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DATE

April 29, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Patrick Beyer
  • Adviser (former Chief Financial Officer) — Todd Garner

TAKEAWAYS

  • Total Reported Sales -- $317 million, a decrease of 1.3% year over year reflecting the impact of the gastrointestinal (GI) product line exit.
  • Organic Sales Growth -- Increased 2.1% year over year, excluding GI product lines and currency effects.
  • Orthopedics Segment -- Sales grew 4.5% in constant currency, with three consecutive quarters delivering at least mid-single-digit growth.
  • General Surgery Segment -- Total sales declined 8.5% in constant currency; adjusting for the GI exit, organic worldwide general surgery sales were flat.
  • AirSeal Platform -- U.S. laparoscopic procedure penetration stands at 6%-7% of over 3 million annual cases; more than 50% growth in capital unit placements compared to the same quarter last year.
  • Buffalo Filter (Smoke Evacuation) -- Currently, 20 U.S. states cover 51% of the population with smoke-free operating room laws; 13 additional states have pending bills, with management noting legislative support as a continuing growth catalyst.
  • BioBrace Platform -- Over 30 published clinical studies with a 268-patient randomized controlled trial on track to complete enrollment in 2026; clinical guidelines by the American Academy of Orthopedic Surgeons now recommend augmentation in rotator cuff repair.
  • Adjusted Gross Margin -- 57.4%, up 100 basis points from the prior-year quarter, primarily driven by favorable product mix and positive foreign currency impact.
  • Adjusted Net Income -- $27.1 million, down 8.5% year over year, citing the GI business exit as a primary factor.
  • Adjusted Diluted EPS -- $0.89, representing a 6.3% year-over-year decrease.
  • Inventory and Accounts Receivable Days -- Inventory increased to 246 days (from 222 days a year ago and 207 days at prior quarter-end) due to intentional stock builds; accounts receivable days rose to 65.
  • Share Repurchases -- Approximately 858,000 shares bought back for $37.4 million in the quarter.
  • Cash Flow from Operations -- $13.5 million, compared to $41.5 million in the prior-year quarter; capital expenditures were $2.9 million.
  • 2026 Organic Growth Guidance Raised -- Guidance updated to 5.0%-6.5%, increased from the previous range of 4.5%-6.0%.
  • GI Product Line Exit -- 2026 expected GI product revenue revised down to $14.5 million-$17.5 million, nearly $7 million lower than previous guidance midpoint, following two completed divestiture agreements.
  • 2026 Total Reported Revenue Guidance -- Raised lower bound to $1.35 billion, keeping the high end at $1.375 billion, despite reduced GI revenue contribution.
  • Adjusted EPS Guidance Maintained -- Full-year range held at $4.30-$4.45, with Q2 guidance at $1.09-$1.14.
  • Debt and Leverage -- Long-term debt rose to $860.2 million; leverage ratio at 3.1x at quarter-end, with intention to refinance debt in Q2 using bank debt instead of issuing new convertible notes due to "historic trough in med tech multiples."
  • Interest Expense Impact -- Interest expense projected to increase full-year adjusted EPS by at least $0.10, attributed to the shift from convertible notes to bank debt refinancing.

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RISKS

  • Adjusted net income and EPS both declined year over year, directly attributed to the GI business exit and continued headwinds in OEM smoke products.
  • Intentional inventory build raised inventory days to 246, potentially reflecting demand uncertainty or efforts to address service levels and supply chain risks.
  • Interest expense expected to increase at least $0.10 per share for the year following decision to refinance with bank debt rather than issue new convertible notes, which management explicitly cited as a "headwind" to adjusted EPS.
  • Cash flow from operations decreased to $13.5 million versus $41.5 million the previous year, identified as typical for the company's seasonally highest cash outlay period.

