Yahoo Finance Integra's (IART) Q1 Earnings Match Estimates, Margins Contract
Integra LifeSciences Holdings Corporation IART delivered adjusted earnings per share (EPS) of 74 cents for the first quarter of 2023, unchanged year over year. The metric also came in line with the Zacks Consensus Estimate.
The adjustment excludes the impact of certain non-recurring charges like amortization expense and EU Medical Device Regulation charges among others.
GAAP EPS for the first quarter was 29 cents, a 25.6% plunge from 39 cents in the year-ago quarter.
Revenue Discussion
Total revenues in the reported quarter improved 1.1% year over year to $380.8 million. The metric exceeded the Zacks Consensus Estimate by 2%. Organically, revenues increased 4.6% year over year. The quarter’s figure exceeded the company’s first-quarter sales estimate band of $357 million to $365 million.
Segmental Details
Coming to product categories, revenues from the Codman Specialty Surgical (“CSS”) segment rose 0.3% year over year on a reported basis to $248.1 million (organically, up 3.5%). This improvement can be attributed to strength in CUSA Clarity capital and disposables and Certas Plus valves, including high single-digit growth internationally, led by Japan and China. This was partially offset by the loss of CereLink monitor revenues in the quarter, following the third-quarter 2022 recall. Also, continued supply challenges dented growth.
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Integra LifeSciences Holdings Corporation price-consensus-eps-surprise-chart | Integra LifeSciences Holdings Corporation Quote
Tissue Technologies revenues totaled $132.7 million in the first quarter, up 2.6% year over year on a reported basis and 6.8% on an organic basis. The organic growth was led by broad strength in the company’s Wound Reconstruction portfolio, with double-digit growth from Integra Skin, MicroMatrix, Gentrix, and Cytal and high single-digit growth from SurgiMend. However, the growth was partially offset by continued pressure in Private Label as the company’s partners normalized their inventory levels.
Margin Trend
In the reported quarter, gross profit totaled $232.9 million, down 0.5% year over year. The gross margin contracted 100 basis points (bps) to 61.2%. The company-adjusted gross margin was 67.3%.
Selling, general and administrative expenses rose 4.2% to $166.7 million in the quarter under review, while research and development expenses increased 10.9% to $26.7 million.
Overall, adjusted operating profit rose $39.5 million, up 21.1% year over year. Adjusted operating margin saw a 292-bps contraction year over year to 10.4%.
Financial Position
Integra exited the first quarter with cash and cash equivalents of $307.4 million, down from $456.6 million at the end of fourth-quarter 2022.
Cumulative net cash flow from operating activities at the end of the first quarter was $26.2 million compared with $44.3 million in the year-ago period.
Guidance
The company reaffirmed its financial guidance for 2023. The guidance takes into account the recovery of markets prior to pandemic levels and the impact of Integra’s commercial capability build-out and new products.
For the full year, IART once again projects revenues in the band of $1.60-$1.62 billion. This suggests reported growth of approximately 2.9%-4% and organic growth of 4%-5.2%.
The Zacks Consensus Estimate for the same is pegged at $1.61 billion.
The company also reiterated its adjusted earnings per share guidance for 2023 in the band of $3.43-$3.51, considering the impact of the share repurchase. The Zacks Consensus Estimate for the same is pegged at $3.48.
Integra also provided its guidance for the second quarter of 2023.
For the second quarter, Integra expects revenues in the range of $396-$400 million, which suggests growth of approximately (0.5%) to 0.5% and organic growth of 1.5-2.5% year over year. The Zacks Consensus Estimate for the same is pegged at $404.1 million.
Adjusted EPS is estimated in the range of 75-79 cents. This considers the impact of the acceleration of Boston quality system upgrades from the second half of the year into the second quarter.
The Zacks Consensus Estimate for adjusted EPS is pegged at 86 cents.
Our Take
Integra exited the first quarter of 2023 with in-line earnings and a revenue beat.
On a positive note, first-quarter revenues were above the company’s guidance range, with organic growth of 4.6% year over year. Tissue Technologies, in particular, registered strong double-digit growth, banking on strong performances of a number of leading products in the wound reconstruction franchise. The company also launched MicroMatrix in Europe where it is seeing positive initial feedback from wounds and reconstructive surgeons.
In CSS, the company also had a good start to the year with double-digit growth in the CUSA product line and programmable valves as well as strong performance in instrument sales.
On the flip side, unfavorable product and geographic mix as well as Boston quality project expenses are putting pressure on the bottom line. According to the company, the temporary pressures represented a headwind of approximately 120 basis points in the quarter and offset its positive revenue performance and continuous cost improvement activities.
Zacks Rank & Key Picks
Integra currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Bio-Rad Laboratories BIO, Henry Schein, Inc. HSIC and Avanos Medical, Inc. AVNS.
Bio-Rad Laboratories, carrying a Zacks Rank of 2 (Buy), at present is slated to release first-quarter 2023 earnings on May 4. BIO has an earnings yield of 3.3% against the industry’s negative yield of 2.9%.
BioRad Laboratories’ earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 27.54%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Henry Schein, carrying a Zacks Rank #2, is expected to release first-quarter 2023 earnings soon. HSIC has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has gained 22.2% compared with the industry’s 19.7% rise in the past six months.
Avanos, carrying a Zacks Rank #2, is scheduled to release first-quarter 2023 earnings on May 3. AVNS has an estimated growth rate of 1.8% for 2023. AVNS earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has gained 46.3% compared with the industry’s 17.5% rise in the past six months.
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Integra LifeSciences Holdings Corporation (IART) : Free Stock Analysis Report
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