Integra LifeSciences Holdings Corporation IART delivered adjusted earnings per share (EPS) of 41 cents for the third quarter of 2024, a 46.1% plunge year over year. The metric, however, surpassed the Zacks Consensus Estimate by 5.1%.
The adjustment excludes the impact of certain non-recurring charges like structural optimization charges, the Boston recall/Braintree transition and EU Medical Device Regulation charges among others.
GAAP loss per share in the third quarter was 14 cents against GAAP EPS of 24 cents in the year-ago quarter.
Following the earnings announcement, shares of IART rose 25.1% at yesterday’s close.
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Revenue Discussion
Total revenues in the reported quarter fell 0.4% year over year to $380.8 million. The metric topped the Zacks Consensus Estimate by 1.3%. Organically, revenues declined 8.6% year over year. Revenues decreased 10.3% on an organic basis, excluding the Boston manufacturing plant’s production.
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Coming to product categories, revenues in the Codman Specialty Surgical (CSS) segment rose 1% year over year on a reported basis (organically, down 10.7%) to $270.8 million. The downside can be attributed to a 16% decline in Neurosurgery sales on an organic basis, primarily due to temporary shipping holds in CSF management and Neuro monitoring as well as supply challenges in Dural access and repair.
However, the company reported mid-single-digit growth in Advanced Energy, driven by CUSA capital and CUSA disposables.
Instruments within CSS grew 8.7% on an organic basis. ENT sales too grew substantially, banking on the Acclarent acquisition
Tissue Technologies revenues totaled $110.1 million in the third quarter, down 3.6% year over year on a reported basis and 3.7% on an organic basis. Excluding the company’s products manufactured in Boston, Tissue Technologies sales declined 9.4% year over year.
The downside was due to the impact of a low double-digit decline in Integra Skin due to production challenges. However, the company reported low double-digit growth in DuraSorb, MicroMatrix and Cytal. Sales in private label grew 13.3% Organically.
Margin Trend
In the reported quarter, gross profit totaled $200.2 million, down 8.3% year over year. The gross margin contracted 452 basis points (bps) to 52.6%.
Selling, general and administrative expenses increased 9.4% to $177.2 million in the quarter under review, while research and development expenses rose 3.2% to $27.4 million.
Overall, adjusted operating loss was $4.4 million against adjusted operating profit of $29.8 million a year ago.
Financial Position
Integra exited third-quarter 2024 with cash and cash equivalents and short-term investments of $277.6 million, down from $297 million at the end of second-quarter 2024.
Cumulative net cash flow from operating activities at the end of the third quarter of 2024 was $78.6 million compared with $81.2 million a year ago.
Guidance
The company updated its financial guidance for 2024.
For 2024, IART now projects revenues in the band of $1.609 billion-$1.619 billion (compared with the previous guidance of $1.61 billion-$1.63 billion). This suggests reported growth of 4.4%-5% and organic decline of 1% to 1.7%. The Zacks Consensus Estimate for the same is pegged at $1.61 billion.
The company projects adjusted EPS for 2024 between $2.41 and $2.49 (tightened from the previously guided range of $2.41 and $2.57). The Zacks Consensus Estimate for the metric is pegged at $2.45.
The company also provided fourth-quarter 2024 outlook.
For the fourth quarter of 2024, Integra expects reported revenues in the range of $441 million-$451 million, suggesting reported growth of 11.1% to 13.6% and organic growth of 2% to 4.5%. The Zacks Consensus Estimate for the same is pegged at $449.9 million.
Adjusted earnings per share are expected to be in the range of 81-89 cents. The Zacks Consensus Estimate for the metric is pegged at 88 cents.
Our Take
Integra exited the third quarter of 2024 with better-than-expected results, with both earnings and revenues surpassing the consensus mark. However, the year-over-year decline in both earnings and revenues is concerning. The CSS business suffered from shipping holds. According to the company, these supply challenges overshadowed the continued significant demand for the company’s neurosurgery products. Within Tissue Technologies, revenues were down as production could not meet the strong demand for Integra Skin.
Unfavorable product and geographic mix and Boston quality project expenses exerted pressure on the bottom line. The tightening of the top end of the guidance range reflects recent quality holds and spending increase resulting from the ongoing remediation work taking place as Integra implements the compliance master plan.
On a positive note, the shipping holds were largely resolved within the third quarter and the remaining shipping holds are in line with the company’s July expectation. The company currently expects a significant step-up in sequential revenues in the fourth quarter, driven by the resolution of the majority of the shipping holds.
Zacks Rank & Key Picks
Integra currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, ResMed Inc. RMD and Boston Scientific Corporation BSX.
Quest Diagnostics, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2024 adjusted EPS of $2.30, beating the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion outpaced the consensus mark by 3.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has a long-term estimated growth rate of 6.5%. DGX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.4%.
ResMed reported first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 13.6%. RMD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.4%.
Boston Scientific reported third-quarter 2024 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.6%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.3%.
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