SUMMARY

CONMED Corporation (CNMD 0.92%) divested its entire GI product portfolio through two separate agreements, accelerating this exit and reducing expected 2026 GI revenue by $7 million at the midpoint. Management raised the company's full-year organic growth guidance to 5.0%-6.5%, citing positive momentum in orthopedics, AirSeal, and smoke evacuation markets. AirSeal capital equipment placements increased more than 50% year over year in the U.S. laparoscopic market, while Buffalo Filter products benefited from ongoing legislative trends, with 13 additional states considering smoke-free operating room laws. Adjusted gross margin reached 57.4%, the highest in recent quarters, and the company maintained its 2026 adjusted EPS range of $4.30-$4.45 despite refinancing debt with bank loans expected to add at least $0.10 per share in interest expense. Cash flow from operations and inventory levels shifted due to higher working capital required for service improvements and anticipated seasonal cash demands.

  • Todd Garner said, "we are able to keep our adjusted EPS guidance for the full year unchanged at the range of $4.30 to $4.45," despite citing at least $0.10 higher interest expense from refinancing.
  • Patrick Beyer emphasized the strategic prioritization of "minimally invasive surgery, smoke evacuation and orthopedic soft tissue repair" following the GI portfolio divestiture.
  • Organic U.S. general surgery sales rose 1.5%, while organic international general surgery sales fell 3.3%, highlighting mixed regional performance dynamics.
  • The GI portfolio divestiture agreements include ongoing transition service arrangements (TSAs) into 2027, affecting near-term service commitments and revenue recognition.

INDUSTRY GLOSSARY

  • AirSeal: A clinical insufflation platform used in laparoscopic and robotic surgeries to maintain stable intra-abdominal pressure and optimize visualization.
  • Buffalo Filter: CONMED's smoke evacuation product suite designed to clear surgical smoke from operating rooms and meet regulatory requirements.
  • BioBrace: A proprietary implant for soft tissue repair that combines mechanical reinforcement with biologic healing, FDA-cleared for orthopedic procedures.
  • TSAs (Transition Service Agreements): Contracts in which a seller provides interim services to a buyer after divesting a business segment, ensuring continuity during the transition period.
  • OEM (Original Equipment Manufacturer) smoke products: Smoke evacuation components manufactured by CONMED that are sold to other companies for integration into their solutions rather than marketed directly by CONMED.

Full Conference Call Transcript

Pat Beyer, President and Chief Executive Officer, for opening remarks. Mr. Beyer?

Patrick Beyer: Thank you. Good afternoon, and thank you for joining us for CONMED's First Quarter 2026 Earnings Call. With me on the call today is Todd Garner. The search for our new CFO is progressing well, and we look forward to providing you with an update soon. I ask Todd to join me today as he is assisting us as our adviser with our Q1 earnings report. I'll start and provide you with an update of our first quarter results and updates on our strategic priorities. Todd will then take you through the financials and our 2026 guidance in more detail before we open the call for your questions.

Before turning to the quarter, I want to recognize our teams around the world for their continued focus and execution. Across the business, their work is making a real difference for our customers and for the company. During the first quarter, we reached an agreement to divest certain GI products. And in April, we reached a second agreement to divest our remaining GI products. As is customary, we will provide transition services under TSAs through the end of this year and into 2027. This decision was intentional and strategic. It allows us to concentrate resources and investment on our higher growth, higher-margin offerings and better focuses the organization on driving improved execution and delivering long-term shareholder value.

I'll start by briefly reviewing our first quarter results. Total sales for the quarter were $317 million, a decrease of 1.3% compared to the prior year quarter. Excluding the impact of our previously announced exit from our gastroenterology product lines, total sales increased 3.8% year-over-year as reported and 2.1% in constant currency. Orthopedics delivered sales growth of 4.5% on a constant currency basis, while general surgery sales declined 7.4% in constant currency but were flat after adjusting for the gastroenterology exit. From an earnings perspective, excluding special items that affected comparability, our adjusted net income of $27.1 million decreased 8.5% year-over-year, and our adjusted diluted net earnings per share of $0.89 decreased 6.3% year-over-year.

