A month has gone by since the last earnings report for Integra LifeSciences (IART Quick QuoteIART - Free Report) . Shares have added about 10.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Integra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Integra's Q3 Earnings Miss Estimates, 2023 View Cut

Integra LifeSciences delivered adjusted earnings per share of 76 cents in the third quarter of 2023, down 11.6% year over year. The metric missed the Zacks Consensus Estimate by 2.6%.

The adjustment excludes the impact of certain non-recurring charges like amortization expenses, the Boston recall and EU Medical Device Regulation charges.

GAAP earnings per share in the third quarter was 24 cents, plunging 90.6% from 60 cents in the year-ago quarter.

Revenue Discussion

Total revenues in the reported quarter dropped 0.7% year over year to $382.4 million. The metric missed the Zacks Consensus Estimate by 1.4%. Organically, revenues fell 0.4% year over year.

Segmental Details

Coming to product categories, revenues in the Codman Specialty Surgical (“CSS”) segment rose 7.4% year over year on a reported basis to $268.2 million (organically, up 7.4%). This improvement can be attributed to low-double-digit growth in CSF management and Neuro Monitoring driven by Certas Plus valves, BactiSeal catheters and ICP microsensors, high-single-digit growth in Dural Access and Repair driven by DuraGen DuraSeal and Mayfield, low single-digit decline in Advanced Energy due to timing of CUSA capital orders, and mid-single-digit growth in Instruments. This figure compares with our third quarter’s CSS model’s projection of $268.4 million.

Tissue Technologies revenues totaled $114.2 million in the third quarter, down 15.6% year over year on a reported basis and 15.1% on an organic basis. The downside was due to the impact of the lost revenues and an increase in the return provision related to the Boston product recall, which was partially offset by double-digit growth from MicroMatrix, Cytal, Gentrix and amniotics. This figure compares with our third quarter’s Tissue Technologies model’s projection of $119.6 million.

Margin Trend

In the reported quarter, gross profit totaled $218.3 million, down 7.7% year over year. The gross margin contracted 437 basis points (bps) to 57.1%. The company-adjusted gross margin was 64.6%.

Selling, general and administrative expenses rose 12.6% to $161.9 million in the quarter under review, while research and development expenses increased 7.5% to $26.6 million.

Overall, adjusted operating profits were $29.8 million, down 56.3% year over year. Adjusted operating margin saw a 991-bps contraction year over year to 7.8%.

Financial Position

Integra exited the third quarter with cash and cash equivalents of $273.7 million, down from $309.2 million at the end of second-quarter 2023.

Cumulative net cash flow from operating activities at the end of the third quarter of 2023 was $81.2 million compared with $1.79 billion at the end of third-quarter 2022.

Guidance

The company updated its financial guidance for 2023.

For the full year, IART projects revenues in the band of $1.541-$1.547 billion (the previous guidance was $1.55-$1.56 billion). This suggests reported growth of (1.1%)-(0.7%) and organic growth of 0.1-0.5%. The Zacks Consensus Estimate for the same is pegged at $1.56 billion.

The company projects adjusted EPS guidance for 2023 in the $3.10-$3.14 (the previous guided range was $3.10-$3.18). The Zacks Consensus Estimate for the same is pegged at $3.14.

Integra also provided its guidance for the fourth quarter of 2023.

For the fourth quarter, Integra expects revenues in the range of $397-$403 million, which suggests growth of approximately (0.4%) to 1.1% and organic growth of (0.8)-0.7% year over year. The Zacks Consensus Estimate for the same is pegged at $405.9 million.

Adjusted EPS is estimated in the range of 89-93 cents. This considers the impact of the acceleration of the Boston recall, the strength of the U.S. dollar, and an updated tax rate.

The Zacks Consensus Estimate for adjusted EPS is pegged at 92 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Integra has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Integra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Integra belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Intuitive Surgical, Inc. (ISRG Quick QuoteISRG - Free Report) , has gained 21.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Intuitive Surgical, Inc. reported revenues of $1.74 billion in the last reported quarter, representing a year-over-year change of +12%. EPS of $1.46 for the same period compares with $1.19 a year ago.

For the current quarter, Intuitive Surgical, Inc. is expected to post earnings of $1.47 per share, indicating a change of +19.5% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Intuitive Surgical, Inc. Also, the stock has a VGM Score of D.