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Integra's (IART) Q2 Earnings and Revenues Top, Margins Down
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Integra LifeSciences Holdings Corporation (IART - Free Report) delivered adjusted earnings per share (EPS) of 63 cents in the second quarter of 2024, down 11.3% year over year. The metric surpassed the Zacks Consensus Estimate by 1.6%.
The adjustment excludes the impact of certain non-recurring charges like structural optimization charges, the Boston recall and EU Medical Device Regulation charges.
GAAP loss per share in the second quarter was 16 cents against GAAP EPS of 5 cents in the year-ago quarter.
Revenue Discussion
Total revenues in the reported quarter rose 9.7% year over year to $ 418.2 million. The metric topped the Zacks Consensus Estimate by 1.4%. Organically, revenues increased 2.3% year over year. Revenues increased 0.3% on an organic basis, excluding the Boston manufacturing plant’s production.
Segmental Details
Coming to product categories, revenues in the Codman Specialty Surgical (CSS) segment rose 11.3% year over year on a reported basis to $301.8 million (organically, up 0.9%). The upside can be attributed to high-single-digits growth in Dural Access and Repair, driven by DuraGen and Mayfield, low-single-digits growth in advanced energy driven by Aurora, and low-double-digits ENT growth reflecting MicroFrance ENT instruments.
Tissue Technologies revenues totaled $116.4 million in the second quarter, up 5.6% year over year on a reported basis and 5.7% on an organic basis. The upside was due to the impact of high-double-digit growth in DuraSorb, mid-double-digit growth in Gentrix, along with low double-digit growth in MicroMatrix, Cytal and amniotics.
Margin Trend
In the reported quarter, gross profit totaled $225.9 million, up 9.1% year over year. However, the gross margin contracted 27 basis points (bps) to 54%.
Selling, general and administrative expenses increased 18.5% to $195.5 million in the quarter under review, while research and development expenses rose 11.9% to $29.8 million.
Overall, adjusted operating profit were $0.7 million, down 95.6% year over year. Adjusted operating margin saw a 391-bps contraction year over year to 0.2%.
Financial Position
Integra exited second-quarter 2024 with cash and cash equivalents of $215.2 million, down from $591.9 million at the end of first-quarter 2024.
Cumulative net cash flow from operating activities at the end of the second quarter of 2024 was $56.2 million compared with $54.4 million at the first-quarter end.
Guidance
The company updated its financial guidance for 2024.
For 2024, IART now projects revenues in the band of $1.61 billion-$1.63 billion (down from the previous guidance of $1.67-$1.69 billion). This suggests reported growth of 4.4%-5.7%, with organic growth of -1% to 0.3%. The Zacks Consensus Estimate for the same is pegged at $1.68 billion.
The company projects adjusted EPS guidance for 2024 between $2.41 and $2.57 (down from the previously guided range of $3.01-$3.11). The Zacks Consensus Estimate for the metric is pegged at $3.03.
The company also provided third-quarter 2024 outlook.
For the third quarter of 2024, Integra expects reported revenues in the range of $372 million-$382 million, suggesting reported growth of -2.6% to 0.0% and organic growth of -9.4% to -6.7%. The Zacks Consensus Estimate for the same is pegged at $398.5 million.
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Adjusted earnings per diluted share are expected to be in the range of 36-44 cents. The Zacks Consensus Estimate for the metric is pegged at 85 cents.
Our Take
Integra exited the second quarter of 2024 with better-than-expected results, with both earnings and revenues surpassing the consensus mark. CSS and Tissue Technologies business segments performed well. The company witnessed strong demand for Integra's diverse portfolio of leading brands and continued successful market adoption of CereLink monitors and microsensors. During the reported quarter, Integra also maintained growth momentum in the international market and expanded its international portfolio CUSA, DuraGen and Mayfield. During the second quarter, the company experienced early integration success with the Acclarent ENT acquisition.
Unfavorable product and geographic mix and Boston quality project expenses are exerting pressure on the bottom line. The contraction of both margins is discouraging. The company lowered 2024 guidance, affected by revenue reduction linked to temporary shipping halts, as well as a planned increase in spending to support the compliance master plan.
Zacks Rank & Key Picks
Integra currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) , and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2024 earnings of $1.14 per share, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates based on earnings in each of the trailing four quarters, the average surprise being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.
DGX’s historical five-year earnings growth rate of 7.4% compared favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.
