CONMED Corporation (CNMD) is making a calculated bet on its future, announcing Friday that it's ditching its gastroenterology product lines entirely to focus on what it sees as the more promising world of surgical innovation.
The portfolio shake-up is all about refocusing resources on faster-growing areas like minimally invasive surgery, robotic procedures, laparoscopic techniques, smoke evacuation systems, and orthopedic soft tissue repair. It's the kind of strategic pivot that sounds great in theory but comes with real short-term costs.
"By concentrating our resources on our core growth platforms, we are positioning CONMED for long-term success and continued leadership in surgical innovation," said Patrick Beyer, the company's President and CEO.
A big piece of this exit involves unwinding Conmed's exclusive U.S. and Canadian distribution rights for the Gore VIABIL biliary stent, which it sold through an agreement with W. L. Gore & Associates. The company had already telegraphed in its most recent quarterly filing that it wasn't planning to renew the deal past the end of 2026, but after completing its strategic review, management decided to pull the plug early. The partnership officially ends January 1, 2026, though financial terms of the termination weren't disclosed.
The Financial Trade-Off
Walking away from gastroenterology isn't a small decision. The product portfolio was expected to generate between $90 million and $95 million in revenue during 2025, with gross margins hovering around 45%. That's real money the company is leaving on the table.
And yes, it's going to hurt earnings in the near term. Conmed expects the exit to create EPS dilution of 45 cents to 55 cents in 2026. But here's the trade management is making: once the gastroenterology business is fully out of the picture, the company's consolidated gross margin profile should improve by roughly 80 basis points. Lower revenue, but better profitability on what remains.
The proceeds from the Gore transaction will go toward general corporate purposes, which in corporate speak could mean anything from strategic acquisitions to debt reduction to share buybacks. Management is keeping its options open.
2025 Outlook Stays Intact
Despite the strategic shift, Conmed says its 2025 guidance isn't changing. The company reaffirmed its revenue forecast of $1.365 billion to $1.372 billion, right in line with the analyst consensus of $1.368 billion. Adjusted earnings guidance also remains at $4.48 to $4.53 per share, compared to the Street's expectation of $4.47.
The company plans to provide its full 2026 guidance when it reports fourth-quarter 2025 results, which should give investors a clearer picture of what the post-gastroenterology future looks like.
CNMD Price Action: Shares of CNMD were down 9.43% at $40.07 at the time of publication Friday.