Integra (IART) Q1 Earnings Top Estimates, Margins Expand

Integra LifeSciences Holdings Corporation IART delivered adjusted earnings per share (EPS) of 74 cents for the first quarter of 2022, up 7.2% year over year. The metric surpassed the Zacks Consensus Estimate by 8.8%.

The adjustment excludes the impact of certain non-recurring charges like structural optimization charges, acquisition, divestiture and integration-related charges and EU Medical Device Regulation charges, among others.

GAAP EPS for the first quarter was 39 cents, a significant 26.4% plunge from the year-ago quarter.

Revenue Discussion

Total revenues in the reported quarter improved 4.6% year over year to $376.6 million. The metric beat the Zacks Consensus Estimate by 3.9%. Organically, revenues increased 5.6% 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 were $129.3 million, representing reported growth of 8.8% and organic growth of 6.9% compared to the first quarter of 2021. The upside was driven by favorable timing of Private Label customer orders and growth in Wound Reconstruction and Care led by sales of Integra Dermal Matrices and SurgiMend.

Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise

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 $129.3 million in the first quarter, up 8.8% year over year on a reported basis and 6.9% on an organic basis. This improvement was driven by favorable timing of Private Label customer orders and growth in Wound Reconstruction and Care led by sales in Integra Dermal Matrices and SurgiMend.

Margin Trend

In the reported quarter, gross profit totaled $234 million, up 9.3% year over year. The gross margin expanded 265 basis points (bps) to 62.2%. The company-adjusted gross margin was 67.7%.

Selling, general and administrative expenses rose 2.1% to $159.9 million in the quarter under review, while research and development expenses increased 7.6% to $24.1 million.

Overall, adjusted operating profit rose to $209.9 million, up 9.4% year over year. Adjusted operating margin saw a 246-bp expansion year over year to 55.8%.

Financial Position

Integra exited the first quarter of 2022 with cash and cash equivalents of $407.1 million, up from $513.4 million at the end of 2021.

Cumulative net cash flow from operating activities at the end of the first quarter was $44.3 million compared with $69.1 million in the year-ago period.

Guidance Updated

The company has updated its financial guidance for 2022 and provided the second-quarter view.

For 2022, the company now projects revenues in the band of $1.58-$1.60 billion (unchanged). This suggests reported growth of approximately 2.5% to 3.5% (unchanged) and organic growth of approximately 3.8% to 5.2% (higher than the earlier band of 3.5% to 5%). The Zacks Consensus Estimate for the same is pegged at 1.59 billion.

The company expects to report adjusted earnings per share in the band of $3.27 to $3.35 for 2022 (unchanged). The Zacks Consensus Estimate for the same is pegged at $3.31.

For the second quarter of 2022, Integra expects revenues in the range of $392 million to $400 million, suggesting0.5% to 2.5% growth on a reported basis (earlier expected growth rate was (1%) to 1.5%) and 2.8% to 4.8% growth on an organic basis (0% to 2.5%). The Zacks Consensus Estimate for the same is pegged at 395.5 million.

Adjusted earnings per share are estimated in the range of 78 cents to 82 cents (a rise from 67-71 cents earlier). The Zacks Consensus Estimate for the metric is pegged at 80 cents.

Our Take

Integra exited the first quarter of 2022 on a bullish note with better-than-expected earnings and revenues. The year-over-year growth in both the CSS and Tissue Technology segments buoys optimism. Sales from CereLink ICP Monitor System and SurgiMend raise confidence. The robust uptake of the company’s products is encouraging. Further, the company’s updated 2022 financial guidance calls for strong year-over-year growth.

However, the increase in costs and expenses is building pressure on the bottom line.

Zacks Rank & Key Picks

Integra currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space that have announced quarterly results are Teleflex Incorporated TFX, UnitedHealth Group Incorporated UNH and Abiomed, Inc. ABMD.

Teleflex, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of $2.88, which beat the Zacks Consensus Estimate by 5.5%. Revenues of $641.7 million outpaced the consensus mark by 1.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Teleflex has an estimated long-term growth rate of 13%. TFX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 10.1%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

Abiomed reported fourth-quarter fiscal 2022 adjusted EPS of $1.16, which surpassed the Zacks Consensus Estimate by 6.4%. Revenues of $269.9 million outpaced the Zacks Consensus Estimate by 1.3%. It currently has a Zacks Rank #2.

Abiomed has an estimated long-term growth rate of 20%. ABMD’s earnings surpassed estimates in the trailing four quarters, the average surprise being 7.9%.

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