		55.3		56.0
Selling and administrative expense	Selling and administrative expense	42.1		39.7		41.7		45.1		Selling and administrative expense	41.7		42.1		41.9		41.7
Research and development expense	Research and development expense	4.4		4.2		4.4		4.7		Research and development expense	4.6		4.4		4.4		4.4
Income from operations	Income from operations	10.7		12.4		9.8		3.5		Income from operations	8.8		10.7		9.0		9.8
Interest expense	Interest expense	3.3		5.0		3.8		5.4		Interest expense	3.1		3.3		2.4		3.8
Other expense	Other expense	0.5		—		0.2		—		Other expense	—		0.5		14.1		0.2
Income (loss) before income taxes	Income (loss) before income taxes	7.0		7.3		5.9		(2.0)		Income (loss) before income taxes	5.7		7.0		(7.6)		5.9
Provision for income taxes		1.0		4.4		0.7		0.4
Provision (benefit) for income taxes										Provision (benefit) for income taxes	(11.1)		1.0		5.9		0.7
Net income (loss)	Net income (loss)	6.0	%	2.9	%	5.2	%	(2.4)	%	Net income (loss)	16.8	%	6.0	%	(13.5)	%	5.2	%

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Net Sales

The following table presents net sales by product line for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended											Three Months Ended
						% Change											% Change
		2021		2020		As Reported		Impact of Foreign Currency		Constant Currency			2022		2021		As Reported		Impact of Foreign Currency		Constant Currency
Orthopedic surgery	Orthopedic surgery	$	105.7	$	102.2	3.5	%	-0.6	%	2.9	%	Orthopedic surgery	$	118.6	$	105.7	12.2	%	1.8	%	14.0	%
General surgery	General surgery	143.1		135.6		5.5	%	-0.2	%	5.3	%	General surgery	156.5		143.1		9.4	%	1.3	%	10.7	%
Net sales	Net sales	$	248.8	$	237.8	4.6	%	-0.3	%	4.3	%	Net sales	$	275.1	$	248.8	10.6	%	1.5	%	12.1	%

Single-use products	Single-use products	$	200.9	$	190.9	5.3	%	-0.4	%	4.9	%	Single-use products	$	231.3	$	200.9	15.1	%	1.6	%	16.7	%
Capital products	Capital products	47.9		46.9		2.0	%	-0.4	%	1.6	%	Capital products	43.8		47.9		-8.5	%	1.2	%	-7.3	%
Net sales	Net sales	$	248.8	$	237.8	4.6	%	-0.3	%	4.3	%	Net sales	$	275.1	$	248.8	10.6	%	1.5	%	12.1	%

		Nine Months Ended											Nine Months Ended
						% Change											% Change
		2021		2020		As Reported		Impact of Foreign Currency		Constant Currency			2022		2021		As Reported		Impact of Foreign Currency		Constant Currency
Orthopedic surgery	Orthopedic surgery	$	320.8	$	261.9	22.5	%	-2.2	%	20.3	%	Orthopedic surgery	$	346.3	$	320.8	8.0	%	1.0	%	9.0	%
General surgery	General surgery	415.9		347.7		19.6	%	-1.1	%	18.5	%	General surgery	448.3		415.9		7.8	%	0.9	%	8.7	%
Net sales	Net sales	$	736.7	$	609.6	20.8	%	-1.5	%	19.3	%	Net sales	$	794.6	$	736.7	7.9	%	0.9	%	8.8	%

Single-use products	Single-use products	$	597.3	$	497.1	20.1	%	-1.5	%	18.6	%	Single-use products	$	663.1	$	597.3	11.0	%	1.0	%	12.0	%
Capital products	Capital products	139.4		112.5		23.9	%	-1.8	%	22.1	%	Capital products	131.5		139.4		-5.6	%	0.9	%	-4.7	%
Net sales	Net sales	$	736.7	$	609.6	20.8	%	-1.5	%	19.3	%	Net sales	$	794.6	$	736.7	7.9	%	0.9	%	8.8	%

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Net sales increased ~~4.6%~~10.6% and ~~20.8%~~7.9% in the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the same periods a year ago driven by increases ~~across all~~in our product ~~lines as the COVID-19 pandemic had a significant impact on sales during the first nine months of 2020.~~lines.

