Who's responsible for this Debacle?

Everybody reports to someone. Who does Hartman, his Senior Staff, and all his cronies report too? He's been in the job for over 2 years now? He's missed every number he's given to investors. The ship is sinking! Why doesn't the people Hartman reports too, do something?

 

Is goldy still there? He was about as intelligent as a squid

 

The only perplexing thing about Conmed is the current stock price. Everyone in the industry knows the company is a dog, their product line is crap, they don't invest appropriately in R&D, etc., etc. When revenue drops they buy a company (Surgiquest, etc.) to mask their mess. And no potential acquirer will touch them with such liabilities. Yet the Wall Street ponzi scheme keeps the share price high. The house of cards has been very wobbly for a long time. Time will tell how many good people get hurt when it comes down. Curt and his lackeys will do just fine. And that's a pity.

 

Hey come on now, don't get so down on Curt. He's the only person in Conmed that received $7,000,000 in compensation last year. Think about how hard he must working, and how many positives changes he must have made, to make that kind of money! Isn't it amazing? It just shows how bad corporate America really is. I realize CEOs at successful companies that are growing and profitable, make a lot more than $7,000,000 a year. But how could a new CEO of a company get paid that kind of money when sales have only continued to erode, and at a way faster pace than when we still had the old CEO? The last full year of our old CEO, Conmed did $767 million in sales (that was 2013). This whole new board of directors and CEO that came on in 2014 was supposed to make such a huge change. The $767 million of sales in 2013, probably won't break $700 million this year (with the Surgiquest sales it might be close, but we didn't have Surgiquest in 2013, so that can't be included in the 2013 sales. And take a look at how much Conmed overpaid for Surgiquest, to gain $65 million in sales at the most, and even with that we still have less sales than 3 years ago).

 

The stock price remains at this level because the market and the large institutional investors who own 95% of the stock believe there are several companies who would be interested in acquiring Conmed. Otherwise, they would sell and the stock would nose dive. Also, an activist investor has quietly acquired 10% of the stock and has an employee of the investor sitting on the Board. So they know everything going on, including who the potential buyers must be. Why else would they buy over $100 million in Conmed stock?

 

No one doubts that the share price is based on a potential acquisition. But the list of potential acquirers is very, very short. And every one of the companies doing due diligence on CNMD knows that nothing has changed in the years since they first put the company on the market. Do you really think any M&A guy will sign off on spending $1.5b on this dog? They all know that post-acquisition they would throw half the line away (non core), fire the entire US sales team (redundant), need to double down on the R&D budget (nearly all lines are ancient and have field issues), assume the pension liability and pending lawsuits, and pay huge severance fees (sweetheart termination deals for execs, board, and long time employees.). Yeah, the institutional investors know what's going on all right. Look for these same investors to quietly sell as the next fool steps up to buy.

 

No disagreement that the list is short. But there are several companies who would be interested in integrating the non ortho busines into their existing non ortho business, growing or expanding their existing or fledgling ortho business, and getting the SQ business. If you think about it for several moments, you will figure out who these companies are. Think big companies. Paying a premium on where the stock is now trading, assuming the debt, paying severance to the execs, might bring the cost to 3 times sales, which is really fair for a company like Conmed when you consider the amount of redundant cost elimination which could be achieved Really good companies, with much better management, go for much higher multiples.

 

These companies have looked at ConMed for the past 3-4 years. They know the management team, have seen their books, and understand their product lines. Most of the short list of acquirers quickly took a pass. The ones you reference have since focused on small tuck-in deals. The Conmed story has gotten worse over time, not better. Why on earth would they be interested in ConMed now?

 

Conmed is a tiny acquisition for these guys. Not sure what "tuck in " refers to, but everything Conmed would fit, if that's what you mean.