These were, of course, impacted by the exit of our GI business. Now I want to turn to our 3 key growth platforms: AirSeal, Buffalo Filter and BioBrace. These platforms sit at the center of our long-term strategy and provide a durable foundation for growth and margin expansion. Our decision to exit gastroenterology and place a strategic focus on minimally invasive surgery, smoke evacuation and orthopedic soft tissue repair reflects our intent to allocate capital, talent and attention towards the area where we see the greatest opportunity. I'll walk through each platform and highlight what we're seeing develop in the market. Starting with AirSeal, our clinical insufflation platform that is supported by 2 durable growth vectors, robotic and laparoscopic surgery.

AirSeal benefits from a large installed base of over 10,000 systems globally, which continued to grow in quarter 1, giving us broad clinical presence and deep surgeon familiarity. AirSeal plays a critical role in complex procedures where conventional insufflation systems may be less reliable. AirSeal's clinical differentiation underpins its role in robotic surgery, particularly as these procedures continue to expand across subspecialties and migrate into ambulatory surgery centers. AirSeal follows surgeon preference. Beyond robotics, the laparoscopic opportunity remains significantly underpenetrated. In the United States alone, more than 3 million laparoscopic procedures are performed annually. And today, AirSeal is used only in 6% to 7% of those cases.

We continue to see good traction in laparoscopy market, including continued growth in the first quarter. Taken together, AirSeal's installed base, differentiation among high acuity specialists, importance in ambulatory environments and expanding laparoscopic adoption support our confidence that AirSeal can deliver high single-digit to low double-digit growth over the long term. Turning to Buffalo Filter, our smoke evacuation platform. This continues to be one of our most compelling long-term growth opportunities. On the legislative front, we now have 20 U.S. states with smoke-free operating room laws on the books, covering approximately 51% of the population. We continue to see additional states moving towards legislation and expect this trend to persist, giving the safety benefits for health care professionals.

We are continuing to see traction internationally, particularly in the Nordic countries, Canada and Australia. On the product side, our PlumeSafe X5 launched in the first half of 2025 continues to gain traction. Its smaller footprint, quieter operation and faster smoke clearance are resonating in outpatient and ambulatory environments. Importantly, we remain disciplined in how we are scaling this area. Our strategic focus is on direct smoke evacuation, where we control the customer relationship and capture the full margin profile. While OEM remains part of the portfolio, over time, we expect direct smoke to represent a larger share of smoke evacuation revenue, consistent with our broader focus on higher growth, higher-margin opportunities.

Our third key growth platform is BioBrace, which continues to perform exceptionally well and remains a signature element of our sports medicine strategy. BioBrace is increasingly recognized by surgeons as a differentiated solution in soft tissue repair, addressing both the mechanical and biologic drivers of failure. It is the only FDA-cleared implant that delivers structural reinforcement while also promoting biologic healing, a combination that is reshaping how surgeons approach complex repairs. As surgeons gain experience with the technology, we are seeing broader utilization across both primary repairs and more complex cases. Clinical validations remain a critical component of the platform's long-term value proposition. There are currently over 30 published studies on BioBrace.

Our 268-patient randomized controlled trial remains on track to complete enrollment in 2026 with publication expected in 2027. In the interim, the growing body of existing clinical data, along with the American Academy of Orthopedic Surgeons guidelines recommending augmentation in rotator cuff repair are reinforcing surgeon confidence and supporting adoption. We believe BioBrace is still early in its life cycle. As BioBrace becomes further embedded into surgical workflows and expands across additional soft tissue procedures, we see a long runway for sustained growth and increasing contribution to our orthopedics portfolio. From an operational standpoint, we finished 2025 strong and continue to improve supply chain performance during the first quarter.

