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
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedCommission File Number
June 30, 2023March 31, 2024001-39218
CONMED CORPORATION
(Exact name of the registrant as specified in its charter)
Delaware16-0977505
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
11311 Concept BlvdLargo,Florida33773
(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 classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueCNMDNYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  

Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company.  See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer     Accelerated filer     Non-accelerated filer

Smaller reporting company     Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No

The number of shares outstanding of registrant's common stock, as of July 24, 2023April 22, 2024 is 30,739,75130,800,747 shares.



CONMED CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2023MARCH 31. 2024
PART I FINANCIAL INFORMATION
Item NumberPage
   
 
   
 
   
 
   
 
   
 
   
   
   
   
   
PART II OTHER INFORMATION
   
   
   


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 EndedSix Months Ended
June 30,June 30,
2023202220232022
Net salesNet sales$317,652 $277,190 $613,121 $519,516 
Net sales
Net sales
Cost of sales
Cost of sales
Cost of salesCost of sales146,962 125,413 287,110 231,748 
Gross profitGross profit170,690 151,777 326,011 287,768 
Gross profit
Gross profit
Selling and administrative expenseSelling and administrative expense129,700 115,826 259,784 218,701 
Selling and administrative expense
Selling and administrative expense
Research and development expense
Research and development expense
Research and development expenseResearch and development expense13,572 11,493 26,110 22,165 
Operating expenses Operating expenses143,272 127,319 285,894 240,866 
Operating expenses
Operating expenses
Income from operations
Income from operations
Income from operationsIncome from operations27,418 24,458 40,117 46,902 
Interest expenseInterest expense9,997 5,928 20,252 10,926 
Other expense (See Note 11)— 112,011 — 112,011 
Interest expense
Income (loss) before income taxes17,421 (93,481)19,865 (76,035)
Interest expense
Income before income taxes
Income before income taxes
Income before income taxes
Provision for income taxesProvision for income taxes3,689 74,810 4,314 77,281 
Net income (loss)$13,732 $(168,291)$15,551 $(153,316)
Provision for income taxes
Comprehensive income (loss)$15,767 $(172,636)$20,462 $(156,221)
Provision for income taxes
Net income
Net income
Net income
Comprehensive income
Comprehensive income
Comprehensive income
Per share data:Per share data: 
Net income (loss) 
Per share data:
Per share data:
Net income
Net income
Net income
BasicBasic$0.45 $(5.65)$0.51 $(5.18)
Basic
Basic
Diluted
Diluted
DilutedDiluted0.43 (5.65)0.49 (5.18)
Weighted average common sharesWeighted average common shares
Weighted average common shares
Weighted average common shares
Basic
Basic
BasicBasic30,662 29,775 30,587 29,601 
DilutedDiluted31,795 29,775 31,499 29,601 
Diluted
Diluted

 See notes to consolidated condensed financial statements.
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CONMED CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited, in thousands except share and per share amounts)
 
June 30,
2023
December 31,
2022
March 31,
2024
March 31,
2024
December 31,
2023
ASSETSASSETS ASSETS 
Current assets:Current assets: Current assets: 
Cash and cash equivalentsCash and cash equivalents$27,848 $28,942 
Accounts receivable, netAccounts receivable, net229,256 191,345 
InventoriesInventories327,309 332,320 
Prepaid expenses and other current assetsPrepaid expenses and other current assets31,109 28,619 
Total current assetsTotal current assets615,522 581,226 
Property, plant and equipment, netProperty, plant and equipment, net116,788 115,611 
GoodwillGoodwill815,634 815,429 
Other intangible assets, netOther intangible assets, net665,584 681,799 
Other assetsOther assets109,194 103,527 
Total assetsTotal assets$2,322,722 $2,297,592 
LIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIES AND SHAREHOLDERS' EQUITY 
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY 
Current liabilities:Current liabilities: Current liabilities: 
Current portion of long-term debtCurrent portion of long-term debt$69,632 $69,746 
Accounts payableAccounts payable78,577 73,393 
Accrued compensation and benefitsAccrued compensation and benefits55,052 54,733 
Other current liabilitiesOther current liabilities149,908 98,680 
Total current liabilitiesTotal current liabilities353,169 296,552 
Long-term debtLong-term debt971,475 985,076 
Long-term debt
Long-term debt
Deferred income taxesDeferred income taxes66,081 66,725 
Other long-term liabilitiesOther long-term liabilities151,803 203,694 
Total liabilitiesTotal liabilities1,542,528 1,552,047 
Commitments and contingenciesCommitments and contingencies
Commitments and contingencies
Commitments and contingencies
Shareholders' equity:
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 outstandingauthorized 500,000 shares; none outstanding— — 
Common stock, par value $0.01 per share;
100,000,000 shares authorized; 31,299,194 shares
issued in 2023 and 2022, respectively
313 313 
Common stock, par value $0.01 per share;
100,000,000 shares authorized; 31,299,194 shares
issued in 2024 and 2023, respectively
Paid-in capitalPaid-in capital432,780 413,235 
Retained earningsRetained earnings415,924 412,631 
Accumulated other comprehensive lossAccumulated other comprehensive loss(52,947)(57,858)
Less: 565,685 and 811,532 shares of common stock
in treasury, at cost, in 2023 and 2022, respectively
(15,876)(22,776)
Less: 508,028 and 534,000 shares of common stock
in treasury, at cost, in 2024 and 2023, respectively
Total shareholders’ equityTotal shareholders’ equity780,194 745,545 
Total liabilities and shareholders’ equityTotal liabilities and shareholders’ equity$2,322,722 $2,297,592 

 See notes to consolidated condensed financial statements.
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CONMED CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited, in thousands except per share amounts)
Common StockPaid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Shareholders’
Equity
Common StockPaid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Shareholders’
Equity
SharesAmount SharesAmount
Balance at December 31, 202231,299 $313 $413,235 $412,631 $(57,858)$(22,776)$745,545 
Balance at December 31, 2023
Common stock issued under employee plansCommon stock issued under employee plans 556  2,044 2,600 
Stock-based compensationStock-based compensation 5,726  5,726 
Dividends on common stock ($0.20 per share)Dividends on common stock ($0.20 per share)(6,113)(6,113)
Settlement of convertible notes hedge transactions
Settlement of convertible notes hedge transactions
Settlement of convertible notes hedge transactions
Settlement of convertible notes
Comprehensive income:Comprehensive income:
Cash flow hedging gain, netCash flow hedging gain, net877 
Cash flow hedging gain, net
Cash flow hedging gain, net
Pension liability, net
Pension liability, net
Pension liability, netPension liability, net403 
Foreign currency translation adjustmentsForeign currency translation adjustments1,596 
Foreign currency translation adjustments
Foreign currency translation adjustments
Net income
Net income
Net incomeNet income1,819 
Total comprehensive incomeTotal comprehensive income4,695 
Total comprehensive income
Total comprehensive income
Balance at March 31, 202331,299 $313 $419,517 $408,337 $(54,982)$(20,732)$752,453 
Common stock issued under employee plans6,841 4,856 11,697 
Stock-based compensation6,422 6,422 
Dividends on common stock ($0.20 per share)(6,145)(6,145)
Comprehensive income:
Cash flow hedging gain, net503 
Pension liability, net403 
Foreign currency translation adjustments1,129 
Net income13,732 
Total comprehensive income15,767 
Balance at June 30, 202331,299 $313 $432,780 $415,924 $(52,947)$(15,876)$780,194 
Balance at March 31, 2024
Balance at March 31, 2024
Balance at March 31, 2024

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 Common StockPaid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Shareholders’
Equity
 SharesAmount
Balance at December 31, 202131,299 $313 $396,771 $496,605 $(54,203)$(54,051)$785,435 
Common stock issued under employee plans  2,232  4,020 6,252 
Stock-based compensation  4,463    4,463 
Dividends on common stock ($0.20 per share)(5,899)(5,899)
Comprehensive income (loss):
Cash flow hedging gain, net1,082 
Pension liability, net521 
Foreign currency translation adjustments(163)
Net income14,975 
Total comprehensive income16,415 
Cumulative effect of change in accounting principle(1)
(37,911)20,791 (17,120)
Balance at March 31, 202231,299 $313 $365,555 $526,472 $(52,763)$(50,031)$789,546 
Common stock issued under employee plans  611  633 1,244 
Stock-based compensation  5,755    5,755 
Dividends on common stock ($0.20 per share)(6,092)(6,092)
Shares issued for the settlement of convertible notes(25,890)25,890 — 
Convertible note premium on extinguishment103,125 103,125 
Settlement of convertible notes hedge transactions118,912 118,912 
Settlement of warrants(96,758)(96,758)
Issuance of convertible notes hedge transactions, net of tax(142,128)(142,128)
Issuance of warrants72,000 72,000 
Comprehensive income (loss):
Cash flow hedging gains, net4,662 
Pension liability, net490 
Foreign currency translation adjustments(9,497)
Net loss(168,291)
Total comprehensive loss(172,636)
Balance at June 30, 202231,299 $313 $401,182 $352,089 $(57,108)$(23,508)$672,968 
(1)We recorded the cumulative impact of adopting Accounting Standards Update (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.
 Common StockPaid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Shareholders’
Equity
 SharesAmount
Balance at December 31, 202231,299 $313 $413,235 $412,631 $(57,858)$(22,776)$745,545 
Common stock issued under employee plans  556  2,044 2,600 
Stock-based compensation  5,726    5,726 
Dividends on common stock ($0.20 per share)(6,113)(6,113)
Comprehensive income:
Cash flow hedging gain, net877 
Pension liability, net403 
Foreign currency translation adjustments1,596 
Net income1,819 
Total comprehensive income4,695 
Balance at March 31, 202331,299 $313 $419,517 $408,337 $(54,982)$(20,732)$752,453 

See notes to consolidated condensed financial statements.

