Q1 2024 Conmed Corp Earnings Call

Participants

Curt Hartman; Chairman of the Board, President, Chief Executive Officer; Conmed Corp

Todd Garner; Chief Financial Officer, Executive Vice President - Finance; Conmed Corp

Matthew O'Brien; Analyst; Piper Sandler & Co

Young Li; Analyst; Jefferies Group LLC

Vik Chopra; Analyst; Wells Fargo Securities, LLC

Kristen Stewart; Analyst; CL King & Associates, Inc

Frederick Wise; Analyst; Stifel, Nicolaus & Company, Incorporated

Robert Marcus; Analyst; JPMorgan Chase & Co

Travis Steed; Analyst; BofA Securities

Mike Matson; Analyst; Needham & Company

Presentation

Operator

Thank you for standing by, and welcome to Comet's First Quarter Fiscal Year 2024 earnings conference call. (Operator Instructions) Let me remind you that during this call, management will be making comments and statements regarding its financial outlook, its plans and objectives.
These statements represent the forward looking statements that involve risk and uncertainties as those terms are defined under the federal securities laws, investors are cautioned that any such forward-looking statements are not guarantees of future events, performance or results. The Company's actual results may differ materially from its current expectations. Please refer to the risks and other uncertainties disclosed under the forward-looking information in today's press release as well as the Company's SEC filings for more details on the risks and uncertainties that may cause actual results to differ materially.
The Company disclaims any obligation to update any forward-looking statements that may be discussed during this call. Except as may be required by applicable law.
You will also hear management refer to non-GAAP or adjusted measurements during this discussion. While these figures are not a substitute for GAAP measures, management uses these figures to aid in monitoring the company's ongoing financial performance from quarter to quarter and year to year on a regular basis and for benchmarking against other medical technology companies.
Adjusted net income and adjusted earnings per share measured the income of the Company, excluding credits or charges that are considered by the company to be special or outside its normal ongoing operations. These adjusting items are specified in the reconciliation supporting the company's earnings releases posted to the company's website. With these required announcements completed, I will turn the call over to Curt Hartman, Conmed's Chair of the Board, President and Chief Executive Officer, for opening remarks, Mr. Hartman.

Curt Hartman

Thank you, Latif, and good afternoon, and thank you for joining us for comments first quarter 2024 earnings call. With me on the call is Todd Garner, Executive Vice President and Chief Financial Officer. We're also joined today by our new Chief Operating Officer, Pat Beyer. Today, we will share with you our first quarter results and the overall outlook for our business. We will then open the call to your questions.
I start by reviewing our first quarter results. Total sales for the quarter were $312.3 million representing a year-over-year increase of 5.7% as reported and 5.9% in constant currency. Proud of these results on top of last year's inflated growth, which was driven by a tailwind from the final sales catch up from the Q4 '2022 warehouse issue. Our global logistics team has never operated in a coordinated and efficient fashion as they are today, and I'm very proud of this team from an earnings perspective.
During the first quarter, our GAAP net income totaled $19.7 million. This compares to net income of $1.8 million in the first quarter of 2023. Excluding special items that affected comparability, our adjusted net income of $24.8 million increased 20.3% year-over-year. And our adjusted diluted net earnings per share of $0.79 increased 19.7% year-over-year.
Overall, I'm very encouraged by our start to the new year as we saw strength across the domestic business and finished as expected outside the US given the year-over-year, comparable sales first quarter surgical volumes were steady and capital spend in our categories remains consistent. Our new product launches, including the introduction of bio brace into the foot and ankle space. While early have us encouraged, we've made good progress in the supply chain challenges we were dealing with last year and our backorders now back to pre-pandemic levels relative to sales.
Most importantly, we delivered solid results on both the top and the bottom line and are set up for continued strong 2024 performance. Before closing, I want to congratulate and welcome Pat Beyer as he has been promoted to the newly created role of Chief Operating Officer. I see this as a natural evolution for conduit and our leadership team that has great commercial and operational instincts and builds tremendous teams that deliver results. He was the first member of the current team that joined Conrad back in December of 2024 he's well known across the Company and with over 30 years in the industry is well known across our markets, both domestically and internationally.
Finally, he has participated in various investor events during his time at Conmed. So he has exposure to this area of the business and many of you listening as well. Overall, I'm pleased with our start to the year excited by the broad underlying strength of our diverse portfolio and very encouraged by the positive engagement we are seeing across our business offering in all areas of the Company.
And now I'll turn the call over to Todd, who will provide a more detailed analysis of our Q1 financial performance and take you through our full year guidance.