 

Tuck in acquisitions are usually small companies with focused product lines that can be easily and quickly assimilated into the acquirer's current business units. Even for huge companies like J&J or Medtronic a purchase of a large publicly traded multinational company such as ConMed for $1.5-2.1b is a huge deal. It would require significant due diligence, M&A advisors, board presentations, etc. You seeing lots of suits in Largo and Utica? Nope.

But if you think Conmed is a perfect target for a few big companies out there, please name them and enlighten the rest of us.

 

Your analysis is pretty accurate. I would say with the current stock price even if an acquiring company paid a 15% premium above market cap the purchase price would be more like $1.25/1.3 Bil.

As far as a purchase goes Zimmer would be the most obvious. They need good power equipment and the video/ Surgiquest/ advanced surgical line could slide into their surgical division to allow them to have multiple sales forces in a broader Instruments division. Pure speculation but it wouldn't be a crazy purchase for them.

 

Zimmer won't spend over $1.25b for capital products that are old and have significant problems. Hall power, pumps and shavers are good but haven't been given proper R&D investment in years. Video is garbage. GI and electrosurgery aren't worth anything to Zimmer. Lap is outside of the Zimmer call pattern and Surgiquest is only valuable with huge sales volumes and reduced prices. So with huge issues and $150m in sales per year with Conmed, their capital products are worth less than two times sales at $300m. But what about the Linvatec sports medicine line? It's the majority of Conmed's sales yet completely redundant to the Biomet/Cayenne lines. Zimmer just trashes them post-acquisition? Such an acquisition would have been plausible before the Cayenne deal, but still crazy. But today it absolutely doesn't make any sense when combined with all the other Conmed liabilities.

Who else is on the short list?

 

the pursuit of a "strategic alternative" back in 2014 did not yield any "satisfactory offers". we were trading right around where we are today ($38 - $41).

since that time, virtually all existing lines have either continued their decline or at best have treaded water. certainly nowhere near the proclaimed and lofty expectations of CH and his friends and family package of leaders

debt has had to have increased dramatically with SQ acquisition (which any of the buyers out there could have bought straight up at any time over the past 5+ years if they really wanted it and probably done so at a much better price) and it's such a small sales number that it can't make up for the rest of the problems

first question is, what was the needed number back in 2014 in order to be deemed "satisfactory". $50, $55, $60?

next question is, with nothing positive coming about in over 2 years and the only thing CH et al are pointing to is a high priced acquisition that any of those folks could've made and which has ultimately lowered our value, what would any new potential acquirer pay?

that previous $50-$60 would yield less than it did before

final question, how can CH and new board look all of those new investors in the face with that kind of deal?

not a pretty picture for us. CH and team may have to go nuclear and try to pull off some massive acquisition, surely need something, especially in ortho

 

Stryker, in an effort to expand it's business beyond Ortho, paid 1.28 billion or 2.52 times sales, for Physio Control earlier this year. Just for comparison sake, if you applied the same multiple for Conmed, minus the debt, it would be $53.81 a share, or about a 33% premium from where we are currently trading. Just a note, the guy from VOCE said we worth $56-$57 a share three years ago. A 2 for 1 stock deal would be equal to about 56.50 a share. Where did our entire new management come from? Who needs a bunch of suits coming to Utica or Largo, when their already here?

 

STFU. You think Stryker has any interest in ConMed? That is most hysterical thing I've read on CP. Ever.

 

How about olympus acquiring Conmed?

 

Think you hit the nail on the head. Without a big sellout, the board and CH need to veil the poor sales with another acquisition. Look for ConMed to buy a company with incremental revenues of $100 million. But if they go nuclear, it would have to be a merger. Wright, Integra, or Nuvasive?

 

IMO there are no buyers out there stupid enough to buy Conmed. But, if there were, the acquisition price is already factored in to the current share price. So yeah, 10-15% over current is $45 a share. But it won't happen.

 

Nobody wants the job, and they don't feel like letting him go yet. He reports to strip clubs. That's it.