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CONMED CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended Three Months Ended
June 30, March 31,
20232022 20242023
Cash flows from operating activities:Cash flows from operating activities: Cash flows from operating activities: 
Net income (loss)$15,551 $(153,316)
Adjustments to reconcile net income (loss) to net cash provided by operating activities: 
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities:Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
DepreciationDepreciation8,222 8,090 
Amortization of deferred debt issuance costs
Amortization of deferred debt issuance costs
Amortization of deferred debt issuance costsAmortization of deferred debt issuance costs3,012 1,916 
AmortizationAmortization27,777 26,065 
Stock-based compensationStock-based compensation12,148 10,218 
Deferred income taxesDeferred income taxes(607)70,402 
Deferred income taxes
Deferred income taxes
Non-cash adjustment to fair value of contingent consideration liabilityNon-cash adjustment to fair value of contingent consideration liability3,799 — 
Loss on early extinguishment of debt— 3,426 
Loss on convertible notes conversion premium— 103,125 
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:Increase (decrease) in cash flows from changes in assets and liabilities:    
Accounts receivableAccounts receivable(35,184)(17,779)
InventoriesInventories4,468 (35,549)
Accounts payableAccounts payable4,453 13,724 
Accrued compensation and benefitsAccrued compensation and benefits(253)(12,260)
Other assetsOther assets(11,907)(11,388)
Other liabilitiesOther liabilities(8,653)6,936 
Net cash provided by operating activities22,826 19,070 
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Cash flows from investing activities:
Cash flows from investing activities:Cash flows from investing activities:  
Purchases of property, plant and equipmentPurchases of property, plant and equipment(8,783)(9,398)
Payments related to business acquisition, net of cash acquired— (142,555)
Other(1,000)— 
Purchases of property, plant and equipment
Purchases of property, plant and equipment
Net cash used in investing activities
Net cash used in investing activities
Net cash used in investing activitiesNet cash used in investing activities(9,783)(151,953)
Cash flows from financing activities:Cash flows from financing activities: 
Payments on term loan— (92,981)
Cash flows from financing activities:
Cash flows from financing activities: 
Payments on revolving line of credit
Payments on revolving line of credit
Payments on revolving line of creditPayments on revolving line of credit(347,000)(312,000)
Proceeds from revolving line of creditProceeds from revolving line of credit331,000 172,000 
Payments to redeem convertible notesPayments to redeem convertible notes— (275,000)
Proceeds from issuance of convertible notes— 800,000 
Payments related to debt issuance costs— (21,187)
Payments related to contingent consideration
Payments related to contingent consideration
Payments related to contingent consideration
Dividends paid on common stockDividends paid on common stock(12,208)(11,773)
Purchases of convertible notes hedge transactions— (187,600)
Proceeds from issuance of warrants— 72,000 
Proceeds from settlement of convertible notes hedge transactions— 86,228 
Payment for settlement of warrants— (69,534)
Dividends paid on common stock
Dividends paid on common stock
Other, net
Other, net
Other, netOther, net13,771 6,457 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(14,437)166,610 
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents300 (1,422)
Effect of exchange rate changes on cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents(1,094)32,305 
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period28,942 20,847 
Cash and cash equivalents at beginning of period
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Cash and cash equivalents at end of period
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$27,848 $53,152 
Non-cash investing and financing activities:Non-cash investing and financing activities:
Non-cash investing and financing activities:
Non-cash investing and financing activities:
Contingent consideration$— $69,402 
Dividends payableDividends payable$6,145 $6,092 
Dividends payable
Dividends payable
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 devices and equipment for 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.

Note 2 - Interim Financial Information

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary to fairly present the results for the periods presented. The consolidated condensed financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. Results for the period ended June 30, 2023March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.2024.

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, 20222023 included in our Annual Report on Form 10-K.

Use of Estimates

PreparationThe preparation of the consolidated condensed financial statements in conformity with U.S. GAAPaccounting principles generally accepted in the United States of America requires management to make estimates and assumptions thatjudgments which affect the reported amounts of assets, and liabilities and disclosurerelated disclosures of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amountsamount of revenue and expenses during the reporting period.

While there has been uncertainty and disruption in the global economy and financial markets, we are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of July 27, 2023,April 25, 2024, 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 Issued Accounting Standards, Not Yet Adopted
    
In March 2020,December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform2023-09 - Income Taxes (Topic 848)740): Facilitation of the Effects of Reference Rate ReformImprovements to Income Tax Disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation in specified categories as well as information 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.income taxes paid. This ASU is effective as of March 12, 2020 throughfor annual periods beginning after December 31, 202215, 2024 and was extended through December 31, 2024 byearly adoption is permitted. This ASU 2022-06, Reference Rate Reform (Topic 848): Deferral ofshould be applied on a prospective basis with retrospective application permitted. We expect this ASU to only impact our disclosures with no impact to the Sunset Date of Topic 848. The Company has not adopted these ASUs as of June 30, 2023. Our seventh amended and restated senior credit agreement includes language to address the change from LIBOR to SOFR, an alternative base rate, therefore we do not believe reference rate reform will have a significant impact on our consolidated financial statements.

Note 4In November 2023, the FASB issued ASU 2023-07 - Business CombinationsSegment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose significant segment expenses and other segment items on an annual and interim basis, and provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. The ASU does not change how a public entity identifies its operating segments, aggregates them or applies the quantitative threshold to determine its reportable segments. The new disclosure requirements are also applicable to entities that account and report as a single operating segment entity. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the guidance is to be applied retrospectively to all prior periods presented. We expect this ASU to only impact our disclosures with no impact to the consolidated financial statements.

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 lower extremities (foot and ankle). The
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In2Bones Acquisition was funded through a combination of cash on hand and long-term borrowings as further described in Note 11. Proforma information for In2Bones is immaterial for disclosure for the three and six months ended June 30, 2023 and 2022.
Recently Adopted SEC Rules

In March 2024, the SEC adopted the final rule under SEC Release Nos. 33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which will require registrants to provide certain climate-related information in their registration statements and annual reports. The disclosure requirements follow a phase-in timeline, with initial requirements beginning with the filing of the 2025 Form 10-K. We incurred costsare currently evaluating the final rule to determine the impact on our disclosures. On April 4, 2024, the SEC issued an order staying the final rule pending the completion of judicial review of the petitions challenging the final rule filed in six different circuit courts, which have been consolidated for review by the U.S. Court of Appeals for the amortization of inventory step-up to fair value of $2.2 million and $4.3 million during the three and six months ended June 30, 2023, respectively, and $0.3 million during both the three and six months ended June 30, 2022 related to the In2Bones acquisition, which were recorded in cost of sales. During the three and six months ended June 30, 2023, we recognized $0.2 million and $0.5 million, respectively, in integration costs and professional fees related to the acquisition that were included in selling and administrative expense. During the three and six months ended June 30, 2022, we recognized $2.6 million in consulting and legal related fees associated with the acquisition of In2Bones, which were included in selling and administrative expense.Eighth Circuit.