•Orthopedic surgery sales increased ~~3.5%~~12.2% and ~~22.5%~~8.0% in the three and nine months ended September 30, ~~2021, respectively. Sales for the three months ended September 30, 2021 increased compared to the three months ended September 30, 2020,~~2022, respectively, primarily related to growth in ~~capital products as customers resumed capital purchases. Sales for~~our sports medicine and procedures specific product offerings coupled with the ~~nine months ended September 30, 2021 increased compared to~~sales from the nine months ended September 30, 2020 as 2020 was significantly impacted by the COVID-19 pandemic as hospitals and surgery centers deferred non-urgent surgeries and customers also deferred capital equipment purchases.recently acquired In2Bones products.

•General surgery sales increased ~~5.5%~~9.4% and ~~19.6%~~7.8% in the three and nine months ended September 30, ~~2021, respectively. 2020 was significantly impacted~~2022, respectively, primarily driven by the COVID-19 pandemic as hospitals and surgery centers deferred non-urgent surgeries. General surgery sales for the three and nine months ended September 30, 2021 increased compared to the three and nine months ended September 30, 2020 mainly driven by continued growth in our AirSeal and other advanced surgical ~~products, including our AirSeal~~® ~~and Buffalo Filter~~® ~~products, and~~product offerings as well as 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.~~

Cost of Sales

Cost of sales increased to $123.5 million in the three months ended September 30, 2022 as compared to $106.5 million in the three months ended September 30, 2021 ~~as compared~~and increased to ~~$104.1~~$355.2 million in the ~~three~~nine months ended September 30, ~~2020 and increased~~2022 as compared to $324.5 million in the nine months ended September 30, ~~2021 as compared~~2021. Gross profit margins decreased 210 basis points to ~~$284.8 million~~55.1% in the ~~nine~~three months ended September 30, ~~2020. Gross profit margins increased 100 basis points~~2022 as compared to 57.2% in the three months ended September 30, ~~2021 as compared~~2021. Gross profit margins decreased 70 basis points to ~~56.2%~~55.3% in the ~~three~~nine months ended September 30, ~~2020 and increased 270 basis points~~2022 as compared to 56.0% in the nine months ended September 30, ~~2021 as compared to 53.3% in the nine months ended September 30, 2020.~~

~~The increase~~2021. Decreases in gross profit ~~margin of 100 basis points in the three months ended September 30, 2021 and 270 basis points in the nine months ended September 30, 2021 was~~margins are driven by ~~an increase~~recognition of unfavorable production variances resulting from cost increases and inflation in ~~sales~~raw materials, freight and ~~product mix as well as the absence in 2021~~other costs of ~~certain costs incurred in 2020 including the following:~~

•~~$6.6 million in costs related to plant underutilization due to abnormally low production as a result of decreased sales caused by the COVID-19 pandemic~~production. In addition, during ~~the nine months ended September 30, 2020;~~

•~~$2.2 million in costs related to product rationalization during the nine months ended September 30, 2020;~~

•~~$1.1 million in restructuring costs related to a voluntary separation arrangement as a result of the COVID-19 pandemic during the nine months ended September 30, 2020;~~

•~~$0.6 million and $4.0 million for~~ the three and nine months ended September 30, ~~2020,~~2022, we incurred costs for inventory step-up adjustments of $2.1 million and $2.4 million, 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~~

•~~$0.8 million~~ ~~and $2.3 million for the three and nine months ended September 30, 2020, respectively, related inventory step-up adjustments from a previous~~In2Bones acquisition.

