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Integra Lifesciences (IART) Q4 Earnings Top, Revenues Drop Y/Y
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Integra LifeSciences Holdings Corporation (IART - Free Report) delivered adjusted earnings per share (EPS) of 94 cents in the fourth quarter of 2022 (up 11.9% year over year). The reported figure surpassed the Zacks Consensus Estimate by 1.1%.
The adjusted EPS excludes the impact of certain non-recurring charges like structural optimization charges, divestiture, acquisition and integration, amortization expenses related to intangible assets and medical device regulation charges among others.
Without adjustments, the company registered a GAAP EPS of 63 cents, up 18.9% from the year-ago quarter.
For the full year, adjusted EPS was $3.36, up 5.7% from the 2021 reported figure and ahead of the Zacks Consensus Estimate by 0.3%.
Revenues
During the quarter under review, revenues decreased 1.8% year over year to $398 million. The decrease was primarily due to an unfavorable FX impact of $11 million and the impact of the Traditional Wound Care (TWC) divestiture. The reported figure compares with the Zacks Consensus Estimate of $397.3 million. Organically, revenues increased 2.9% year over year.
For the full year, revenues grossed $1.56 billion which reflected a 0.9% increase from the 2021 figure on a reported basis (up 4.2% organically). Full-year revenues matched with the Zacks Consensus Estimate.
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Coming to product categories, revenues from the Codman Specialty Surgical segment (66% of revenues), decreased 2.2% year over year on a reported basis to $264.6 million (organically, up 1.8%). Within the segment, Instruments sales grew by 2.2% at the Constant Exchange Rate.
The organic revenue growth of 1.7% in Neurosurgery was driven by strong growth in CUSA capital and disposables in the United States and global small capital sales, offset by the recall impact of CereLink monitors.
The Tissue Technologies segment (34% of the revenues), reported revenues of $133.4 million in the fourth quarter, down 1.1% year over year on a reported basis and up 5% on an organic basis. The organic growth was mainly due to sales in Wound Reconstruction and Care, with strength from Integra Skin, amniotics, Primatrix, MicroMatrix and Cytal, partially offset by a decline in the private label.
Margins
The gross profit in the reported quarter totaled $250.1 million, up 0.3% year over year. The gross margin expanded 136 basis points (bps) to 62.8%.
SG&A expenses declined 6.4% to $151.9 million in the quarter under review, while research and development expenses rose 8.3% to $26.8 million.
The adjusted operating profit was $71.4 million, up 14.6% year over year. The adjusted operating margin expanded 257 bps to 17.9%.
Financial Position
Integra exited 2022 with cash and cash equivalents of $456.7 million, down from the reported figure of $513.4 million at the end of 2021.
The cumulative net cash flow from operating activities at the end of 2022 was $264.4 million compared with $312.4 million in the year-ago period.
On Jan 26, 2023, the company entered into an accelerated share repurchase plan with Goldman Sachs to buy back $150 million of its outstanding common stock having a par value of $0.01 per share. The transactions are expected to be completed in the first half of 2023.
Guidance
The company provided 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 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 sequential improvement from first to second-half growth is primarily driven by the gradual recovery of supply throughout the year, the normalization of private label orders from 2022, the recovery of China’s business post-pandemic lockdowns, and the timing of the CereLink relaunch.
The Zacks Consensus Estimate for the same is pegged at $1.61 billion.
The company expects to deliver adjusted earnings per diluted share 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 $3.51.
Integra’s guidance for the first quarter of 2023 takes into account the timing of the CereLink relaunch and the recent acquisition of Surgical Innovation Associates and the divestiture of the TWC business.
For the first quarter, Integra expects revenues in the range of $370-$376 million, which suggests growth of approximately -1.5% to flat and organic growth of 2-3.5% year over year. The Zacks Consensus Estimate for the same is pegged at $379.6 million.
The adjusted EPS is estimated in the range of 72-76 cents. The Zacks Consensus Estimate for the same is pegged at 78 cents.
Our Take
Integra exited the fourth quarter of 2022 with an earnings beat and a year-over-year decline in revenues. The decrease was mainly due to a significant FX headwind and the impact of the TWC divestiture.
On a positive note, consistent demand recovery in markets across various segments and key product lines at near pre-pandemic levels fuelled by the gradual improvement of the supply chain, buoys optimism. The relaunch of Cerelink at the end of the second quarter of 2023 is also a positive.
Within the Tissue Technologies segment, the increased capacity and productivity from the integration of the ACell portfolio delivered double-digit growth in the quarter. Expansion in both margins is also impressive.
With plans for international expansion in the pipeline, an improvement in the gross margin through a favorable product mix and a focus on price capture and increased efficiencies within the company’s manufacturing sites, Integra expects accelerated growth in 2023 and strengthened margin accretion.