On August 9, 2022, we acquired Biorez, Inc. ("Biorez") and all of its stock (the "Biorez Acquisition") for an aggregate upfront payment of $85.5 million in cash. We paid $83.9 million as of June 30, 2023, with a $1.6 million 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. Proforma information is immaterial for disclosure for the three and six months ended June 30, 2023 and 2022.
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Note 54 - 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 EndedThree Months Ended
June 30, 2023June 30, 2022
Three Months EndedThree Months Ended
March 31, 2024March 31, 2024March 31, 2023
Orthopedic SurgeryGeneral SurgeryTotalOrthopedic SurgeryGeneral SurgeryTotal Orthopedic SurgeryGeneral SurgeryTotalOrthopedic SurgeryGeneral SurgeryTotal
Primary Geographic MarketsPrimary Geographic Markets
United States
United States
United StatesUnited States$52,339 $122,328 $174,667 $40,461 $108,721 $149,182 
Europe, Middle East & AfricaEurope, Middle East & Africa32,582 25,700 58,282 32,060 22,468 54,528 
Asia PacificAsia Pacific33,249 19,357 52,606 27,674 16,201 43,875 
Americas (excluding the United States)Americas (excluding the United States)22,620 9,477 32,097 19,987 9,618 29,605 
Total sales from contracts with customersTotal sales from contracts with customers$140,790 $176,862 $317,652 $120,182 $157,008 $277,190 
Timing of Revenue RecognitionTiming 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
Goods transferred at a point in timeGoods transferred at a point in time$130,274 $175,025 $305,299 $110,060 $155,451 $265,511 
Services transferred over timeServices transferred over time10,516 1,837 12,353 10,122 1,557 11,679 
Total sales from contracts with customersTotal sales from contracts with customers$140,790 $176,862 $317,652 $120,182 $157,008 $277,190 

Six Months EndedSix Months Ended
June 30, 2023June 30, 2022
Orthopedic SurgeryGeneral SurgeryTotalOrthopedic SurgeryGeneral SurgeryTotal
Primary Geographic Markets
United States$101,284 $237,973 $339,257 $78,408 $202,001 $280,409 
Europe, Middle East & Africa65,702 48,596 114,298 62,041 42,794 104,835 
Asia Pacific63,370 35,343 98,713 51,091 29,155 80,246 
Americas (excluding the United States)41,610 19,243 60,853 36,158 17,868 54,026 
Total sales from contracts with customers$271,966 $341,155 $613,121 $227,698 $291,818 $519,516 
Timing of Revenue Recognition
Goods transferred at a point in time$251,397 $337,614 $589,011 $208,264 $288,773 $497,037 
Services transferred over time20,569 3,541 24,110 19,434 3,045 22,479 
Total sales from contracts with customers$271,966 $341,155 $613,121 $227,698 $291,818 $519,516 

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

June 30, 2023December 31, 2022
Contract liability$18,604 $19,114 
March 31, 2024December 31, 2023
Contract liability$18,319 $17,962 
    
Revenue recognized during the sixthree months ended June 30,March 31, 2024 and March 31, 2023 and June 30, 2022 from amounts included in contract liabilities at the beginning of the period were $7.6$4.8 million and $7.0$4.2 million, respectively. There were no material contract assets as of June 30, 2023March 31, 2024 and December 31, 2022.2023.

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Note 65 - Comprehensive Income (Loss)

Comprehensive income (loss) consists of the following:
 
Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Net income (loss)$13,732 $(168,291)$15,551 $(153,316)
Other comprehensive income (loss):
Cash flow hedging gain, net of income tax (income tax expense of $161 and $1,491 for the three months ended June 30, 2023 and 2022, respectively, and $442 and $1,838 for the six months ended June 30, 2023 and 2022, respectively)503 4,662 1,381 5,744 
Pension liability, net of income tax (income tax expense of $129 and $158 for the three months ended June 30, 2023 and 2022, respectively, and $258 and $284 for the six months ended June 30, 2023 and 2022, respectively.)403 490 806 1,012 
Foreign currency translation adjustment1,129 (9,497)2,724 (9,661)
Comprehensive income (loss)$15,767 $(172,636)$20,462 $(156,221)
Three Months Ended March 31,
 20242023
Net income$19,709 $1,819 
Other comprehensive income:
Cash flow hedging gain, net of income tax (income tax expense of $1,423 and $280 for the three months ended March 31, 2024 and 2023, respectively)4,448 877 
Pension liability, net of income tax (income tax expense of $96 and $129 for the three months ended March 31, 2024 and 2023, respectively)301 403 
Foreign currency translation adjustment(4,380)1,596 
Comprehensive income$20,078 $4,695 

Accumulated other comprehensive loss consists of the following:

Cash Flow
Hedging
Gain (Loss)
Pension
Liability
Cumulative
Translation
Adjustments
Accumulated
Other
Comprehensive
Income (Loss)
Balance, December 31, 2022$2,497 $(23,749)$(36,606)$(57,858)
Other comprehensive income before reclassifications, net of tax4,010 — 2,724 6,734 
Amounts reclassified from accumulated other comprehensive income (loss) before taxa
(3,471)1,064 — (2,407)
Income tax842 (258)— 584 
Net current-period other comprehensive income1,381 806 2,724 4,911 
Balance, June 30, 2023$3,878 $(22,943)$(33,882)$(52,947)
Cash Flow
Hedging
Gain (Loss)
Pension
Liability
Cumulative
Translation
Adjustments
Accumulated
Other
Comprehensive
Loss
Balance, December 31, 2023$117 $(18,766)$(31,521)$(50,170)
Other comprehensive income (loss) before reclassifications, net of tax5,499 — (4,380)1,119 
Amounts reclassified from accumulated other comprehensive income (loss) before taxa
(1,387)398 — (989)
Income tax336 (97)— 239 
Net current-period other comprehensive income (loss)4,448 301 (4,380)369 
Balance, March 31, 2024$4,565 $(18,465)$(35,901)$(49,801)

Cash Flow
Hedging
Gain (Loss)
Pension
Liability
Cumulative
Translation
Adjustments
Accumulated
Other
Comprehensive
Income (Loss)
Balance, December 31, 2021$3,656 $(29,671)$(28,188)$(54,203)
Other comprehensive income (loss) before reclassifications, net of tax9,851 — (9,661)190 
Amounts reclassified from accumulated other comprehensive income (loss) before taxa
(5,421)1,296 — (4,125)
Income tax1,314 (284)— 1,030 
Net current-period other comprehensive income (loss)5,744 1,012 (9,661)(2,905)
Balance, June 30, 2022$9,400 $(28,659)$(37,849)$(57,108)
Cash Flow
Hedging
Gain (Loss)
Pension
Liability
Cumulative
Translation
Adjustments
Accumulated
Other
Comprehensive
Loss
Balance, December 31, 2022$2,497 $(23,749)$(36,606)$(57,858)
Other comprehensive income before reclassifications, net of tax1,923 — 1,596 3,519 
Amounts reclassified from accumulated other comprehensive income (loss) before taxa
(1,381)532 — (849)
Income tax335 (129)— 206 
Net current-period other comprehensive income877 403 1,596 2,876 
Balance, March 31, 2023$3,374 $(23,346)$(35,010)$(54,982)
(a) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive loss components are included in sales or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 76 and Note 13,12, respectively, for further details.

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Note 76 - 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 (loss) but are included in accumulated other comprehensive loss.  These changes in fair value will be recognized into earnings (loss) 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 DesignationJune 30, 2023December 31, 2022
As ofAs of
FASB ASC Topic 815 DesignationFASB ASC Topic 815 DesignationMarch 31, 2024December 31, 2023
Forward exchange contractsForward exchange contractsCash flow hedge$214,933 $198,473 
Forward exchange contractsForward exchange contractsNon-designated80,528 81,929 

The remaining time to maturity as of June 30, 2023March 31, 2024 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 Recognized in AOCIConsolidated Condensed Statements of Comprehensive Income (Loss)Amount of Gain Reclassified from AOCI
Three Months Ended June 30,
Total Amount of Line Item Presented
Amount of Gain Recognized in AOCIAmount of Gain Recognized in AOCIConsolidated Condensed Statements of Comprehensive IncomeAmount of Gain Reclassified from AOCI
Three Months Ended March 31,Three Months Ended March 31,
Total Amount of Line Item Presented
Derivative Instrument
Derivative Instrument
Derivative InstrumentDerivative Instrument20232022Location of amount reclassified202320222023202220242023Location of amount reclassified2024202320242023
Foreign exchange contracts
Foreign exchange contracts
Foreign exchange contractsForeign exchange contracts$2,753 $9,756 Net Sales$317,652 $277,190 $915 $3,403 
 Cost of Sales146,962 125,413 1,175 199 
Pre-tax gainPre-tax gain$2,753 $9,756 $2,090 $3,602 
Tax expenseTax expense667 2,365 507 873 
Net gainNet gain$2,086 $7,391 $1,583 $2,729 

Amount of Gain Recognized in AOCIConsolidated Condensed Statements of Comprehensive Income (Loss)Amount of Gain Reclassified from AOCI
Six Months Ended June 30,
Total Amount of Line Item Presented
Derivative Instrument20232022Location of amount reclassified2023202220232022
Foreign exchange contracts$5,291 $13,003 Net Sales$613,121 $519,516 $1,490 $5,147 
Cost of Sales287,110 231,748 1,981 274 
Pre-tax gain$5,291 $13,003 $3,471 $5,421 
Tax expense1,281 3,152 842 1,314 
Net gain$4,010 $9,851 $2,629 $4,107 