~~Refer to Note 12 for further details on the above items.~~

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Selling and Administrative Expense

Selling and administrative expense increased to $114.6 million in the three months ended September 30, 2022 as compared to $104.7 million in the three months ended September 30, 2021 ~~as compared~~and increased to ~~$94.4~~$333.3 million in the ~~three~~nine months ended September 30, ~~2020 and increased~~2022 as compared to $307.5 million in the nine months ended September 30, ~~2021 as compared to $274.7 million in the nine months ended September 30, 2020.~~2021. Selling and administrative expense as a percentage of net sales ~~increased~~decreased to 41.7% in the three months ended September 30, 2022 as compared to 42.1% in the three months ended September 30, 2021 ~~as compared~~and increased to ~~39.7%~~41.9% in the ~~three~~nine months ended September 30, ~~2020 and decreased~~2022 as compared to 41.7% in the nine months ended September 30, ~~2021~~2021.

The decrease in selling and administrative expense as ~~compared to 45.1% in~~a percentage of net sales for the ~~nine~~three months ended September 30, ~~2020.~~2022 was primarily driven by higher sales in 2022 as compared to the prior year period, which was partially offset by the $3.7 million in consulting fees, legal fees and other integration related costs associated with the In2Bones and Biorez acquisitions.

The increase in selling and administrative expense as a percentage of net sales for the three months ended September 30, 2021 was driven by higher shipping costs and a return to travel and trade show attendance and partially offset by the absence in 2021 of $1.0 million in costs associated with the restructuring of our Orthopedic sales force during the three months ended September 30, 2020.

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~~The decrease in selling and administrative expense as a percentage of net sales for the~~ nine months ended September 30, ~~2021~~2022 was ~~mainly~~primarily driven by ~~higher sales in 2021 while continuing to monitor our expenses in response to the COVID-19 pandemic. In addition, 2020 included the following expenses:~~

•~~$3.1~~$6.3 million in ~~severance~~ ~~costs~~consulting fees, legal fees and other integration related ~~to a voluntary termination program and~~ costs associated with the ~~restructuring~~acquisitions of ~~our Orthopedic sales force during the nine months ended September 30, 2020, respectively;~~

•~~a $2.1 million write-off of field inventory used for customer demonstration~~In2Bones and ~~evaluation of products resulting from the product rationalization initiative during the nine months ended September 30, 2020;~~Biorez as further described in Note 4 and

•~~$1.2~~ Note 14 and $0.8 million in ~~severance and integration costs mainly~~legal fees related to the ~~Buffalo Filter acquisition~~settlement of litigation as further described in Note 14. These amounts were partially offset by the ~~nine months ended September 30, 2020.~~prior year having a $0.4 million related to sales force restructuring in 2021.

Research and Development Expense

Research and development expense increased to $12.8 million in the three months ended September 30, 2022 as compared to $10.9 million in the three months ended September 30, 2021 ~~as compared~~and increased to ~~$9.9~~$34.9 million in the ~~three~~nine months ended September 30, ~~2020. Research and development expense increased~~2022 as compared to $32.2 million in the nine months ended September 30, ~~2021 as compared to $28.8 million in the nine months ended September 30, 2020.~~2021. As a percentage of net sales, research and development expense increased 20 basis points to 4.6% in the three months ended September 30, 2022 as compared to 4.4% in the three months ended September 30, 2021 ~~as compared to 4.2% in the three months ended September 30, 2020~~ and ~~decreased 30 basis points to~~remained flat at 4.4% in the nine months ended September 30, ~~2021~~2022 as compared to ~~4.7% in~~ the nine months ended September 30, ~~2020.~~2021. The higher spend as a percentage of sales for the three months ended September 30, ~~2021~~2022 was mainly driven by the In2Bones and Biorez Acquisitions as well as timing of projects. ~~The lower spend as a percentage of sales for the nine months ended September 30, 2021 was driven by higher sales in 2021.~~

Interest Expense

Interest expense ~~decreased~~increased to $8.5 million in the three months ended September 30, 2022 from $8.1 million in the three months ended September 30, ~~2021 from $11.9 million~~2021. The weighted average interest rates on our borrowings increased to 2.66% in the three months ended September 30, ~~2020 and~~2022 as compared to 2.46% in the three months ended September 30, 2021. The increase in interest expense in the three months ended September 30, 2022 is primarily driven by the increased borrowings of the 2.250% Notes offset by three months ended September 30, 2021 including $2.6 million in interest expense related to the amortization of debt discount that is no longer applicable in 2022 as a result of the adoption of ASU 2020-06, as further described in Note 3.