We are moving into a position in which we are able to provide customers with the consistent service they expect. This allows our orthopedic sales team to get back on offense and engage more proactively with surgeons and accounts. To support this momentum, we continue to expand capacity across both our internal manufacturing footprint and through qualified external partners. This dual approach gives us greater flexibility, improved resilience and positions us to support sustained growth. Importantly, these improvements are now showing up in our results. Orthopedics delivered mid-single-digit growth in the first quarter, marking the third consecutive quarter of at least mid-single-digit growth, a trend that reflects improving supply reliability alongside continued strength in our core platform.

We are making sustained progress, and we believe we are on a clear path toward where we ultimately want to be, operating a more durable, high-performance supply chain that can support long-term growth. Our capital allocation priorities remain unchanged. We continue to balance organic investment in innovation, manufacturing and commercial effectiveness, disciplined acquisitions that strengthen our existing platforms and returning capital to shareholders, supported by strong and consistent cash generation. Our balance sheet continues to strengthen, and we believe CONMED is well positioned to invest in our business while maintaining financial discipline. In summary, we enter 2026 with a focused portfolio, improving execution and differentiated growth drivers operating in attractive markets.

We remain committed to delivering reliable performance and creating long-term value for our shareholders. With that, I'll turn the call over to Todd, who will provide a more detailed analysis of our quarter 1 financial performance and discuss our 2026 financial guidance. Todd?

Todd Garner: Thank you, Pat. All sales growth numbers I reference today will be given in constant currency. The reconciliation of GAAP to constant currency is included in our press release. The organic numbers referenced exclude GI sales from 2025 and 2026. As usual, we have included an investor deck on our website that summarizes the results of the quarter and our financial guidance. It also includes a reconciliation of GAAP to constant currency organic growth. For the first quarter of 2026, our total sales decreased 2.9% year-over-year. Organic sales increased 2.1% year-over-year. For Q1, total sales in the U.S. decreased 5.8% versus the prior year quarter, and total international sales grew 1.0%.

Organic sales in the U.S. increased 2.8% and organic international sales grew 1.3%. Total worldwide orthopedic sales grew 4.5% in the first quarter. Total U.S. orthopedic sales increased 5.5%. And internationally, orthopedic sales increased 3.9%. Total worldwide general surgery sales decreased 8.5% in the quarter. Organic worldwide general surgery sales were flat over prior year. Total U.S. general surgery sales decreased 10.4% while total international general surgery sales decreased 3.8%. Organic U.S. general surgery sales increased 1.5% while organic international general surgery sales decreased 3.3%. AirSeal and direct smoke both grew in Q1, and we continue to expect AirSeal and direct smoke to be in the high single-digit to low double-digit range for the full year.

But as expected and included in our original guidance for the year, in Q1, both product lines were below our expected range for the full year. We are seeing positive signs with AirSeal as more capital units entered the market in Q1 than robotic systems from the market leader. We are also seeing good early returns from our increased focus on laparoscopic procedures. The data points we can see give us confidence that AirSeal should continue to grow in the high single-digit to low double-digit range in 2026. The OEM smoke products were again a meaningful headwind in Q1.

These non-focused products for us can be very lumpy quarter-to-quarter, and that was the biggest drag on general surgery sales in Q1. Now let's move to the expense side of the income statement. We will discuss expenses and profitability in the first quarter, excluding special items which are detailed in our press release. Adjusted gross margin for the first quarter was 57.4%, which is 100 basis points higher than the prior year quarter, driven by favorable product mix and positive foreign currency impact. Adjusted research and development expense for the first quarter was 4.8% of sales, 80 basis points higher than the prior year quarter. This increase was driven primarily by increased investment into our key growth drivers.

First quarter adjusted SG&A expenses were 40.0% of sales, 130 basis points higher than the prior year quarter. As we said in January, we expect the first quarter to be the highest quarter of the year. On an adjusted basis, interest expense was $5.8 million in the first quarter. The adjusted effective tax rate in Q1 was 24.2%. First quarter GAAP net income was $13.8 million compared to $6.0 million in 2025. GAAP earnings per diluted share were $0.45 this quarter compared to $0.19 a year ago. Excluding the impact of special items, in the first quarter, we reported adjusted net income of $27.1 million, a decrease of 8.5% compared to the first quarter of 2025.