At June 30, 2023, $3.5March 31, 2024, $4.1 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 (losses) from derivative instruments not accounted for as hedges and lossesgains (losses) on our intercompany receivables on our consolidated condensed statements of comprehensive income (loss) were:

Three Months Ended June 30,Six Months Ended June 30,
Derivative InstrumentLocation on Consolidated Condensed Statements of Comprehensive Income (Loss)2023202220232022
  
Net gain on currency forward contractsSelling and administrative expense$768 $1,155 $403 $196 
Net loss on currency transaction exposuresSelling and administrative expense$(1,355)$(2,178)$(1,279)$(1,764)
Three Months Ended March 31,
Derivative InstrumentLocation on Consolidated Condensed Statements of Comprehensive Income20242023
 
Net gain (loss) on currency forward contractsSelling and administrative expense$671 $(366)
Net gain (loss) on currency transaction exposuresSelling and administrative expense$(1,245)$76 

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Balance sheet presentation

We record these forward foreign exchange contracts at fair value. The following tables summarize the fair value for forward foreign exchange contracts outstanding at June 30, 2023March 31, 2024 and December 31, 2022:2023:

June 30, 2023Location on Consolidated Condensed Balance SheetAsset Fair ValueLiabilities Fair ValueNet
Fair
Value
March 31, 2024March 31, 2024Location on Consolidated Condensed Balance SheetAsset Fair ValueLiabilities Fair ValueNet
Fair
Value
Derivatives designated as hedged instruments:Derivatives designated as hedged instruments:   Derivatives designated as hedged instruments:  
Foreign exchange contractsForeign exchange contractsPrepaid expenses and other current assets$6,845 $(2,283)$4,562 
Foreign exchange contractsForeign exchange contractsOther assets1,240 (684)556 
$
$8,085 $(2,967)$5,118 
Derivatives not designated as hedging instruments:
Derivatives not designated as hedging instruments:
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:     
Foreign exchange contractsForeign exchange contractsOther current liabilities15 (224)(209)
Total derivativesTotal derivatives$8,100 $(3,191)$4,909 
Total derivatives
Total derivatives

December 31, 2022Location on Consolidated Condensed Balance SheetAsset Fair ValueLiabilities Fair ValueNet
Fair
Value
December 31, 2023December 31, 2023Location on Consolidated Condensed Balance SheetAsset Fair ValueLiabilities Fair ValueNet
Fair
Value
Derivatives designated as hedged instruments:Derivatives designated as hedged instruments:  
Foreign exchange contractsForeign exchange contractsPrepaid expenses and other current assets$6,757 $(3,121)$3,636 
Foreign exchange contractsForeign exchange contractsOther long-term liabilities60 (400)(340)
$6,817 $(3,521)$3,296 
Foreign exchange contracts
Foreign exchange contracts
$
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:  
Derivatives not designated as hedging instruments:
Derivatives not designated as hedging instruments:
Foreign exchange contracts
Foreign exchange contracts
Foreign exchange contractsForeign exchange contractsOther current liabilities48 (395)(347)
Total derivativesTotal derivatives$6,865 $(3,916)$2,949 
Total derivatives
Total derivatives

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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.
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Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of June 30, 2023March 31, 2024 consist of forward foreign exchange contracts and contingent consideration. 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 from the In2Bones and Biorez acquisitions using Level 3 inputs. 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, revenue volatilities and projected revenues. The recurring Level 3 fair value measurements of contingent consideration for which the liabilities are recorded include the following significant unobservable inputs as of June 30, 2023:March 31, 2024:

Assumptions
AssumptionsAssumptions
Unobservable InputUnobservable InputIn2BonesBiorezUnobservable InputIn2BonesBiorez
Discount rateDiscount rate7.41%12.02%
Discount rate
Discount rate8.21%13.11%
Revenue volatilityRevenue volatility13.56%20.62%Revenue volatility18.62%22.08%
Projected year of paymentProjected year of payment2023-2026Projected year of payment2024-20262024-2026

Adjustments to the fair value of contingent consideration relate to the passage of time and changes in market assumptions. Changes in the fair value of contingent consideration liabilities for the sixthree months ended June 30,March 31, 2024 and 2023 are as follows:

In2BonesBiorezLocation in Financial Statements
Balance as of January 1, 2023$70,198 $116,234 
Changes in fair value of contingent consideration136 3,663 Selling and administrative expense
Balance as of June 30, 2023$70,334 $119,897 
In2BonesBiorez
2024202320242023
Balance as of January 1,$41,393 $70,198 $128,751 $116,234 
Payments(2,187)— (24,741)— 
Changes in fair value of contingent consideration(8,561)2,637 2,016 1,799 
Balance as of March 31,$30,645 $72,835 $106,026 $118,033 
    
Contingent consideration of $73.1$56.6 million and $117.1$80.0 million is included in other current liabilities and other long-term liabilities, respectively, in the consolidated condensed balance sheet at June 30, 2023.March 31, 2024. Contingent consideration of $18.6$77.6 million and $167.8$92.5 million is included in other current liabilities and other long-term liabilities, respectively, in the consolidated condensed balance sheet at December 31, 2022.2023.

The carrying amounts reported in our consolidated condensed balance sheets for cash and cash equivalents, accounts receivable, accounts payable and variable long-term debt approximate fair value.  

Note 7 - Inventories

Inventories consist of the following:

March 31,
2024
December 31,
2023
Raw materials$105,239 $107,262 
Work-in-process28,793 29,463 
Finished goods188,266 181,599 
Total$322,298 $318,324 
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Note 8 - Inventories

Inventories consist of the following:

June 30,
2023
December 31,
2022
Raw materials$123,951 $110,677 
Work-in-process27,797 26,166 
Finished goods175,561 195,477 
Total$327,309 $332,320 
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 per share for the three and six months ended June 30, 2023 (“diluted EPS”) gives effect to all dilutive potential shares. As the Company was in a net loss position for the three and six months ended June 30, 2022, there were no dilutive potential shares included in the computation of diluted shares outstanding.

The following tables set forth the computation of basic and diluted earnings (loss) per share as applicable, for the three and six months ended June 30, 2023March 31, 2024 and 2022:2023:

Three Months Ended June 30, 2023Three Months Ended June 30, 2022
 Basic EPSAdjustmentsDiluted EPSBasic EPSAdjustmentsDiluted EPS
Net income (loss)$13,732 $— $13,732 $(168,291)$— $(168,291)
Weighted average shares outstanding30,662 — 30,662 29,775 — 29,775 
Stock compensation— 874 874 — — — 
Warrants— 45 45 — — — 
Convertible notes— 214 214 — — — 
30,662 1,133 31,795 29,775 — 29,775 
EPS$0.45 $0.43 $(5.65)$(5.65)
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Net income$19,709 $1,819 
Basic weighted average shares outstanding30,780 30,511 
Stock compensation492 629 
Convertible notes— 64 
Diluted weighted average shares outstanding31,272 31,204 
Net income (per share)
Basic$0.64 $0.06 
Diluted0.63 0.06 
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Six Months Ended June 30, 2023Six Months Ended June 30, 2022
 Basic EPSAdjustmentsDiluted EPSBasic EPSAdjustmentsDiluted EPS
Net income (loss)$15,551 — $15,551 $(153,316)— $(153,316)
Weighted average shares outstanding30,587 — 30,587 29,601 — 29,601 
Stock compensation— 751 751 — — — 
Warrants— 22 22 — — — 
Convertible notes— 139 139 — — — 
30,587 912 31,499 29,601 — 29,601 
EPS$0.51 $0.49 $(5.18)$(5.18)

The shares used in the calculation of diluted EPS exclude 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 1.82.5 million and 1.72.2 million for the three and six months ended June 30,March 31, 2024 and 2023, respectively. As the Company was in a net loss position for the three and six months ended June 30, 2022, there were no anti-dilutive shares.


Note 109 - Goodwill and Other Intangible Assets

The changes in the net carrying amount of goodwill for the sixthree months ended June 30, 2023March 31, 2024 are as follows:

Balance as of December 31, 20222023$815,429806,844 
Foreign currency translation205 (568)
Balance as of June 30, 2023March 31, 2024$815,634806,276 
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. 