Zacks Rank and Key Picks
Integra currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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Integra Lifesciences (IART) Q4 Earnings Top, Revenues Drop Y/Y
Integra LifeSciences Holdings Corporation (IART - Free Report) delivered adjusted earnings per share (EPS) of 94 cents in the fourth quarter of 2022 (up 11.9% year over year). The reported figure surpassed the Zacks Consensus Estimate by 1.1%.
The adjusted EPS excludes the impact of certain non-recurring charges like structural optimization charges, divestiture, acquisition and integration, amortization expenses related to intangible assets and medical device regulation charges among others.
Without adjustments, the company registered a GAAP EPS of 63 cents, up 18.9% from the year-ago quarter.
For the full year, adjusted EPS was $3.36, up 5.7% from the 2021 reported figure and ahead of the Zacks Consensus Estimate by 0.3%.
Revenues
During the quarter under review, revenues decreased 1.8% year over year to $398 million. The decrease was primarily due to an unfavorable FX impact of $11 million and the impact of the Traditional Wound Care (TWC) divestiture. The reported figure compares with the Zacks Consensus Estimate of $397.3 million. Organically, revenues increased 2.9% year over year.
For the full year, revenues grossed $1.56 billion which reflected a 0.9% increase from the 2021 figure on a reported basis (up 4.2% organically). Full-year revenues matched with the Zacks Consensus Estimate.
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Integra LifeSciences Holdings Corporation price-consensus-eps-surprise-chart | Integra LifeSciences Holdings Corporation Quote
Segmental Details
Coming to product categories, revenues from the Codman Specialty Surgical segment (66% of revenues), decreased 2.2% year over year on a reported basis to $264.6 million (organically, up 1.8%). Within the segment, Instruments sales grew by 2.2% at the Constant Exchange Rate.
The organic revenue growth of 1.7% in Neurosurgery was driven by strong growth in CUSA capital and disposables in the United States and global small capital sales, offset by the recall impact of CereLink monitors.
The Tissue Technologies segment (34% of the revenues), reported revenues of $133.4 million in the fourth quarter, down 1.1% year over year on a reported basis and up 5% on an organic basis. The organic growth was mainly due to sales in Wound Reconstruction and Care, with strength from Integra Skin, amniotics, Primatrix, MicroMatrix and Cytal, partially offset by a decline in the private label.
Margins
The gross profit in the reported quarter totaled $250.1 million, up 0.3% year over year. The gross margin expanded 136 basis points (bps) to 62.8%.
SG&A expenses declined 6.4% to $151.9 million in the quarter under review, while research and development expenses rose 8.3% to $26.8 million.
The adjusted operating profit was $71.4 million, up 14.6% year over year. The adjusted operating margin expanded 257 bps to 17.9%.
Financial Position
Integra exited 2022 with cash and cash equivalents of $456.7 million, down from the reported figure of $513.4 million at the end of 2021.
The cumulative net cash flow from operating activities at the end of 2022 was $264.4 million compared with $312.4 million in the year-ago period.
On Jan 26, 2023, the company entered into an accelerated share repurchase plan with Goldman Sachs to buy back $150 million of its outstanding common stock having a par value of $0.01 per share. The transactions are expected to be completed in the first half of 2023.
Guidance
The company provided 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 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 sequential improvement from first to second-half growth is primarily driven by the gradual recovery of supply throughout the year, the normalization of private label orders from 2022, the recovery of China’s business post-pandemic lockdowns, and the timing of the CereLink relaunch.
The Zacks Consensus Estimate for the same is pegged at $1.61 billion.
The company expects to deliver adjusted earnings per diluted share 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 $3.51.
Integra’s guidance for the first quarter of 2023 takes into account the timing of the CereLink relaunch and the recent acquisition of Surgical Innovation Associates and the divestiture of the TWC business.
For the first quarter, Integra expects revenues in the range of $370-$376 million, which suggests growth of approximately -1.5% to flat and organic growth of 2-3.5% year over year. The Zacks Consensus Estimate for the same is pegged at $379.6 million.
The adjusted EPS is estimated in the range of 72-76 cents. The Zacks Consensus Estimate for the same is pegged at 78 cents.
Our Take
Integra exited the fourth quarter of 2022 with an earnings beat and a year-over-year decline in revenues. The decrease was mainly due to a significant FX headwind and the impact of the TWC divestiture.
On a positive note, consistent demand recovery in markets across various segments and key product lines at near pre-pandemic levels fuelled by the gradual improvement of the supply chain, buoys optimism. The relaunch of Cerelink at the end of the second quarter of 2023 is also a positive.
Within the Tissue Technologies segment, the increased capacity and productivity from the integration of the ACell portfolio delivered double-digit growth in the quarter. Expansion in both margins is also impressive.
With plans for international expansion in the pipeline, an improvement in the gross margin through a favorable product mix and a focus on price capture and increased efficiencies within the company’s manufacturing sites, Integra expects accelerated growth in 2023 and strengthened margin accretion.
Zacks Rank and Key Picks
Integra currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.