Interest expense decreased to $19.5 million in the nine months ended September 30, 2022 from $27.9 million in the nine months ended September 30, ~~2021 from $32.9 million in the nine months ended September 30, 2020.~~2021. The weighted average interest rates on our borrowings decreased to ~~2.46%~~2.44% in the ~~three~~nine months ended September 30, ~~2021~~2022 as compared to ~~4.01% in the three months ended September 30, 2020 and~~ 2.94% in the nine months ended September 30, ~~2021 as compared to 3.63%~~2021. The decrease in interest expense in the nine months ended September 30, ~~2020. The decrease in interest expense~~2022 is primarily due to decreases in our term loan and revolving credit facility borrowings; decreases in our weighted average interest rates compared to the same periods a year ago ~~driven by lower borrowings and lower interest rates~~ as a result of the seventh amended and restated senior credit ~~agreement~~agreement; and the nine months ended September 30, 2021 including $7.6 million in interest expense related to the amortization of debt discount that is no longer applicable in 2022 as a result of the adoption of ASU 2020-06, as further described in Note 9.3. These are offset by the increased borrowings of the 2.250% Notes entered into on June 6, 2022.

Other Expense

~~Other~~During the nine months ended September 30, 2022, we recorded expense ~~during~~of $103.1 million related to the conversion premium on the repurchase and extinguishment of 2.625% Notes; $5.5 million related to the settlement of the associated convertible notes hedge transactions and $3.4 million related to the write-off of deferred financing fees associated with the repurchase of $275.0 million of the 2.625% Notes and the pay down of $90.0 million on our term loan as further described in Note 11.

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During the three and nine months ended ended September 30, 2021, ~~was related to costs associated with our seventh amended and restated senior credit agreement entered into July 16, 2021 as further described in Note 9. Theses costs included~~we recorded $1.1 million related to a loss on early extinguishment and third party ~~fees. Other expense in~~fees associated with the ~~three~~seventh amended and ~~nine months ended September 30, 2020 is related to non-service pension costs as further described in Note 11.~~restated senior credit agreement.

Provision (Benefit) for Income Taxes

The Company's tax provision (benefit) for interim periods is determined using an estimate of its annual effective tax rate applied to its year-to-date earnings (loss), and also adjusting for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate and if the estimated annual effective tax rate changes, the Company would make a cumulative adjustment in that quarter.

Income tax ~~expense~~benefit has been recorded at an effective tax rate of (193.7)% for the three months ended September 30, 2022 compared to an income tax expense at an effective tax rate of 14.3% for the three months ended September 30, ~~2021 compared to income tax expense at an effective tax rate of 60.5% for the three months ended September 30, 2020.~~2021. Income tax expense has been recorded at an effective ~~tax~~ rate of (77.7)% for the nine months ended September 30, 2022 as compared to 12.3% for the nine months ended September 30, ~~2021 compared to income tax expense at an~~2021. The lower effective tax rate of (22.9)% for the nine months ended September 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. Our income positionrates for the three and nine months ended September 30, 2022 as compared to the same periods in the prior year were primarily due to the second quarter 2022 pretax loss that was generated by the premium on extinguishment of a portion of the 2.625% Notes and the change in fair value of convertible notes hedges upon settlement as these items were not deductible for tax purposes. The three months ended September 30, 2022 and 2021 ~~generated tax expense which was offset by~~included discrete income tax benefit from ~~federal tax deductions relating to~~ stock option exercises ~~that decreased~~which reduced the effective tax rate by ~~12.5%~~1.0% and ~~14.1%~~12.5%, respectively. The tax rates for the three months and nine months ended September 30, 2020 were primarily the result of the third quarter 2020 income which offset in part the second quarter 2020 loss position. At the end of the second quarter of 2020, the loss position resulted in an effective rate of 26.6% through the first six months of the year. Given the increase in income in the third quarter of 2020, the year-to-date income level changed and drove a higher level of tax liability in the third quarter on a year-to-date basis. This resulted in a tax rate for the third quarter of 2020 of 60.5% which included a discrete benefit relating to the final issuance of tax regulations regarding US tax on foreign earnings at different rates. The nine months ended September 30, ~~2020~~2022 included discrete income tax benefit ~~associated with this final issuance of tax regulations,~~from stock option exercises ~~and other federal income~~which increased the effective rate by 3.1% as compared to the tax ~~items.~~benefit from stock option exercises which reduced the effective tax rate by 14.1% for the nine months ended September 30, 2021. A reconciliation of the United States statutory income tax rate to our effective tax rate is included in our

