Integra (IART) Q2 Earnings Top, 2022 Adjusted EPS View Cut

Integra LifeSciences Holdings Corporation IART delivered adjusted earnings per share (EPS) of 82 cents for the second quarter of 2022, up 3.8% year over year. The metric surpassed the Zacks Consensus Estimate by 2.5%.

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

GAAP EPS for the second quarter was 54 cents, a significant 31.7% surge from the year-ago quarter.

Revenue Discussion

Total revenues in the reported quarter improved 2% year over year to $397.8 million. The metric beat the Zacks Consensus Estimate by 0.8%. Organically, revenues increased 4.8% year over year. The quarter’s figure was within the company’s second-quarter sales estimate of $392 million to $400 million.

Segmental Details

Coming to product categories, revenues from the Codman Specialty Surgical (CSS) segment were $257.9 million, representing reported growth of 0.4% and organic growth of 4.3% from the second quarter of 2021. The upside was driven by strength in both Instruments and Neurosurgery. Neurosurgery growth was driven by advanced energy and CSF management.

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 $140 million in the second quarter, up 5.1% year over year on a reported basis and 5.9% on an organic basis. This improvement was driven by 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 $249.4 million, up 4.5% year over year. The gross margin expanded 148 basis points (bps) to 62.7%. The company-adjusted gross margin was 68%.

Selling, general and administrative expenses dropped 1.2% to $160.7 million in the quarter under review, while research and development expenses increased 27.2% to $25.6 million.

Overall, adjusted operating profit rose to $63.2 million, up 12.7% year over year. Adjusted operating margin saw a 151-bp expansion year over year to 15.8%.

Financial Position

Integra exited the second quarter of 2022 with cash and cash equivalents of $447.2 million, up from $407.1 million at the end of Q1.

Cumulative net cash flow from operating activities at the end of the second quarter was $110.8 million compared with $160.4 million in the year-ago period.

Guidance Updated

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

For 2022, the company now projects revenues in the band of $1,557-$1,575 million (lower than the previous projection of $1.58-$1.60 billion). This suggests reported growth of approximately 1% to 2.1% (down from 2.5% to 3.5%). The Zacks Consensus Estimate for the same is pegged at $1.59 billion.

Integra has tightened its organic growth expectation to the range of 4% to 5.2% (from the prior range of 3.8% to 5.2%).

The company expects to report adjusted earnings per share in the band of $3.21 to $3.29 for 2022 ($3.27 to $3.35 guided previously). The Zacks Consensus Estimate for the same is pegged at $3.30.

For the third quarter of 2022, Integra expects revenues in the range of $383 million to $391 million, suggesting (1%) to 1% growth on a reported basis and 2.6% to 4.8% growth on an organic basis. The Zacks Consensus Estimate for the same is pegged at 399 million.

Adjusted earnings per share are estimated in the range of 78 cents to 82 cents. The Zacks Consensus Estimate for the metric is pegged at 80 cents.

Our Take

Integra exited the second 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.

However, the increase in costs and expenses is building pressure on the bottom line. A reduced reported revenue and adjusted EPS guidance is also concerning.

Zacks Rank & Key Picks

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

Some better-ranked stocks from the medical sector include Glaukos GKOS, ShockWave Medical SWAV and STERIS STE, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Glaukos’ loss per share estimates have improved from $1.94 to $1.78 for 2022 in the past 60 days. GKOS has gained 5.7% over the past year.

Glaukos delivered an earnings surprise of 28.68%, on average, in the last four quarters.

Estimates for ShockWave Medical have moved north from earnings per share of $1.85 to $2.02 for 2022 in the past 60 days. SWAV has gained 22.5% over the past year.

ShockWave Medical delivered an earnings surprise of 189.99%, on average, in the last four quarters.

STERIS’ earnings per share estimates have improved from $8.70 to $8.71 for 2022 in the past 60 days. STE has improved 2.1% over the past year.

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