Our Q1 adjusted diluted net earnings per share were $0.89, a decrease of 6.3% compared to the prior year quarter. Turning to the balance sheet. Our cash balance at March 31 was $35.0 million compared to $40.8 million at December 31. Accounts receivable days at March 31 were 65 days compared to 62 days at March of 2025 and 60 days at December 31. Inventory days at quarter end were 246 compared to 222 days a year ago and 207 on December 31. As we continue to focus on service levels, we have purposely built more inventory. Long-term debt at the end of the quarter was $860.2 million versus $834.2 million as of December 31.

Our leverage ratio on March 31 was 3.1x. Q1 is typically our biggest cash outlay, and we continue to expect this ratio to hold at roughly 3x as we balance debt leverage and share buybacks. In Q1, we bought back approximately 858,000 shares for a total of $37.4 million. Cash flow provided from operations in the quarter was $13.5 million compared to $41.5 million in the first quarter of 2025. Capital expenditures in the first quarter were $2.9 million compared to $3.8 million a year ago.

We continue to expect operating cash flow for the full year to be between $145 million and $155 million and capital expenditures between $20 million and $30 million, resulting in free cash flow around $125 million. No change from our prior guidance at the beginning of the year. Now let's turn to financial guidance. We'll start with revenue. We are pleased to be able to raise our organic growth expectation for 2026 to 5.0% to 6.5% from our prior range of 4.5% to 6.0%. Pat outlined the good signals we are seeing in the business, and we are pleased with the improving outlook.

Currency has also improved slightly, and we now expect foreign exchange rates to be a tailwind to revenue of between 40 and 50 basis points. When we provided initial 2026 revenue guidance in January, we had recently announced our strategic intention to exit the GI product lines, but the only transaction that was complete was the agreement with Gore that was announced in December. In January, we did not have clarity on how or when we would exit the remaining product lines, and our guidance included that lack of clarity. In March, as Pat said, we closed on the sale of certain GI products to Micro-Tech.

And in late April, we closed on the sale of the remainder of our GI portfolio to a strategic acquirer who we will be able to disclose in the coming few weeks. As Pat said, these agreements include a period of us providing product and services that may likely extend beyond 2026. So we now have much better clarity on what to expect for the remainder of 2026. In January, we estimated that we would sell between $21 million and $25 million of GI product lines in 2026.

With these 2 agreements complete and happening faster than originally anticipated, our 2026 revenue guidance for the GI product lines is now between $14.5 million and $17.5 million, which is about a $7 million reduction from our prior guide at the midpoint. Fortunately, the lower revenue also comes with lower costs. And so our EPS guidance of $0.45 to $0.50 impact for the full year is still consistent with our January expectations. Because of our improving growth profile, despite that approximate $7 million of lower GI revenue for the year, we are raising the lower end of our reported range by $5 million and keeping the high end of the range the same.

That results in expected reported revenue between $1.35 billion to $1.375 billion for 2026. We expect reported revenue in Q2 to be between $336 million and $340 million. And we've provided a detailed look at the assumptions of the organic growth and currency impact for the remainder of the year in our investor deck. We expect to refinance our debt during Q2 before the outstanding convertible notes go current. We have strong banking partners, and we are seeing attractive rates and plenty of capacity available to us. Given the historic trough in med tech multiples, we have determined that issuing new convertible notes at this time would not be in the best interest of CONMED shareholders.

So our intent is to refinance with bank debt, which we expect could increase our full year adjusted interest expense, impacting adjusted EPS for the full year by at least $0.10. Despite this increase, thanks to the strength in the profitability we saw in Q1 and the increase in our organic growth profile, we are able to keep our adjusted EPS guidance for the full year unchanged at the range of $4.30 to $4.45. For Q2, we expect adjusted EPS to be between $1.09 and $1.14. With that, we'd like to open the call to your questions. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Travis Steed of Bank of America.