Todd Garner

You heard all sales growth numbers I reference today will be given in constant currency. The reconciliation to GAAP numbers is included in our press release. As usual, we have included an investor deck on our website that summarizes the results of the quarter and our updated guidance for the first quarter of 2020 for our total sales increased 5.9%. As a reminder, a year ago, we grew [19.4%] organically in Q1 of 2023 as we had a tailwind from reducing the warehouse related backlog.
When we look at the first quarter over a two year stacked growth rate, the average growth rate for the Company is in the low double digits. Q1 of 2024 has also had one less selling day compared to the prior year quarter, which we estimate to have impacted consolidated growth between 100 basis points to 150 basis points. For Q1 our sales in the US increased 7.2% versus the prior year quarter and our international international sales grew 4.2%. Worldwide Orthopedics revenue grew 3.0% in the first quarter. In the US, orthopaedic sales grew 10.6% and internationally, orthopedic sales declined 1.6%. Total worldwide general surgery revenue increased 8.2% in the quarter, US general surgery revenue grew 5.7%, while internationally, general surgery revenue increased 14.1%.
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. As noted in our press release, adjusted gross margin for the first quarter was 55.6%, an increase of 160 basis points compared to the prior year quarter. This was meaningfully better than expected due to product mix in specific geographies.
Research and development expense for the first quarter was 4.4% of sales, 20 basis points higher than the prior year quarter. First quarter adjusted SG&A expenses were 38.7% of sales, 80 basis points higher than the prior year quarter on an adjusted basis, interest expense was $8.2 million in the first quarter. The adjusted effective tax rate in Q1 was 23.8% and first quarter GAAP net income was $19.7 million. This compares to GAAP net income of $1.8 million in Q1 of 2023. GAAP earnings per diluted share were $0.63 this quarter compared to $0.06 a year ago. Excluding the impact of special items in the first quarter, we reported adjusted net income of $24.8 million, an increase of 20.3% compared to the first quarter of 2023. Our Q1 adjusted diluted net earnings per share were $0.79, an increase of 19.7% compared to the prior year quarter.
Turning to the balance sheet, our cash balance at the end of the quarter was $33.9 million compared to $24.3 million as of December 31. Accounts receivable days as of March 31 were 70 days compared to 67 at the end of 2023 and 65 days a year ago. Inventory days at quarter end were 207 compared to 198 at December 31 and 215 a year ago. Long-term debt at the end of the quarter was $990.1 million versus $973.1 million as of December 31, our leverage ratio on March 31 was 4.0 times. As discussed on our last call, given the heavier cash requirements in the beginning of the year, we expect our leverage ratio to stay around 4times in the first half of 2024 and then drop into the low 3s by the end of 2024.
Cash flow provided from operations in the quarter was $29.1 million compared to cash flow used for operations of $3.8 million in the first quarter of 2023 capital expenditures in the first quarter were $2.0 million compared to $4.3 million a year ago.
Now let's turn to financial guidance. The first quarter came in a little better than we expected and we feel good about the expectations we set in January for the first half and full year, currency did get worse by about $10 million on the top line for the year. So our reported range for revenue drops by that $10 million and is now $1.33 billion to $1.355 billion. We expect the currency headwind in Q2 alone to be approximately 50 basis points.
So we're now guiding to reported growth between 4% and 6% in Q2. The currency impact is affecting gross margin as well. And we expect a portion of the mix favorability we experienced in Q1 to potentially swing the other way in Q2, resulting in gross margin improvement between 60 basis points and 80 basis points over Q2 of 2023. This would put the first half 2024 gross margins in the range of what we expected back in January. Given the currency impact and expected higher interest rates for the year compared to three months ago, we are lowering our adjusted EPS range for the year by $0.05 to be between $4.25 and $4.35, which still represents growth between 23% and 26% over 2023. Overall, we are pleased with the Q1 performance. And excluding FX, we see the year unfolding the same way we did in January. And with that, we'd like to open the call to your questions and I'll hand it back to Atif.