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Other intangible assets consist of the following:

June 30, 2023December 31, 2022 March 31, 2024December 31, 2023
Weighted Average Amortization Period (Years)Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Weighted Average Amortization Period (Years)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
Customer and distributor relationshipsCustomer and distributor relationships24$369,888 $(179,698)$369,854 $(170,870)
Customer and distributor relationships
Customer and distributor relationships
Sales representation, marketing and promotional rights
Sales representation, marketing and promotional rights
Sales representation, marketing and promotional rightsSales representation, marketing and promotional rights25149,376 (69,000)149,376 (66,000)
Developed technologyDeveloped technology18320,204 (39,616)320,204 (34,675)
Developed technology
Developed technology
Patents and other intangible assets
Patents and other intangible assets
Patents and other intangible assetsPatents and other intangible assets1681,139 (53,253)79,838 (52,472)
Intangible assets with indefinite lives:Intangible assets with indefinite lives:    
Intangible assets with indefinite lives:
Intangible assets with indefinite lives: 
Trademarks and tradenamesTrademarks and tradenames86,544 — 86,544 — 
Trademarks and tradenames
Trademarks and tradenames
$1,007,151 $(341,567)$1,005,816 $(324,017)
$
$
$

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 $8.8$8.6 million and $8.2$8.8 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, and $17.6 million and $16.2 million for the six months ended June 30, 2023 and 2022, respectively, and is included as a reduction of revenue (for amortization related to our sales representation, marketing and promotional rights) and in selling and administrative expense (for all other intangible assets) in the consolidated condensed statements of comprehensive income (loss).income.
 
The estimated intangible asset amortization expense remaining for the year ending December 31, 20232024 and for each of the five succeeding years is as follows:
 
Amortization included in expenseAmortization recorded as a reduction of revenueTotal
Remaining, 2023$14,671 $3,000 $17,671 
202428,810 6,000 34,810 
Amortization included in expenseAmortization included in expenseAmortization recorded as a reduction of revenueTotal
Remaining, 2024
2025202529,632 6,000 35,632 
2026202629,396 6,000 35,396 
2027202730,436 6,000 36,436 
2028202833,568 6,000 39,568 
2029

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Note 1110 - Long-Term Debt

Long-term debt consists of the following:

June 30, 2023December 31, 2022 March 31, 2024December 31, 2023
Revolving line of creditRevolving line of credit$54,000 $70,000 
Term loan, net of deferred debt issuance costs of $627 and $729 in 2023 and 2022, respectively133,961 133,858 
2.625% convertible notes, net of deferred debt issuance costs of $232 and $432 in 2023 and 2022, respectively69,768 69,568 
2.250% convertible notes, net of deferred debt issuance costs of $16,708 and $18,834 in 2023 and 2022, respectively783,292 781,166 
Term loan, net of deferred debt issuance costs of $472 and $524 in 2024 and 2023, respectively
2.625% convertible notes
2.250% convertible notes, net of deferred debt issuance costs of $13,517 and $14,581 in 2024 and 2023, respectively
Financing leasesFinancing leases86 230 
Total debtTotal debt1,041,107 1,054,822 
Less: Current portionLess: Current portion69,632 69,746 
Total long-term debtTotal long-term debt$971,475 $985,076 

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 was payable in quarterly installments increasing over the term of the facility. During 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 for the three and six months ended June 30, 2022. 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 the termTerm Secured Overnight Financing Rate plus 0.114% ("Adjusted Term SOFR") (5.239%(5.489% at June 30, 2023)March 31, 2024) plus an interest rate margin of 1.125% (6.364%(6.614% at June 30, 2023)March 31, 2024). 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 Term SOFR plus 1.00%, plus, in each case, an interest rate margin.

There were $134.6$114.6 million in borrowings outstanding on the term loan facility as of June 30, 2023.March 31, 2024. There were $54.0$88.0 million in borrowings outstanding under the revolving credit facility as of June 30, 2023.March 31, 2024. Our available borrowings on the revolving credit facility at June 30, 2023March 31, 2024 were $529.4$495.4 million with approximately $1.6 million of the facility set aside for outstanding letters of credit. The carrying amounts of the term loan and revolving credit facility approximate fair value.
    
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 June 30, 2023.March 31, 2024. 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 aggregate principal amount of 2.625% convertible notes that were due in 2024 (the "2.625% Notes"). Interest iswas payable semi-annually in arrears on February 1 and August 1 of each year, commencing August 1, 2019. The 2.625% Notes willwere scheduled to mature on February 1, 2024, unless earlier repurchased or converted.

The 2.625% Notes representrepresented subordinated unsecured obligations and arewere convertible under certain circumstances, as defined in the indenture, into a combination of cash and CONMED common stock.  The 2.625% Notes may becould have been 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 convertcould have converted 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 havehad the right to convert the 2.625% Notes prior to November 1, 2023, but only upon the occurrence of specified events. The conversion rate iswas subject to anti-dilution adjustments if certain events occur.occurred. A portion of the net proceeds from the offering of the 2.625% Notes was used as part of
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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.

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 three and six months ended June 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. TheIn February 2024, the Company repaid the remaining $70.0 million inthen outstanding of the 2.625% Notes are reflected inthrough borrowings on our revolving credit facility and issued 0.1 million shares of the current portion of long-term debt at June 30, 2023.Company's common stock.

For the three months ended June 30,March 31, 2024 and 2023, and 2022, we have recorded interest expense on the 2.625% Notes of $0.5$0.2 million and $1.7 million, respectively, and for the six months ended June 30, 2023 and 2022, we have recorded interest expense on the 2.625% Notes of $0.9 million and $3.9$0.5 million, respectively, at the contractual coupon rate of 2.625%.

The estimated fair value of the 2.625% Notes was approximately $105.9 million as of June 30, 2023 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 aggregate principal amount of 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 both the three months ended June 30,March 31, 2024 and 2023, and 2022, we have recorded interest expense on the 2.250% Notes of $4.5 million and $1.3 million, respectively, and for the six months ended June 30, 2023 and 2022, we have recorded interest expense on the 2.250% Notes of $9.0 million and $1.3 million, respectively, at the contractual coupon rate of 2.250%.

The estimated fair value of the 2.250% Notes was approximately $900.9$732.8 million as of June 30, 2023March 31, 2024 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 offerings of the 2.625% and 2.250% Notes, we entered into convertible notes hedge transactions with a number of financial institutions (each, an “option counterparty”). The convertible 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. Concurrent with entering into the convertible 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.
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In connection with the repurchase and extinguishment of $275.0 million principal amount of the 2.625% Notes, the Company entered into agreements with the option counterparties to terminate a corresponding portion of the hedges on the 2.625% Notes. The Company recorded a $5.5 million charge to other expense as a resultUpon maturity in February 2024 of a subsequent decline in fair value between execution datethe remaining 2.625% Notes and settlement date duringof the three and six months ended June 30, 2022.related hedges, the Company received 0.1 million shares from the option counterparties.

The convertible 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 notes hedge transactions, is greater than the strike price of the convertible notes hedge transactions, which initially corresponds
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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 for the 2.625% Notes and $251.53251.53 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, unless we elect to settle the warrants in cash.

The scheduled maturities of long-term debt outstanding at June 30, 2023March 31, 2024 are as follows:

Remaining, 2023$70,000 
2024— 
Remaining, 2024
20252025— 
20262026188,588 
20272027800,000 
20282028— 
2029
The above amounts exclude deferred debt issuance costs and financing leases.

Note 1211 - 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.

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

20232022 20242023
Balance as of January 1,Balance as of January 1,$1,944 $2,344 
Provision for warrantiesProvision for warranties304 113 
Provision for warranties
Provision for warranties
Claims madeClaims made(377)(369)
Balance as of June 30,$1,871 $2,088 
Balance as of March 31,
Balance as of March 31,
Balance as of March 31,
 
Costs associated with extended warranty repairs are recorded as incurred and amounted to $2.6$1.3 million and $3.2$1.5 million for the sixthree months ended June 30,March 31, 2024 and 2023, and 2022, respectively.

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Note 1312 - Pension Plan

Net periodic pension cost consists of the following: 

Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Service costService cost$194 $269 $388 $538 
Service cost
Service cost
Interest cost on projected benefit obligation
Interest cost on projected benefit obligation
Interest cost on projected benefit obligationInterest cost on projected benefit obligation911 537 1,822 1,074 
Expected return on plan assetsExpected return on plan assets(1,032)(1,324)(2,064)(2,648)
Expected return on plan assets
Expected return on plan assets
Net amortization and deferral
Net amortization and deferral
Net amortization and deferralNet amortization and deferral532 648 1,064 1,296 
Net periodic pension costNet periodic pension cost$605 $130 $1,210 $260 
Net periodic pension cost
Net periodic pension cost
 
We do not expect to make any pension contributions during 2023.2024. Non-service pension cost/(benefit)cost was immaterial for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023.