Gracia Mahoney: This is Gracia on for Travis. On the first one, I wanted to ask a little bit more about the debt refinancing that you called out that you're starting in Q2. And just a little bit more about the strategy and what levers you can do to mitigate potential EPS dilution both in 2026 and then also in 2027 as well. And then I had one follow-up.

Todd Garner: Sure. Thanks, Grace. So we're starting those discussions with our banking partners. We have a very strong banking group, some of the best banks in the world. We have ample capacity. We're seeing good rates. The change from what we thought -- what we planned for the full year is we thought that there would be a mix of bank debt and convertible notes that was in the prior original kind of intention. As we look at the historic low multiples in med tech, we determined that it was not in the best interest of CONMED shareholders to do new convertible notes at this time. So that raises the cost of capital just a little bit.

As I said in my script, we see that as at least $0.10. I'm not being terribly precise there, obviously, because the negotiations are not done. We don't know exactly what we're going to get. And there's a lot of year left in cash flows and what the rates may do. And so it's going to be more than we originally thought as we laid out 2026, but thankfully, the strength in the business the results of Q1 allow us to keep EPS the same despite that increased headwind from interest expense.

Gracia Mahoney: Great. Helpful. And then the second one, earlier this morning, just saw a company come out and talk about inflationary pressures. So I think that's top of mind. I was sort of wondering what you're seeing on the macro front in terms of inflation impacting margins and any framework to think about how that could impact CONMED over the rest of the year and what is sort of implicit in your margin guide there as well?

Patrick Beyer: Grace, it's Pat here. Thanks for the question. Again, any macro geopolitical or economic margin pressure or price pressure would be included in guidance. I just want to let you know that. We are seeing some pressure on some commodity products like oil, gold that are affecting our cost of goods sold, but we're working hard with our vendors and our partners and our supply chain to mitigate as much as we can there. At a macro level, we're seeing some component prices go up. We're partnering with our supply chain to mitigate those, and we're also partnering with our hospital systems to partner with them on cost-effective clinical solutions.

And we don't expect any more of the macro influences on the cost side to impact our guidance here. And so we've included that in there.

Operator: Our next question comes from the line of Ross Osborn of Wells Fargo.

Ross Osborn: Starting out with AirSeal, and apologies if I missed this, but what was the attach rate to DV5 during the quarter?

Patrick Beyer: Ross, Pat here, and welcome. We did not state the attachment rate for the quarter. What I would say to you is the attachment rate for AirSeal in quarter 1 followed the guidance that we have given in the past, and that was on the DV5. We have guided between 10% and 20%, and we continue to be in that zone, Ross.

Ross Osborn: Okay. Sounds great. And then for my second question, what is your level of visibility into state legislation on ORs may result in a tailwind?

Patrick Beyer: And I'm sorry about that. And you're talking about smoke evacuation?

Ross Osborn: Yes. Just curious regarding guidance, how much is baked in for new states coming on board?

Patrick Beyer: Again, anything would have been built into it. Again, I think we stated 20 states have enacted 45% of the hospitals in the U.S., 51% of the population. We have line of sight of 13 additional states have bills pending, and we believe Maryland and Massachusetts are the most likely ones to pass. In fact, Maryland is actually at the governor's desk. And so we continue to see legislation play a role in the background as well as the clinical benefits of it, and societies continue to play as equal or more important role as societies like AORN are pushing for legislation and action from hospitals to standardize on smoke evacuation.

Operator: Our next question comes from the line of Robbie Marcus of JPMorgan.

Robert Marcus: Congrats on a nice quarter. Two for me. Hoping you could walk us through the bridge on second quarter. It seems like a larger-than-normal step-up in dollars. And I realize the last few years maybe aren't the best proxies for 1Q to 2Q. I know 2Q is historically a stronger quarter. Maybe just give us a bridge of how you get there on a dollar basis. What's getting better and how to think about that? And then I have a follow-up.