Question and Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Matt O'Brien of Piper Sandler. Your question, please.

Matthew O'Brien

Thanks for taking the questions that I think we can ask, too. So just for starters here, you know, good to see general surgery come in above expectations, but the continual concern is just going to remain around this competitive threats. So I'm just curious what you've seen from that competitor as far as their insufflation or is it similar to what you're offering with AirSeal? Is it more similar to some of the other previous products that have been introduced to the market that claim to be low pressure, but they're really not an end.
And what is your expectation in terms of the potential for some impact there versus being more aggressive on the traditional LAP side?
And then I do have one more follow-up. Thanks.

Curt Hartman

For that. And that was a pretty healthy string of questions there, Matt. So I may on not get to all of them so please remind me if I do miss some.
So I think where we are is it's early days, you know, to use a poker analogy, the cards we've been dealt and content. It's got the same hand we've been planned since 2016, which is a clinical insufflation hand where low pressure consistency, precision pressure, all yielding significant studies showing length of reduction length of stay our reduction in length of stay reduction in length of surgery, reduction in post-op pain. All of that is still in our hands from what we've said going back to Q2 of last year is that we believed it would be our standard insufflation device in the marketplace. I think it's early. I don't fully have all the reports on what to what they're doing. But I think we still feel very good about our position with our product in the marketplace. And as Todd said, back in January, our guidance going into this year incorporates some level of potential headwind. And our view on that has not changed, Todd. I don't know if I missed anything now.

Todd Garner

I think that's a that's right there.

Matthew O'Brien

Was one more piece to that long-winded question. It was really on the traditional lab side. Are you guys making more investments there just to get ahead of any potential pressure?

Curt Hartman

I think that's a natural progression, Matt. The on the business had zero revenue in that space. And at the end of last year, we had 40% of our AirSeal revenue in that space in that that is just the natural progression and evolution from we know how to do that. We've done it both internationally and in the domestic market and will continue to go there. It's really a byproduct of markets place saturation, and I'm not going to communicate if we're making more strategic investments in that area or not. But our sales force well understands that there's business out there to get both in general laparoscopic as well as robotic surgery, and we're going after both of them.

Matthew O'Brien

Got it. And then the follow-up and sorry for taking up so much time here is just on the ortho side, specifically Bio-Rad, as I know you've said I think you said tens of millions of dollars this year is it is it going to be more than a doubling of what you saw last year or even even higher than that? How should we kind of frame up what Bio-Rad's could look like this year?

Curt Hartman

Yes, great. Great question. And glad you asked it come when we acquired Bio-Rad's in 2022, we said it would be about $1 million in 2022, and it was right in that range. And we said in '23, it would get to mid-single digits a year ago on this call, I said high single digits and in fact, we exceeded that number last year. And we said that as we got into 2024, it would be double digit millions. And we feel very confident about that performance. And when we made that statement back in 2022, that was before we fully understood how it would play out in our foot and ankle business. And as I alluded to in my opening, we are in the early stages of launching that as indicated at Academy into foot and ankle. And we feel very good about the contributions foot and ankle and by our reps will make to the business as well. So we feel great about Bio-Reference and feel great about its future, not only in 2024, but well into the future.

Operator

Thank you. Our next question comes from the line of Yung Lee of Jefferies. Your question, please.

Young Li

Great. Thanks so much for taking my question and congrats on the promotion, Pat, and I guess to start, was the curious about that on the AirSeal side of service, we are still currently relatively low penetration in the ASC. channel and I guess I'm kind of curious about sort of the economics and reimbursement in ASCs versus the hospital inpatient setting for procedures. Is that a tougher sell into as Steve given the premium price versus conventional and for floaters?