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Integra's (IART) Q2 Earnings and Revenues Top, Margins Down
Integra LifeSciences Holdings Corporation (IART - Free Report) delivered adjusted earnings per share (EPS) of 63 cents in the second quarter of 2024, down 11.3% year over year. The metric surpassed the Zacks Consensus Estimate by 1.6%.
The adjustment excludes the impact of certain non-recurring charges like structural optimization charges, the Boston recall and EU Medical Device Regulation charges.
GAAP loss per share in the second quarter was 16 cents against GAAP EPS of 5 cents in the year-ago quarter.
Revenue Discussion
Total revenues in the reported quarter rose 9.7% year over year to $ 418.2 million. The metric topped the Zacks Consensus Estimate by 1.4%. Organically, revenues increased 2.3% year over year. Revenues increased 0.3% on an organic basis, excluding the Boston manufacturing plant’s production.
Segmental Details
Coming to product categories, revenues in the Codman Specialty Surgical (CSS) segment rose 11.3% year over year on a reported basis to $301.8 million (organically, up 0.9%). The upside can be attributed to high-single-digits growth in Dural Access and Repair, driven by DuraGen and Mayfield, low-single-digits growth in advanced energy driven by Aurora, and low-double-digits ENT growth reflecting MicroFrance ENT instruments.
Tissue Technologies revenues totaled $116.4 million in the second quarter, up 5.6% year over year on a reported basis and 5.7% on an organic basis. The upside was due to the impact of high-double-digit growth in DuraSorb, mid-double-digit growth in Gentrix, along with low double-digit growth in MicroMatrix, Cytal and amniotics.
Margin Trend
In the reported quarter, gross profit totaled $225.9 million, up 9.1% year over year. However, the gross margin contracted 27 basis points (bps) to 54%.
Selling, general and administrative expenses increased 18.5% to $195.5 million in the quarter under review, while research and development expenses rose 11.9% to $29.8 million.
Overall, adjusted operating profit were $0.7 million, down 95.6% year over year. Adjusted operating margin saw a 391-bps contraction year over year to 0.2%.
Financial Position
Integra exited second-quarter 2024 with cash and cash equivalents of $215.2 million, down from $591.9 million at the end of first-quarter 2024.
Cumulative net cash flow from operating activities at the end of the second quarter of 2024 was $56.2 million compared with $54.4 million at the first-quarter end.
Guidance
The company updated its financial guidance for 2024.
For 2024, IART now projects revenues in the band of $1.61 billion-$1.63 billion (down from the previous guidance of $1.67-$1.69 billion). This suggests reported growth of 4.4%-5.7%, with organic growth of -1% to 0.3%. The Zacks Consensus Estimate for the same is pegged at $1.68 billion.
The company projects adjusted EPS guidance for 2024 between $2.41 and $2.57 (down from the previously guided range of $3.01-$3.11). The Zacks Consensus Estimate for the metric is pegged at $3.03.
The company also provided third-quarter 2024 outlook.
For the third quarter of 2024, Integra expects reported revenues in the range of $372 million-$382 million, suggesting reported growth of -2.6% to 0.0% and organic growth of -9.4% to -6.7%. The Zacks Consensus Estimate for the same is pegged at $398.5 million.
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Integra LifeSciences Holdings Corporation price-consensus-eps-surprise-chart | Integra LifeSciences Holdings Corporation Quote
Adjusted earnings per diluted share are expected to be in the range of 36-44 cents. The Zacks Consensus Estimate for the metric is pegged at 85 cents.
Our Take
Integra exited the second quarter of 2024 with better-than-expected results, with both earnings and revenues surpassing the consensus mark. CSS and Tissue Technologies business segments performed well. The company witnessed strong demand for Integra's diverse portfolio of leading brands and continued successful market adoption of CereLink monitors and microsensors. During the reported quarter, Integra also maintained growth momentum in the international market and expanded its international portfolio CUSA, DuraGen and Mayfield. During the second quarter, the company experienced early integration success with the Acclarent ENT acquisition.
Unfavorable product and geographic mix and Boston quality project expenses are exerting pressure on the bottom line. The contraction of both margins is discouraging. The company lowered 2024 guidance, affected by revenue reduction linked to temporary shipping halts, as well as a planned increase in spending to support the compliance master plan.
Zacks Rank & Key Picks
Integra currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) , and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2024 earnings of $1.14 per share, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates based on earnings in each of the trailing four quarters, the average surprise being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.
DGX’s historical five-year earnings growth rate of 7.4% compared favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.