Patrick Beyer: Sounds good. Todd can talk you through the dollars. And then if there's any questions on the background and clinical spaces, I'll jump in on that side.

Todd Garner: Yes. And I know, look, we're only half an hour from releasing the deck on our website. But Robbie, I do want to make sure you see the deck, specifically, I think it's Slide 5. We provided much more granularity on the pieces of organic, the GI sales and currency. So that will just give you some extra visibility. And I would say, in general, if you remember, Q4 was a pretty strong quarter for us. Because of that, we were pretty cautious on the Q1 guide. It came in better than we expected, but we were right in that Q1 was a little softer because Q4 was so strong, particularly internationally.

And so it is true that we are expecting to see an acceleration in Q2 better than what we saw in Q1. But I think that fits with how we saw the year to start with, and the signals we're seeing in Q1 have given us confidence that the Q2 numbers are in a good place.

Robert Marcus: Yes. I see the slide. I guess I'm asking what businesses are getting better because it's just -- it's a larger dollar amount from first quarter to second quarter, especially with the GI numbers going down year-over-year. So I was wondering if you could kind of give us a bridge. What's getting better in second quarter to get us to that dollar amount?

Patrick Beyer: Robbie, I'm going to be focused on the growth drivers. And so our orthopedic business and BioBrace will continue to accelerate its growth. We will continue to work through our supply chain historical challenges that have gotten a lot better, and we're moving more towards on offense. So you can expect the orthopedic business to continue to accelerate, number one. Number two, we called out that international would be much slower in the first quarter because of the big quarter 4 they had. Their absolute value dollars will accelerate in quarter 2. Then you're going to see the natural drivers of AirSeal and our smoke evacuation from a dollar standpoint and a growth standpoint accelerate there.

The AirSeal business, although it grew, the absolute growth wasn't as much as we would have liked to have seen, but the absolute capital units that have hit the market were pretty attractive for us, and they accelerated in quarter 1, and we expect to see the disposable trends grow in quarter 2 and throughout the year. So that will also play a role in accelerating that absolute dollar growth value from quarter 1 to quarter 2, Robbie.

Robert Marcus: Perfect. And then just quickly on gross margin. You had a really good result, your best one in many quarters. Any color there and just how to think about that through 2Q through 4Q?

Todd Garner: Thanks, Robbie. We did -- we grew 100 basis points over the prior year quarter. Our full year guide for gross margin was 50 to 100 for the year. So we were at the top end of that for Q1. As we look at the rest of the year, we think we should be in that 50 to 100 every quarter. So Q1 was good at the top of the range, and we continue to have the guide of 50 to 100 basis points of improvement in 2026.

Operator: Our next question comes from the line of Matthew O'Brien of Piper Sandler.

Anna Runci: This is Anna on for Matt. I want to touch on the laparoscopic opportunity in AirSeal specifically. I know you've mentioned that market penetration is fairly low there for a while now. So I'm just wondering what the gating factor is there and how we should think about the laparoscopic application as a growth driver long term for AirSeal and then any investments you're making to accelerate penetration into that market.

Patrick Beyer: Thank you. So as we think about laparoscopy, historically, we've done a strong job internationally where the robotic penetration was lower. Internationally, we're selling AirSeal in the laparoscopic market successfully. So we know there's an economic and clinical benefit to the hospital systems and patients around the world. To give some detail on the U.S., there are over 3 million procedures in the U.S. laparoscopically, and we address -- and we have a penetration rate of about 6% to 7%. So we have a strong programs in the United States towards standardization in the laparoscopic market. We know that the clinical benefit and the economic benefit is there, but we're taking a pretty focused approach.

For example, in the laparoscopic market, 2 procedures, colorectal and hysterectomy have over 350,000 procedures done laparoscopically. These are complex surgeries in nature. They're 3 hours plus in length of procedure, and we know the benefits of AirSeal and stable low-pressure clinical insufflation make a real difference. And so we have an active program in the United States around standardization and laparoscopy. We had a good quarter 1 where our pipeline is growing strongly. And I commented that the actual units of AirSeal going into the market in the United States was really strong in quarter 1. We put over 50% more in quarter 1 in the market than we did in quarter 1 2025.