Curt Hartman

Jan, I think I missed the first part of your question. I would have tried to answer and if I'm a little off, please please correct me here, but I think that the genesis of the question is, is it harder to sell AirSeal into the surgery center? I think the short answer is there's not yet a substantial volume of laparoscopic or robotic procedures being done in the surgery center on the general surgery overall, I don't think in any market, whether it's the hospital or the surgery center, we've run into pricing pressure because of the clinical differentiation and the substantial savings and value that facilities get from reduction in length of surgery, reduction in length of stay and reduced headaches for the clinical community in terms of post-op pain management. And in fact, we have many institutions that are taking it into their ERAS program, which is the overall anesthesia and protocol care and looking at that inclusion of AirSeal to help with those programs. So I think the ASC setting as procedures move there will be ready to go there I just don't think that's a big portion of procedure volume at this point in time in the US market specifically.

Young Li

Okay.

Curt Hartman

Hopefully I got that question.

Young Li

Yes, yes, you got it. At the bottom. Thanks for that.
I guess for my follow up, I was kind of curious on, you know, as leverage dropped to the low 3s by the end of the year. Maybe you can talk a little bit about your thoughts on M&A. When are you more comfortable doing some deals, the size of the deals and what you might be interested in?

Todd Garner

Yes, I would say no change really in our approach or filters, young, I'll remind you of our filters and how we think through acquisitions. It needs to be accretive to the Company's revenue growth, which is getting harder, right, because that revenue growth goes up. It's got to be accretive to that needs to be accretive to our gross margin profile. If not on day one. We have to have a clear line of sight for that to happen. And I'd point you to Buffalo Filter, which came in when we acquired them. They were at the corporate average, but quickly became accretive to the Company's gross margin. So that's that's one of the filters. And then it's got to have some sort of protection to it right. We don't want to buy a big splash that then becomes an anchor. So we need to see some we'd like to buy platforms more than just products and and we want to see some protection through IP or some other know-how that makes that those and that accretion that I've talked about be durable. And then, of course, the last one and sometimes the toughest one is it's got to be at a value that benefits Con Ed shareholders, right? We can't give all the value to the seller. That doesn't make any sense. And so that's the same approach we've been taking. We've been pretty successful at that. We continue to engage in the market and know what's out there. And and that's our approach to M&A.

Operator

Thank you. Our next question comes from the line of Vik Chopra of Wells Fargo. Please go ahead.

Vik Chopra

Hey, good afternoon and thank you for taking the questions to me as well. So maybe I'll just start off with patient volume trends. Can you talk about what you saw during the quarter with respect to patient volume, transport, kapidex and general surgery and any color on April perhaps? And then I had a follow-up.

Curt Hartman

Yes, I think as I tried to indicate in my opening comments, the quarter was pretty consistent availability of capital dollars, consistent with what we had historically seen, availability of procedure volumes pretty consistent with what we had seen on and whether it was orthopedics or general surgery, candidly, so that the market specialties we serve were very consistent. There's always little pockets here and there. I think there's a surgical community strike in Korea that's going on right now. That is delaying things. But those things tend to come and go, and I'm probably not going to get into Q2 at this point in time, Vic. But Tom, I think we thought things were pretty consistent in Q1.

Vik Chopra

Okay. Thank you. And then for my follow-up, I think last quarter you called out some near term challenges in your foot and ankle business and correctly, you said that you expect to get back to full full stride as you get into the second quarter. Can you just provide an update on where you are with the foot and ankle business and the performance this quarter.
Thank you.