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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.

Liquidity and Capital Resources

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

Operating cash flows

Our net working capital position was $365.7 million at September 30, 2022. Net cash provided by operating activities was $45.0 million and $78.0 million in the nine months ended September 30, 2022 and 2021, respectively, generated on net income (loss) of $(107.2) million and $38.1 million for the nine months ended September 30, 2022 and 2021, respectively. The change 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;

•A decrease in cash flows from higher incentive compensation payments; and

•An increase in cash flows from higher accounts payable during the period due to the timing of payments.

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Investing cash flows

Net cash used in investing activities in the nine months ended September 30, 2022 increased $231.5 million from the same period a year ago primarily due to the $144.7 million payment for the In2Bones acquisition and $82.4 million for the Biorez acquisition. In addition, capital expenditures were higher at $16.1 million in the nine months ended September 30, 2022 compared to $11.7 million in the same period a year ago.

Financing cash flows

Net cash provided by financing activities in the nine months ended September 30, 2022 was $213.5 million compared to net cash used in financing activities of $60.8 million during 2021. Below is a summary of the significant financing activities impacting the change during the nine months ended September 30, 2022 compared to 2021:

•We received proceeds of $800.0 million in 2.250% Notes as further described in Note 11.

•We paid $275.0 million in aggregate principal on the repurchase and extinguishment of the 2.625% Notes as further described in Note 11.

•We had net payments on our revolving line of credit of $87.0 million, compared to $36.0 million during the nine months ended September 30, 2021 as we used proceeds from our 2.250% Notes to pay down our outstanding balance.

•We had net payments on our term loan of $93.0 million compared to $11.3 million during the nine months ended September 30, 2021 as we prepaid $90.0 million with proceeds from the 2.250% Notes.

•We paid $187.6 million to purchase hedges related to our 2.250% Notes. Partially offsetting this, were proceeds of $72.0 million from the issuance of warrants as further described in Note 11.

•We paid $69.5 million to settle warrants related to the 2.625% Notes and received $86.2 million to settle the hedges related to the 2.625% Notes as further described in Note 11.

•We paid $21.8 million in debt issuance costs mainly related to the 2.250% Notes in 2022 compared to $2.0 million in debt issuance costs related to the seventh amended and restated senior credit agreement in 2021.

Other Liquidity Matters

Our cash balances and cash flows generated from operations may be used to fund strategic investments, business acquisitions, working capital needs, research and development, common stock repurchases and payments of dividends to our shareholders. Management believes that cash flow from operations, including cash and cash equivalents on hand and available borrowing capacity under our seventh amended and restated senior credit agreement, will be adequate to meet our anticipated operating working capital requirements, debt service, funding of capital expenditures, dividend payments and common stock repurchases in the foreseeable future. In addition, management believes we could access capital markets, as necessary, to fund future business acquisitions.