So some good moves are happening there.

Anna Runci: Awesome. That's great to hear. Super helpful. And then I also just wanted to ask on the supply chain. Just any additional color on the progress you've made there. And then once these issues are fully subsided, I'd imagine it might take some time for you to recoup any lost business or any dislocated business. So just wondering if there is an expected lag there and when you expect to fully be back on offense with the supply chain issues?

Patrick Beyer: Yes. So I appreciate the question. So I'll remind you that at the end of 2025, we said we made real progress. The good news was it wasn't a moment, it was a movement, and we've continued to make progress. And the gains we made at the end of 2025, we've sustained. That's number one. Number two, it's allowed us to grow our orthopedic business, and we commented that we've had 3 quarters in a row where we've actually achieved minimum mid-single-digit growth. The good news is BioBrace had never gone on back order.

So our sales professionals, even though they weren't on offense on our core orthopedic product lines, they were connecting with clinicians, taking care of clinicians, clinical issues and maintaining their relationships. So we believe that while we will not take all of the previous business we may have lost back quickly, we believe our relationships are strong with the hospitals. And as contracts continue to come up and we have opportunities, we'll continue to take the appropriate market share that we deserve and we've earned. And again, I would remind you, the sports medicine market is a large market, growing mid-high single digits.

And our expectation is we're a winning company, and we would expect to, over time, move to that mid-single-digit, high single-digit growth trajectory.

Operator: [Operator Instructions] Our next question comes from the line of Mike Matson of Needham & Company.

Michael Matson: So just on Buffalo Filter, the OEM business, is there any way you can help us understand how big of a part of Buffalo Filter, that general surgery business that is? And what's the expectation around when that stops potentially being a drag on Buffalo Filter overall? Like when does it kind of get small enough or level off in terms of the declines?

Patrick Beyer: Mike, the Buffalo Filter piece of our smoke evacuation is smaller than our direct, number one. We grew our direct business in quarter 1. And we believe over time, it will continue to get smaller. And we believe the leading indicators we saw in quarter 1 tell us that total smoke will in 2026 be high single digits, low double digits. And so over time, it will phase away, and we'll continue to focus on our direct business.

Michael Matson: All right. And then just on the interest expense commentary. So it sounds like you're saying that there's -- it's going to be -- and I know it's rough numbers at this point, but approximately $0.10 greater impact from the added interest expense than you previously expected, but you're able to kind of absorb that and you're maintaining the EPS guidance. But I guess looking into '27 then, and I know you're not giving guidance for '27, obviously, but I mean, is it -- it's probably going to kick in midyear. So is that like a $0.20 annualized impact? And would that $0.20 be kind of a headwind in '27?

Todd Garner: Yes. Fair question, Mike. We don't want to get ahead of ourselves. Obviously, we said that with where things are right now, we've determined to not access the convertible part of the market. That doesn't mean that we wouldn't between now and '27, right? So there's a lot of things that can move between now and then. We have a very strong cash engine. And so we'll give '27 guidance at the right time. But -- so I'd ask you to just kind of stay open-minded to where this goes. And I will remind you, we said at least this is still a little bit of a moving target.

So we don't want to be too precise with it, and we certainly don't want to be precise into next year.

Operator: Thank you. I would now like to turn the conference back to Pat Beyer for closing remarks. Sir?

Patrick Beyer: Thank you, Latif. I want to thank everybody for joining us on the call. We entered 2026 with a clear focus on execution. We are concentrating on our key growth platforms and continuing to build a strong foundation for long-term performance. Exiting the GI portfolio further sharpens our focus and positions CONMED as a more disciplined company going forward. I'm really proud of our team and the positive impact they're having on patient outcomes as well as their continued commitment to creating value for our shareholders. Thank you for joining us today, and I want to thank you for your continued interest and support.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.