Curt Hartman

That's a great question. And a couple of things were I'm going to go back in time and then talk about current. Remember that was a smaller business with the founder start-up management team and we largely left it alone. You know, it's kind of a first do no harm philosophy when we do acquisitions, as we further integrated them in his time passed by the founder had told us he was he was going to retire and that transition occurred in the second half of last year. That business reported into Pat Pat went out, did a successful search brought in a new general manager from third quarter of last year that individual is getting up to speed was out at Academy with Foot and Ankle team and during a o f showing products, meat and meat and customers has a background in the space anyway, which was important as well. In addition, we started doing more of the later stage integration work, but the real drag on that business is we had run into some supply challenges with that business. Kind of our our Orthopedics category in the second half of last year really had some struggles. And we said, as we came into 2024 we would be working through those in first quarter. But again, it takes sales force and customer engagement, little bit of time to get back to where it was. And so as we got into the second half of 2024. We thought our Orthopedics platforms be at Foot and Ankle, be it. The legacy orthopedics would be right back on stride and at the growth rates that we expected. And honestly, our Q1 growth rate domestically for orthopedics was was a positive step in the right direction. And we like the trends and we think we're on track with what we said in the January call.

Operator

Thank you. Our next question comes from the line of Kristin Stewart of CL King. Your question, please. Kristian, say thanks for taking the question.

Kristen Stewart

And I just had a question on the international performance in US. or in on orthopedics that came in a little bit below where it was. Is that just kind of the foot and ankle impact? Or is there more there?

Curt Hartman

No, I would say it's some looking at the warehouse catch up that moved into Q1 of 2023, Kristin and a lot of orthopedics capital shipments in Q1 of 2023 that didn't come. It was just a lot of volume in Q1 and it really didn't have anything to do with Foot and Ankle at all.

Kristen Stewart

Okay. Perfect. And then, Todd, just on the gross margin, I just wanted to make sure I understood your comments. Do you still expect gross margins to be up 100 basis points to 150 basis points for the year. Has that changed?

Todd Garner

Yes, no change to the full year guide there, Chris.

Operator

Thank you. Our next question comes from the line of Rick Wise of Stifel. Please go ahead.
We are direct, Rick, please make sure your line is immediate and it's going to speak or?

Frederick Wise

Yes, oh, I didn't hear I didn't hear my name said. Sorry about that. I'm sure. Thanks, guys. Good evening. I just want to make for Todd, that I'm understanding of carefully the guide. I understand what you're saying about the second quarter and the currency, but it would seem like the implication is that we see a strong acceleration in second half to get to your now new full year guide midpoint. I'd just maybe just at a high level, your confidence in the ramp and maybe talk to us about some of the drivers of that acceleration? And then and maybe just what is always the moving pieces in the portfolio? What are you feeling particularly good about that maybe could drive you to be towards the upper end or better as we contemplate the rest of the year?

Todd Garner

So really no change in how we see the year or first half versus second half versus three months ago. So we're pleased with Q1 came in a little better than we thought. We still see the year playing out the way we laid it out last year. Obviously, currency has gotten a little worse for everybody and interest rates are obviously not projected to go down like they were three months ago. So those are really the only two changes to how we see the year. So and as Curt talked about earlier, the orthopedics business for the last couple of quarters, we've been talking about supply challenges and we think Q2 is the is the quarter where those teams kind of get their legs back under and get back out, engaging, get back on offense and really the results of that show up in the back half of this year. So that's how we saw the year three months ago. And that's how we see the year today.

Curt Hartman

That Rick just got out in the press release on the product side, it's the company has built a lot of diversity in its portfolio with a lot of new products. You are you were at Academy, you saw some of the new products we are showing there. Obviously, we remain incredibly excited by bio brace. And now with the expansion into Foot and Ankle, we've we've got the entirety of the foot and ankle portfolio were clear in the back order and the teams getting back on offense. Our General Surgery business, both internationally and in the US remains very strong. And so it's not one or two products. It's really the diversity of the portfolio and the market segments we call on and done. I think sitting here today, we feel pretty good about our offering. So I think that's what that's what gives us confidence in that second half. And that's consistent with what we said in January that the second half was going to be a big second half?

Todd Garner

Yes. And I'll just remind you that that's that's really those growth rates that we're talking about in the second half are not new growth rates for us, right? That's what we did in the quarters last year that didn't have abnormal comp and we were in that kind of low double digit organic growth rate, right? So that's that's what this portfolio does. So that's not like a new level that we're trying to aspire to. We're working through had a couple of quarters of challenges on the supply side, right, which were getting behind us, but then it gets back to what this business has already shown that it can do.