Note 1413 - 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 and lower extremities instrumentation and implants, 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 March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Orthopedic surgeryOrthopedic surgery$140,790 $120,182 $271,966 $227,698 
Orthopedic surgery
Orthopedic surgery
General surgery
General surgery
General surgeryGeneral surgery176,862 157,008 341,155 291,818 
Consolidated net salesConsolidated net sales$317,652 $277,190 $613,121 $519,516 
Consolidated net sales
Consolidated net sales

Note 1514 - 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 andor third parties, we investigate as appropriate.

Manufacturers of medical devices have been the subject of various investigations and 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
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prohibits U.S. companies and their representatives from offering or making payments to foreign officials for the purpose of securing a business advantage; and in many countries, the healthcare professionals with whom we regularly interact may meet the definition of a foreign government official for purposes of this law. Similar anti-bribery laws are in effect in many of the countries in which we operate. The FCPA also imposes obligations on manufacturers with respect to interactions with health care providers who may be considered government officials basedlisted on their affiliation with public hospitals. The FCPA also requires publicly listed manufacturersU.S. stock exchanges 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'smanagement’s authorization. The FCPA posescan pose unique challenges both becausefor manufacturers that operate in foreign cultures in whichwhere conduct illegal underprohibited by the FCPA may not be viewed as 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 (e.g., distributors) over whom the manufacturer may not have complete control. While CONMED has not experienced any material enforcement action to date, there can be no assurance that the Company will not be subject to a material enforcement action in the future, or that the Company will not incur costs including, in the form of fees for lawyers and other consultants, that are material to the Company’s results of operations in the course of responding to a future inquiry or investigation.

In addition, as a manufacturer of U.S. FDA-approved devices reimbursable by federal healthcare programs, we are subject to the Physician Payments Sunshine Act, which requires us to annually report certain payments and other transfers of value we make to U.S.-licensed physicians or U.S. teaching hospitals. Any failure to comply with these laws and regulations could subject us or our officers and employees to criminal and civil financial penalties.

Manufacturers of medical products may face exposure to significant product liability claims, as well as patent infringement and other claims incurred in the ordinary course of business. To date, we have not experienced any claims that have been material to our financial statements or financial condition, but any such claims arising in the future could have a material adverse effect on our business, results of operations or cash flows. We currently maintain commercial product liability insurance of $35 million per incident and $35 million in the aggregate annually, which we believe is adequate. This coverage is on a claims-made basis. There can be no assurance that claims will not exceed insurance coverage, that the carriers will be solvent or that such insurance will be available to us in the future at a reasonable cost.

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.

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

Both actions are in their early stages. The Company'sCONMED’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 51 plaintiffs' claims as precluded by the exclusive workers' compensation remedy, as well as one claim from a non-employee plaintiff. As toAfter discovery closed in November 2023, the plaintiffs filed a voluntary dismissal without prejudice for the remaining claims that were notplaintiffs in the subjectcase. The remaining plaintiffs have until June 2024 to refile.

The second action was filed in Douglas County against CONMED’s landlord (the "Landlord Defendants") and other allegedly related entities (the "Douglas County Action"). Plaintiff alleged the same injuries as the Cobb County Action. Discovery closed in November 2023. The Landlord Defendants filed a Motion for Summary Judgment in March of the motion to dismiss, CONMED believes it has strong defenses and will vigorously defend itself and all parties it is indemnifying.2024. As with any litigation, there are risks, including the risk that CONMEDthe Landlord defendants may not prevail with respect to the defense of the underlying claims, or with respect toand that CONMED may not prevail in securing the adequate insurance coverage forto cover the indemnification claims. The Company is unable to estimate a 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.judgment.

CONMED submitted the foregoing claims for insurance coverage. One insurer is providing coverage for certain of the claims asserted directly against the Company. CONMED litigated two lawsuits in the United States District Court for the Northern District of New York ("the Northern District") with Federal Insurance Company (“Chubb”): one involving CONMED’s claim for coverage for the indemnification claims arising from the Cobb County Action, and the other concerning CONMED’s claim for coverage for the indemnification claims arising from the Douglas County Action. On March 10, 2022, the Court ruled in favor of CONMED with respect to coverage for the indemnification claims arising from the Cobb County
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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 appealed that decision as well. Chubb subsequently withdrew its appeal in connection with a settlement between the parties. Chubb disputes the amount it owes in fees incurred by the Company's attorneys defending the Douglas County action going forward. Accordingly, CONMED has commenced a third action against Chubb in the Northern District to enforce the terms of the settlement agreement, although there can be no assurance that CONMED will prevail.

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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 reviewingreviewed the notice and reached out to the contract sterilizer for more information. At this time, the contract sterilizer has not at this time taken any position on the notice.responded.

The government of Italy passed a law in late 2015 to tax medical device companies on revenue derived from sales to public hospitals. The tax is calculated and based on provincial spending over and above certain thresholds. The Italy medical device tax represents variable consideration in the form of a retroactive discount potentially owed to the customer, which is ultimately the Italian government. Since the law was enacted through September 2022, the Italian government essentially made no effort to administer or collect the tax. A lack of interpretative guidance and the complexity of the law resulted in uncertainty as to the actual amount of liability. In September 2022, the Italian government passed a further decree which, amongst other provisions, delegated administration and collection to the provincial level for the years 2015 – 2018. The Italy medical device tax represents variable consideration in the form of a retroactive discount potentially owed to the customer, which is ultimately the Italian government. The Company is challenging the imposition of the medical device tax in Italy, as have many other medical device companies, on the groundgrounds that the law was never implemented properly with regulations. While the Company is informed that its position is well-grounded in the law, there can be no assurance that the Company will prevail. NoThe Company has recorded reserves in accordance with the provisions of the law, although no amounts have been remitted to date.

In December 2023, the Company voluntarily informed the U.S. Department of Justice (“DOJ”) of potential issues with certain royalty payments related to design surgeons. The Company is fully cooperating with the DOJ and their review of the matter.

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, automobile or other accidents our employees may experience within the course of their employment or otherwise and which may, on occasion, involve potentially significant personal injuries or other exposures.

We record reserves sufficient to cover probable and estimable losses associated with any such pending claims. With respect to the matters described above, except as noted related to the medical device tax in Italy, the Company is unable to estimate a range of possible loss at this time, nor does it believe any potential loss is probable, and as a result has not recorded any reserves related to the potential outcomes in connection with these matters. 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, investigations, or investigations,reports of alleged misconduct, or the costs associated with responding to such claims, investigations or reports of alleged misconduct, especially claims and investigationswhen 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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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, 20222023 and the following, among others:

general economic and business conditions, including, without limitation, a potential economic downturn, supply chain challenges and constraints, including the availability and cost of materials, the effects of inflation, and increased interest rates;
compliance with and changes in regulatory requirements;
the failure of any enterprise-wide software programs or information technology systems, or potential disruption associated with updating or implementing new software programs or information technology systems;
the risk of an information security breach, including a cybersecurity breach;
pandemics and health crises, and the COVID-19 global pandemic,responses thereto by governments and hospitals, which poses risks to our business, financial condition and results of operations as the pandemic and government and hospital responses to it, continue;operations;
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 ability to advance our product lines, including challenges and uncertainties inherent in product research and development, and the uncertain impact, outcome and cost of ongoing and future clinical trials and market studies;
competition;
laws and government regulations;
changes in customer preferences;
changes in technology;
cyclical customer purchasing patterns due to budgetary, staffing 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 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;
current and 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;
trade protection measures, tariffs and other border taxes, and import or export licensing 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, 20222023 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
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date hereof. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect
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events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

Overview

CONMED Corporation (“CONMED”, the “Company”, “we” or “us”) is a medical technology company that provides devices and equipment for 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 and lower extremities instrumentation and implants, small bone, large bone and specialty powered surgical instruments as well as imaging systems for use in minimally invasive surgery procedures and service fees related to the promotion and marketing of sports medicine allograft tissue. General surgery consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures, smoke evacuation devices, a line of cardiac monitoring products as well as electrosurgical generators and related instruments. These product lines as a percentage of consolidated net sales are as follows:
 
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Orthopedic surgeryOrthopedic surgery44 %43 %44 %44 %
Orthopedic surgery
Orthopedic surgery
General surgery
General surgery
General surgeryGeneral surgery56 %57 %56 %56 %
Consolidated net salesConsolidated net sales100 %100 %100 %100 %
Consolidated net sales
Consolidated net sales

A significant amount of our products are used in surgical procedures with approximately84% 85% 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 46%44% of our consolidated net sales during both the sixthree months ended June 30, 2023March 31, 2024 and 2022, respectively.2023.

Business Environment
    
The Company has been and continues to be impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs caused by inflationary pressures and ongoing supply chain challenges. We continuously work with suppliers to mitigate these impacts; however, we expect these challenges to continue through 2023.2024. This will likely impact our results of operations.