The Company is also being impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs caused by inflationary pressures and ongoing supply chain challenges. As noted above, there also remains uncertainty related to the COVID-19 pandemic, including the duration and severity of future impacts to the business and we continue to see our customers and suppliers impacted by staffing shortages. We continue to monitor our spending and expenses in light of 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 $260.2 million at September 30, 2021. Net cash provided by operating activities was $78.0 million and $44.4 million~~ See “Item 1A. Risk Factors" in ~~the nine months ended September 30, 2021 and 2020, respectively, generated~~our Annual Report on ~~net income (loss) of $38.1 million and $(14.6) million~~Form 10-K for the ~~nine months ended September 30,~~year-ended December 31, 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 offset by an increase in inventory levels to mitigate inventory supply challenges and prepare for ~~anticipated increases in revenue.~~

~~Investing cash flows~~

Net cash used in investing activities in the nine months ended September 30, 2021 increased $1.2 million from the same period a year ago primarily due to capital expenditures being higher at $11.7 million in the nine months ended September 30, 2021 compared to $9.9 million in the same period a year ago.

~~Financing cash flows~~

Net cash used in financing activities in the nine months ended September 30, 2021 was $60.8 million compared to $24.9 million during 2020. Below is a summary of the significant financing activities impacting the change during the nine months ended September 30, 2021 compared to 2020:

•We had net payments on our revolving line of credit of $36.0 million, inclusive of the impact of the seventh amended and restated senior credit agreement, compared to $10.0 million in net borrowings during the nine months ended September 30, 2020.

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•We had net payments on our term loan of $11.3 million, inclusive of a $52.4 million impact on both borrowings and repayments between independent counterparties associated with the seventh amended and restated senior credit agreement, compared to $9.9 million in payments during the nine months ended September 30, 2020.

•~~We had net cash proceeds of $14.9 million related to stock issued under employee plans for the nine months ended September 30, 2021 compared to $3.7 million in the same period a year ago.~~

On ~~January 29, 2019,~~June 6, 2022, the Company repurchased and extinguished $275.0 million principal amount of the 2.625% Notes for aggregate consideration consisting of $275.0 million in cash and approximately 0.9 million shares of the Company's common

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stock at an exchange premium cost of $103.1 million. At such time, we ~~issued $345.0~~also settled related hedges and warrants as noted above and further described in Note 11. Concurrently, the Company entered into a Supplemental Indenture related to the remaining $70.0 million in 2.625% ~~convertible notes due~~Notes, 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 inwhich 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~~Company irrevocably elected to settle the principal ~~amount of Notes (equivalent to an initial conversion price of approximately $88.80 per share of common stock). Holders~~value of the remaining 2.625% Notes ~~may convert~~in cash.

On June 6, 2022, we issued $800.0 million in 2.250% Notes and irrevocably elected to settle 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.principal value in cash. A portion of ~~the net~~these 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.~~

~~In connection with the offering~~repurchase and extinguish a portion of the 2.625% Notes, pay off our outstanding balance on our revolving line of credit on that date, pay down $90.0 million of our term loan and partially pay for our In2Bones Acquisition. At the time of this issuance, we entered into convertible note hedge transactions with a number of financial institutions ~~(each, an “option counterparty”). The convertible note hedge transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes,~~for the number of shares of our common stock underlying the Notes. Concurrently with entering into the convertible ~~note~~notes hedge transactions, we also entered into separate warrant transactions with each option counterparty whereby we sold to such option counterparty warrants to purchase, subject to customary anti-dilution adjustments, the same number of shares of our common stock. Refer to Note 11 for further details.

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 ofSee Note 11 for further information on 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 Notesfinancing agreements 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, unless we elect to settle the warrants in cash.outside debt obligations.

Our Board of Directors has authorized a $200.0 million share repurchase program. Through September 30, ~~2021,~~2022, we have repurchased a total of 6.1 million shares of common stock aggregating $162.6 million under this authorization and have $37.4 million remaining available for share repurchases. The repurchase program calls for shares to be purchased in the open market or in private transactions from time to time. We may suspend or discontinue the share repurchase program at any time.

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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.

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 nine months ended September 30, ~~2021.~~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 September 30, ~~2021~~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 1416 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:
						October ~~28, 2021~~27, 2022

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