Frederick Wise

I wanted to I've got two more questions, if I could. I want to come back to AirSeal or Kurt, maybe you could expand a little more on how your AirSeal US commercial strategy is evolving in recent months, I mean, strikes me, and this might be very naive of me to say it this way, but strikes me that you faced some pressures in one market or I could with one customer group. You focused your team commercially more aggressively in some other segments or geographies. I don't know how you're thinking about it, but I mean, there's no doubt in my mind that AirSeal is a great product and embedded it doesn't it doesn't own the whole market there opportunities. How are you thinking about? Are there opportunities that so maybe you do end up with a little more pressure on one side? Or are there other areas to tackle that could help you limit or minimize or partially offset whatever pressures folks are worried about?

Curt Hartman

Yes, Rick, it listen, I'm not going to get into competitive strategies on a public call, but I think our teams are well versed on going to where the business opportunity is and taking advantage of that and especially when you have a clinically differentiated product that has been used over millions of patient lives with a floor of studies around all things related to patient outcomes. We believe that that combination, when presented to the surgical community, independent of the special tea setting is a game winner. And our view on that has not changed. And if it's a tougher sell in this market, we can either buy new strategies to sell into that market or we can go to where it's not as tough to sell some, but let's be brutally honest, medtech is a tough sell across the board because you have to convince people of clinical value and you have to work through value analysis committees, and we know how to do both of those with AirSeal because of what it brings to the table as demonstrated in the eight years that we've owned it and in the years before we owned it, that body of evidence just grows daily. So we feel very good independent of what may be in front of us, whatever path that we're going to find success here with AirSeal.

Frederick Wise

Got you. And I apologize for asking three, if you don't mind. Just want to make sure we get in the smoke evacuation legislation to more states recently passed smoke evacuation legislation, I think both West Virginia and regular or Virginia. And so I think you're up to 17 states now you got more and more states were further along post legislation passing are you or what are you seeing? Is it changing the dynamic and the outlook for the business? Any color would be great. Thank you so much.

Curt Hartman

I think come it's interesting how you would think at this point there be actually more legislation passing. It's been a little bit slow. And I think if my memory and reading the data correctly, I think Florida actually pulled the legislation, so they have actually taken a pause for a moment, Mike, it could be off on that. I'll have to double check that, but that's what my memory says. What we know is where states have passed legislation is that over time as that legislation goes into effect, the growth rates in those markets is higher and we think that's what will happen in West Virginia and Virginia and <unk>. We will support the legislation. We support the operating room staff nursing to have a safe and healthy environment. So our offense here has not changed. We still believe we have a best-in-class product in the marketplace. We still believe we have a comprehensive portfolio that addresses all procedure types where smoke is created, and we still believe we have it in the hands of a great sales force around the world.

Todd Garner

Yes. And just to clarify on Florida. So there was a Florida bill in process that that process ended on March eighth. So that was kind of a floor was in had something in line to pass. But it didn't. It didn't pass and they have they're going to have to restart that bill.

Operator

Thank you.
Our next question comes from the line of Robbie Marcus of JPMorgan. Please go ahead, Robby.

Robert Marcus

Oh, great. Thanks for taking the question. Todd, just wanted to clear up some stuff on the guidance. You guys beat by $5 million on the top line $0.05 on the bottom line, and there's a $0.10 headwind or a $10 million headwind for FX and you're lowering by $0.05. So is there $5 million I'm missing or is it really you're lowering by $10 million, but it's a $15 million headwind. And is it a $0.05 headwind for FX are really a $0.10 set to get to that down $0.05 after the beat in Q1?

Todd Garner

Thanks for the clarifying question, Robbie. So the reduction on the year is $10 million, which is entirely due to FX. So no change to our full year guide, you are correct that we beat consensus in Q1 by $5 million on the top and $0.05 on the bottom. What we're saying is that a relatively small beat does not change how we see the year on a constant currency basis. So no change to our full year guidance in constant currency. The only change is due to currency, which was that $10 million. So some so we still see the first half the way we saw it three months ago, even though we beat Q1 by a little bit, we still see the first half the same. And we still see the second half the same as we did the only adjustment being currency for the full year. And that goes for the top and bottom.