The Company has not been materially impacted by the conflicts in Ukraine and the Middle East.The Company has no direct operations in either Russia or Ukraine andthese regions with our business is limited to selling to third party distributors. Total revenues and accounts receivable associated with sales to third party distributors in these countriesregions are not material to the consolidated condensed financial results, and we have fully reserved the outstanding accounts receivable from distributors in these territories which are not material.statements. We will continue to monitor and adjust our business strategy in this regionresponse to the conflicts in these regions as necessary.

During the fourth quarter of 2022, we implemented a warehouse management system to increase capacity and efficiency, however this also caused significant delays in shipping and increased costs. During the first half of 2023, we made significant progress and improvement with the performance of our warehouse management system and the shipping delays that existed at year-end 2022 were substantially reduced.However, there remains a risk of loss of sales and customers as a result of the shipping disruptions which occurred.

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, 20222023 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.

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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 June 30,Six Months Ended June 30,
 2023202220232022
Net sales100.0 %100.0 %100.0 %100.0 %
Cost of sales46.3 45.2 46.8 44.6 
Gross profit53.7 54.8 53.2 55.4 
Selling and administrative expense40.8 41.8 42.4 42.1 
Research and development expense4.3 4.1 4.3 4.3 
Income from operations8.6 8.8 6.5 9.0 
Interest expense3.1 2.1 3.3 2.1 
Other expense— 40.4 — 21.6 
Income (loss) before income taxes5.5 (33.7)3.2 (14.6)
Provision for income taxes1.2 27.0 0.7 14.9 
Net income (loss)4.3 %(60.7)%2.5 %(29.5)%

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 Three Months Ended March 31,
 20242023
Net sales100.0 %100.0 %
Cost of sales44.9 47.4 
Gross profit55.1 52.6 
Selling and administrative expense39.5 44.0 
Research and development expense4.4 4.2 
Income from operations11.2 4.3 
Interest expense3.1 3.5 
Income before income taxes8.1 0.8 
Provision for income taxes1.8 0.2 
Net income6.3 %0.6 %

Net Sales

The following table presents net sales by product line for the three and six months ended June 30, 2023March 31, 2024 and 2022:2023:

Three Months Ended
% Change
20232022As ReportedImpact of Foreign CurrencyConstant Currency
Three Months EndedThree Months Ended
% Change% Change
202420242023As ReportedImpact of Foreign CurrencyConstant Currency
Orthopedic surgeryOrthopedic surgery$140.8 $120.2 17.1 %2.7 %19.8 %Orthopedic surgery$134.9 $$131.2 2.8 2.8 %0.2 %3.0 %
General surgeryGeneral surgery176.9 157.0 12.6 %1.5 %14.1 %General surgery177.4 164.3 164.3 8.0 8.0 %0.2 %8.2 %
Net sales Net sales$317.7 $277.2 14.6 %2.0 %16.6 % Net sales$312.3 $$295.5 5.7 5.7 %0.2 %5.9 %
Single-use products
Single-use products
Single-use productsSingle-use products$264.8 $230.3 14.9 %2.0 %16.9 %$264.7 $$249.3 6.2 6.2 %0.1 %6.3 %
Capital productsCapital products52.9 46.9 12.9 %2.2 %15.1 %Capital products47.6 46.2 46.2 3.1 3.1 %0.3 %3.4 %
Net sales Net sales$317.7 $277.2 14.6 %2.0 %16.6 % Net sales$312.3 $$295.5 5.7 5.7 %0.2 %5.9 %
Six Months Ended
% Change
20232022As ReportedImpact of Foreign CurrencyConstant Currency
Orthopedic surgery$272.0 $227.7 19.4 %3.3 %22.7 %
General surgery341.1 291.8 16.9 %2.0 %18.9 %
Net sales$613.1 $519.5 18.0 %2.6 %20.6 %
Single-use products$514.0 $431.8 19.0 %2.6 %21.6 %
Capital products99.1 87.7 13.0 %2.6 %15.6 %
Net sales$613.1 $519.5 18.0 %2.6 %20.6 %

Net sales increased 14.6% and 18.0%5.7% in the three and six months ended June 30, 2023, respectively,March 31, 2024 compared to the same periodsperiod a year ago primarily due to increases across the majority of ourin both orthopedic surgery and general surgery product lines, including sales from the recently acquired In2Bones and Biorez products. Further contributing to sales growth during the six months ended June 30, 2023 was the significant progress and improvement we made with the performance of our warehouse management system and significant reduction in the shipping delays that existed at year-end 2022.lines.

Orthopedic surgery sales increased 17.1% and 19.4%2.8% in the three and six months ended June 30, 2023, respectively, as a result of the recently acquired In2BonesMarch 31, 2024 primarily driven by growth in procedure specific and Biorez products and increases in our orthopedicBioBrace® product offerings.

General surgery sales increased 12.6% and 16.9%8.0% in the three and six months ended June 30, 2023, respectively,March 31, 2024 on growth in our AirSeal Buffalo Filter® and other surgicalbiliary product offerings.

Cost of Sales

Cost of sales increased to $147.0$140.3 million in the three months ended June 30, 2023March 31, 2024 as compared to $125.4$140.1 million in the three months ended June 30, 2022 and increased to $287.1 million in the six months ended June 30, 2023 as compared to $231.7 million in the six months ended June 30, 2022.March 31, 2023. Gross profit margins decreased 110increased 250 basis points to 53.7%55.1% in the three months ended June 30, 2023March 31, 2024 as compared to 54.8%52.6% in the three months ended June 30, 2022. Gross profit margins decreased 220 basis points to 53.2% in the six months ended June 30, 2023 as compared to 55.4% in the six months ended June 30, 2022.March 31, 2023.

DecreasesThe 250 basis point increase in gross profit margins are driven by cost increases and inflation in raw materials, freight and other costs of production.during the three months ended March 31, 2024 was mainly due to favorable product mix during the three months ended March 31, 2024. In addition, during the three and six months ended June 30,March 31, 2024, we wrote off $1.4 million in inventory, tooling and equipment related to the cancellation of a planned new product line
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and $0.2 million in severance related to the elimination of certain positions. During the three months ended March 31, 2023, we incurred costs for the amortization of inventory step-up to fair value of $2.2$2.1 million and $4.3 million, respectively, related to the In2Bones acquisition, compared to $0.3 million of such costs during the three and six months ended June 30, 2022. During the six months ended June 30, 2023,
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we also incurred $1.1 million in consulting fees related to a cost improvement initiative and $1.0 million in severance related to the elimination of certain positions.

Selling and Administrative Expense

Selling and administrative expense increaseddecreased to $129.7$123.4 million in the three months ended June 30, 2023March 31, 2024 as compared to $115.8$130.1 million in the three months ended June 30, 2022, and increased to $259.8 million in the six months ended June 30, 2023 as compared to $218.7 million in the six months ended June 30, 2022.March 31, 2023. Selling and administrative expense as a percentage of net sales decreased a 100450 basis points to 40.8%39.5% in the three months ended June 30, 2023March 31, 2024 as compared to 41.8%44.0% in the three months ended June 30, 2022 and increased 30March 31, 2023. The 450 basis points to 42.4% in the six months ended June 30, 2023 as compared to 42.1% in the six months ended June 30, 2022. The increasespoint decrease in selling and administrative expense as a percentage of net sales for the three and six months ended June 30, 2023 wereMarch 31, 2024 was primarily driven by:

$1.8A decrease of $10.9 million in costs related to fair value adjustments to contingent consideration ($6.5 million of income in 2024 compared to $4.4 million expense in 2023), see Note 6; and $6.1
$4.3 million in costs related to the implementation of a new warehouse management system during the three and six months ended June 30, 2023, respectively.in 2023. These costs mainly consisted of incremental freight, labor and travel costs as well as professional fees;
$2.1 million in costs related to the termination of distribution agreements during the three and six months ended June 30, 2023;
$(0.6) million and $3.8 million in fair value adjustments to contingent consideration during the three and six months ended June 30, 2023, respectively; and
$1.6 million in costs consisting of severance related to the elimination of certain positions during the six months ended June 30, 2023.fees.

These increasesdecreases are offset by the $2.6 million in consulting fees and legal costs associated with the acquisition of In2Bones and the $0.8 million in costs related to a legal settlement during the three and six months ended June 30, 2022. In addition, we continue to experience lower ongoinghigher selling and administrative expenses as a percentage of revenue as we leverage our existing selling and administrative structure.associated with higher sales volumes.

