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Shares of musculoskeletal major Integra LifeSciences Holdings Corporation (IART - Free Report) gained 9.90% (or $3.71) on Aug 15, 2013 to close at $41.17 following good news about the company’s N. J. facility.

On Aug 14, Integra disclosed that the U.S. Food and Drug Administration (FDA) successfully completed an inspection of its regenerative medicine facility in Plainsboro, N.J. Following the inspection, FDA cleared the Plainsboro facility from any compliance issues.

Integra’s Plainsboro facility was subject to an FDA warning letter since Dec 21, 2011 following an inspection by the FDA earlier, in the third quarter of 2011. The warning letter pertained to quality system checks and compliance issues at the Plainsboro facility. In mid-2012, the regenerative medicine facility was again inspected by the FDA. However, Integra failed to gain clearance back then.

While the warning letter did not result in any product recall or restrict manufacturing operations at the Plainsboro facility, it hurt revenues and gross margin throughout 2012 due to remediation activities to obtain FDA clearance.  The recent inspection of the facility began on Jul 16, 2013. Based on the inspectional observation, Integra’s remediation activities convinced the FDA that its quality management system at Plainsboro was adequate.

The news came as a major upside for Integra and bolstered market sentiments as reflected in the share price movement. However, the company is still plagued by several challenges. Among these, one of the major setbacks is the series of voluntary product recalls in Apr 2013. These products manufactured during Dec 2010–May 2011 and Nov 2012– Mar 2013 at its Anyasco, Puerto Rico facility, slipped the quality standards due to deviations from an approved product process.

Moreover, on Feb 15, 2013, Integra discontinued the distribution of its collagen products manufactured at the Anyasco facility following a warning letter from the FDA. The company produced silicone and collagen offerings at the Puerto Rican facility. As a result, Integra continues to battle higher expenses associated with the recalls and remediation plans.

We remain watchful of further developments regarding the product recall and its impact on Integra’s financial results. The stock carries a Zacks Rank #3 (Hold).

While we remain on the sidelines for Integra, other medical stocks such as Actelion Ltd. , Gilead Sciences Inc. (GILD - Free Report) and Affymetrix Inc. are worth considering. These stocks carry Zacks Rank #1 (Strong Buy).

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