Robert Marcus

Okay. And then maybe just that to help everybody get level set on what your first half expectations were anywhere you want to help set second quarter as we think about EPS or interest expense, which came in a bit lower and you reiterated gross margin, which I believe FX gets offset in sales?
Correct. Right. So that wouldn't change any of the OpEx guidance?

Todd Garner

No, we don't we definitely see FX affecting gross margin as well. So yes, so that's why I did provide the a little more detail on the Q2 in my scripted comments. So we see them Q2 as a 4% to 6% reported growth. So that would mean, as I said, there's 50 basis points of currency headwind there so that would be 4.5% to 6.5% constant currency growth for Q2, 4% to 6% reported for Q2. I did not give specific EPS guidance for Q2 but I did give that back in Q1, we kind of talked about that. And I think I think the Street has that in the general area. So if you'd take the commensurate impact on the bottom line to get to those revenue numbers, I think we should be in the right place.

Robert Marcus

Great.Appreciate it. Thank you very much.

Operator

Thank you.
Our next question comes from the line of Travis Steed of BofA Securities. Your question, please.

Travis Steed

Thanks for taking the question. Todd, maybe as a follow-up on Q2, I think I heard adjusting for currency, you're at like 4.5% to 6.5% constant currency growth in the bipolar Q1, I just want understand that the cadence for I assume supply gets better in Q2 or anything to kind of consider early, why we wouldn't see a step up and growth rate in Q2.
And then I'll ask my second question, it's just on the antibodies and bio routes. I assume you still assume that businesses double-digit growth in 2024?

Todd Garner

Yes. So yes, sorry, I'll take the second first because I remembering that better. Yes, do we still think we still see those growing double digits for the year.
Okay. So Q2, why 4.5% to 6.5% we just did 5.9%. Those that's all kind of in the same range as I see it. So I see those as pretty consistent. You are correct that supply the supply issue should be less as we move forward. But that's as we look at it, the normal seasonality that happens. But between Q1 and Q2 sequentially, I think I think our Q2 guidance is reasonable based on what that normal sequential seasonality is. Now when you start comparing that against the prior years, it's gets a little noisy, right? Because not every quarter is normal. And there's been and there's been if you go back a couple of years, you've got COVID affecting how the those played out sequentially. But as we looked at a pre-pandemic world. And what would our business normally does between Q1 to Q2 sequentially, we think that where our guide is is the right place to be for now.

Operator

Thank you. Our next question comes from the line of Mike Matson of Needham. Please go ahead, Mike.

Mike Matson

Yes, I think that, Tom, I just really have one question, and I want to follow up on Robbie's question about the change in the guidance. So look, I understand you don't give quarterly guidance, but you did beat where consensus was in the first quarter by about $5 million and then you're lowering for the year by $10 million. So I think that the no, I guess the pessimistic view here is that you're taking down guidance for the remainder of the year, but like $5 million, I know it's not a big number, but in an environment where people are, we are hyper focused on any potential impacts from Intuitive. It seems like it kind of sends a bad sign, I guess. So I just want to know why not just take it down by the $5 million net impact in netting out the currency versus the $5 million from the first quarter, $5 million upside from the first quarter.

Todd Garner

And Mike, we take our job seriously. We give you guidance based on our latest information and there is no change to how we see the year. You are right. We had a small beat in Q1. We don't think that is big enough to alter our view of the year. We still see the year the same way we did three months ago, and we've given the guidance we've given to date and we think it's appropriate.

Mike Matson

Okay. I understand, but I guess of the $5 million effective reduction for the rest of the year, what's causing that, I guess maybe coming put them a different way.

Todd Garner

That nothing has changed on how we see the year 20 days later.

Operator

Yes, thank you. I would now like to turn the conference back to Curt Hartman for closing remarks.Sir.

Curt Hartman

Thank you Atif, and I want to thank everybody for their time today, and we look forward to speaking with you on our next earnings call. Thank you, and have a good evening.

Operator

This concludes today's conference call and thank you for participating. You may now disconnect.