Research and Development Expense

Research and development expense increased to $13.6 million in the three months ended June 30, 2023March 31, 2024 as compared to $11.5$12.5 million in the three months ended June 30, 2022, and increased to $26.1 million from $22.2 million in the six months ended June 30, 2022.March 31, 2023. As a percentage of net sales, research and development expense increased 20 basis points to 4.3%4.4% in the three months ended June 30, 2023March 31, 2024 as compared to 4.1%4.2% in the three months ended June 30, 2022 and remained flat at 4.3% during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.March 31, 2023. The changeschange in spend as a percentage of sales werewas mainly driven by additional research projects during the timing of research projects.three months ended March 31, 2024 as compared to the same period in the prior year.

Interest Expense

Interest expense increaseddecreased to $10.0$9.6 million in the three months ended June 30, 2023March 31, 2024 from $5.9$10.3 million in the three months ended June 30, 2022, and increased to $20.3 million in the six months ended June 30, 2023 from $10.9 million in the six months ended June 30, 2022.March 31, 2023. The weighted average interest rates on our borrowings increased to 3.09%3.18% in the three months ended June 30, 2023March 31, 2024 as compared to 2.37%3.14% in the three months ended June 30, 2022.March 31, 2023. The weighted average interest rates on our borrowings increased to 3.11% in the six months ended June 30, 2023 as compared to 2.30% in the six months ended June 30, 2022. The increasesdecrease in interest expense in the three and six months ended June 30, 2023 were primarilyMarch 31, 2024 was driven by the issuance of the 2.250% Notes in June 2022 as well as higher interest rateslower weighted average borrowings outstanding on our senior credit agreement.facility during 2024.

Other Expense

During the three and six months ended June 30, 2022, we recorded expense 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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Provision for Income Taxes

The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate applied to its year-to-date earnings, 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 has been recorded at an effective tax rate of 21.2%22.5% for the three months ended June 30, 2023March 31, 2024 compared to an income tax expense at an effective tax rate of (80.0)%25.6% for the three months ended June 30, 2022. Income tax expense has been recorded at anMarch 31, 2023. The lower effective tax rate of 21.7% for the six months ended June 30, 2023 compared to (101.6)% for the six months ended June 30, 2022. The higher effective tax rates for the three and six months ended June 30, 2023 wereMarch 31, 2024 was primarily the result of pretaxthe higher income in 2023 as compared to pretax losses generated by the premium on extinguishment and change in fair value2024 incurring a lower percentage of convertible notes hedges which were not deductible for tax in the same periods in the prior year.expense. The three months ended June 30,March 31, 2024 included discrete income tax benefit related to acquired federal research credits which reduced the effective tax rate by 1.4% and discrete income tax expense from stock options which increased the effective tax rate by 0.4% as compared to the three months ended March 31, 2023 which included discrete income tax benefit from stock option exercises which reduced the effective tax rate by 8.4% and discrete income tax expense from other foreign related taxes which increased the effective tax rate by 2.0% as compared to three months ended June 30, 2022 which included no discrete items. The six months ended June 30, 2023 included discrete income tax benefit from stock option exercises which decreased the effective tax rate by 7.7% and discrete income tax expense from other foreign related taxes which increased the effective tax rate by 1.8% as compared to the tax benefit from stock option exercises which increased the effective tax rate by 2.2% for the six months ended June 30, 2022.2.4%. A reconciliation of the United States statutory income tax rate to our effective tax rate is included in our Annual Report on Form 10-K for the year ended December 31, 20222023 under Note 9 to the consolidated financial statements.

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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. 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 $262.4$344.3 million at June 30, 2023.March 31, 2024.  Net cash provided by operating activities was $22.8$29.1 million in the sixthree months ended June 30, 2023 and $19.1March 31, 2024 compared to net cash used in operating activities of $3.8 million in the sixthree months ended June 30, 2022,March 31, 2023, generated on net income (loss) of $15.6$19.7 million and $(153.3)$1.8 million for the sixthree months ended June 30,March 31, 2024 and 2023, and 2022, respectively. Significant changes in assets and liabilities affecting operating cash flows in the sixthree months ended June 30, 2023March 31, 2024 include the following:

A decrease in cash flows from accounts receivable based on the timing of sales and cash receipts;
An increase in cash flows from inventoryaccounts receivable as we moderate our inventory levels;
A decreaseexperienced higher sales in the fourth quarter of 2023 compared to the fourth quarter of 2022 as well as the timing of cash flows from other assets as we increased our field inventory in support of increased sales;receipts;
An increase in cash flows from accounts payable due to the timing of payments; and
A decrease in cash flows from other liabilities primarily resulting from income tax payments.accrued compensation and benefits as a result of higher incentive compensation payments in the three months ended March 31, 2024 compared to the same period a year ago.

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Investing cash flows

Net cash used in investing activities in the sixthree months ended June 30, 2023March 31, 2024 decreased $142.2$2.2 million from the same period a year ago primarily due to capital expenditures being lower at $2.0 million in the $142.6three months ended March 31, 2024 compared to $4.3 million payment forin the In2Bones acquisition in 2022.same period a year ago.

Financing cash flows

Net cash used in financing activities in the sixthree months ended June 30, 2023March 31, 2024 was $14.4$17.0 million compared to net cash provided by financing activities of $166.6$5.4 million during 2022.2023. Below is a summary of the significant financing activities impacting the change during the sixthree months ended June 30, 2023March 31, 2024 compared to 2022:2023:

WeDuring the three months ended March 31, 2024, we repaid the remaining $70.0 million outstanding on the 2.625% Notes.
During the three months ended March 31, 2024, we paid $26.9 million in contingent consideration related to the In2Bones and Biorez acquisitions.
During the three months ended March 31, 2024, we had net paymentsborrowings on our revolving line of credit of $16.0$86.0 million, compared to $140.0net borrowings of $9.0 million duringin the six months ended June 30, 2022.same period a year ago.
We received proceeds of $800.0 million in 2.250% Notes duringDuring the sixthree months ended June 30, 2022.
We paid $275.0 million in aggregate principal on the repurchase and extinguishment of the 2.625% Notes during the six months ended June 30, 2022.
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 during the six months ended June 30, 2022.
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 during the six months ended June 30, 2022.
We paid $21.2 million in debt issuance costs related to the 2.250% Notes during the six months ended June 30, 2022.
We had net payments on our term loan of $93.0 million during the six months ended June 30, 2022.
WeMarch 31, 2024, we had net cash proceeds of $15.3$1.1 million related to stock issued under employee plans for the six months ended June 30, 2023 compared to $9.2$3.4 million in the same period a year ago.

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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. We continue to monitor our spending and expenses in light of these factors. However, we may need to take further steps to reduce our costs, or to refinance our debt. See “Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022,2023, for further discussion.

There were $134.6$114.6 million in borrowings outstanding on the term loan facility as of June 30, 2023.March 31, 2024. There were $54.0$88.0 million in borrowings outstanding under the revolving credit facility as of June 30, 2023.March 31, 2024. Our available borrowings on the revolving credit facility at June 30, 2023March 31, 2024 were $529.4$495.4 million with approximately $1.6 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 June 30, 2023.March 31, 2024. We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales.

In February 2024, the Company repaid the remaining $70.0 million then outstanding of the 2.625% Notes through borrowings on our revolving credit facility and issued 0.1 million shares of the Company's common stock.

See Note 1110 for further information on our financing agreements and outsideoutstanding debt obligations.

Our Board of Directors has authorized a $200.0 million share repurchase program. Through June 30, 2023,March 31, 2024, 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. We
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have not purchased any shares of common stock under the share repurchase program during 2023.2024. 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 pronouncementsAccounting Pronouncements

See Note 3 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 sixthree months ended June 30, 2023.March 31, 2024.  Reference is made to Item 7A. of our Annual Report on Form 10-K for the year ended December 31, 20222023 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
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control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) occurred during the quarter ended June 30, 2023March 31, 2024 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, 20222023 and to Note 1514 of the Notes to Consolidated Condensed Financial Statements included in Part I of this Report for a description of certain legal matters.

Item 5.  Other Information
 
On May 4, 2023, Heather Cohen,During the quarter ended March 31, 2024, none of the members of our Board of Directors or Executive Vice President and Chief Human Resources and Legal Officer,Officers adopted, modified or terminated a trading plan with respect to 6,500 stock appreciation rights ("SARs") granted to Ms. Cohen as equity compensation (the "Cohen Plan"). The Cohen Plan isarrangement intended to satisfy the affirmative defense of Rule 10b5-1(c), under the Securities Exchange Act of 1934, and terminates on May 17, 2024.1934.


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Item 6. Exhibits

Exhibit Index
Exhibit No.Description of Exhibit
3.1
31.1
  
31.2
  
32.1
101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover 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, Finance and
 Chief Financial Officer
 
 Date:  
 July 27, 2023April 25, 2024
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