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Integra (IART) Gains From Innovation Amid Cost Constraints
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Integra LifeSciences Holdings Corporation (IART - Free Report) has been registering robust performances across its Codman Specialty Surgical (CSS) and Tissue Technologies segments. However, the company faces stiff competition as well as foreign exchange fluctuation. Currently, Integra LifeSciences carries a Zacks Rank #3 (Hold).
Integra has outperformed the industry in the past six months. The stock has lost 0.5% compared with the industry’s 19.5% fall. 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. Integra’s first-quarter adjusted earnings per share of 74 cents exceeded the high-end of the company’s guidance, driven by higher revenues, and with gross margins improving 40 basis points from the first quarter of 2021.
CSS segment revenues grew 5% year over year organically in the first quarter of 2022. Global neurosurgery sales were up 5.5-5.8% on an organic basis, driven by CSS management and neuromonitory. CSS management increased in high single digits, led by growth in programmable valves, while neuromonitoring grew in low double digits, benefiting from the recent launch of CereLink.
Total capital sales in the quarter grew in low single digits, driven by smaller capital including CereLink and Mayfield, following Omicron-induced lower sales and larger capital equipment leading to extended selling cycles. International sales in CSS increased in mid-single digits led by the strong performance of CereLink in Europe and growth in Asia. Performance in China and Japan was strong with low double-digit growth in both the countries.
Integra's Tissue Technologies grew 6.9% on an organic basis in the fourth quarter. During the reported quarter, sales in wound reconstruction increased 4% on an organic basis, driven by sales in Integra Skin and SurgiMend. ACell is reported within the wound reconstruction franchise. ACell revenues in the first quarter were consistent with the third and fourth quarters of 2021 and in line with the company’s expectations.
On the flip side, in the first quarter, the increase in costs weighed on the bottom line of Integra. Gross profit totaled $249.3 million, up 3.2% year over year. Despite that, the gross margin contracted 69 basis points (bps) to 61.5%. The gross margin, which was in line with expectations, was impacted unfavorably by higher freight costs, material, and labor inflation, as well as manufacturing and supply chain inefficiencies caused by the Omicron variant.
Although Integra is confident about its future capabilities, there are uncertainties related to exactly how and when the markets and operations would be impacted by the Omicron disruption.
Further, Integra faces significant competition in the surgical implants and medical instruments markets. The company needs to be innovative on the product front in order to keep up with the competition. Consolidation trends in the industry could lead to intense pricing pressure and further competition.
Key Picks
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Masimo Corporation (MASI - Free Report) .
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has declined 0.8% compared with the industry’s 64% fall.
Medpace has a historical growth rate of 27.3%. Medpace’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%. It currently has a Zacks Rank #2 (Buy).
Medpace has outperformed its industry in the past year. MEDP has declined 19.6% compared with the industry’s 64% fall.
Masimo has a historical growth rate of 15.1%. Masimo’s earnings beat estimates in each of the trailing four quarters, the average surprise being 4.4%. The company currently carries a Zacks Rank #2.
Masimo has underperformed the industry in the past year. MASI has declined 34.5% compared with a 17.7% fall of the industry.
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Integra (IART) Gains From Innovation Amid Cost Constraints
Integra LifeSciences Holdings Corporation (IART - Free Report) has been registering robust performances across its Codman Specialty Surgical (CSS) and Tissue Technologies segments. However, the company faces stiff competition as well as foreign exchange fluctuation. Currently, Integra LifeSciences carries a Zacks Rank #3 (Hold).
Integra has outperformed the industry in the past six months. The stock has lost 0.5% compared with the industry’s 19.5% fall. 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. Integra’s first-quarter adjusted earnings per share of 74 cents exceeded the high-end of the company’s guidance, driven by higher revenues, and with gross margins improving 40 basis points from the first quarter of 2021.
CSS segment revenues grew 5% year over year organically in the first quarter of 2022. Global neurosurgery sales were up 5.5-5.8% on an organic basis, driven by CSS management and neuromonitory. CSS management increased in high single digits, led by growth in programmable valves, while neuromonitoring grew in low double digits, benefiting from the recent launch of CereLink.
Integra LifeSciences Holdings Corporation Price
Integra LifeSciences Holdings Corporation price | Integra LifeSciences Holdings Corporation Quote
Total capital sales in the quarter grew in low single digits, driven by smaller capital including CereLink and Mayfield, following Omicron-induced lower sales and larger capital equipment leading to extended selling cycles. International sales in CSS increased in mid-single digits led by the strong performance of CereLink in Europe and growth in Asia. Performance in China and Japan was strong with low double-digit growth in both the countries.
Integra's Tissue Technologies grew 6.9% on an organic basis in the fourth quarter. During the reported quarter, sales in wound reconstruction increased 4% on an organic basis, driven by sales in Integra Skin and SurgiMend. ACell is reported within the wound reconstruction franchise. ACell revenues in the first quarter were consistent with the third and fourth quarters of 2021 and in line with the company’s expectations.
On the flip side, in the first quarter, the increase in costs weighed on the bottom line of Integra. Gross profit totaled $249.3 million, up 3.2% year over year. Despite that, the gross margin contracted 69 basis points (bps) to 61.5%. The gross margin, which was in line with expectations, was impacted unfavorably by higher freight costs, material, and labor inflation, as well as manufacturing and supply chain inefficiencies caused by the Omicron variant.
Although Integra is confident about its future capabilities, there are uncertainties related to exactly how and when the markets and operations would be impacted by the Omicron disruption.
Further, Integra faces significant competition in the surgical implants and medical instruments markets. The company needs to be innovative on the product front in order to keep up with the competition. Consolidation trends in the industry could lead to intense pricing pressure and further competition.
Key Picks
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Masimo Corporation (MASI - Free Report) .
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has declined 0.8% compared with the industry’s 64% fall.
Medpace has a historical growth rate of 27.3%. Medpace’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%. It currently has a Zacks Rank #2 (Buy).
Medpace has outperformed its industry in the past year. MEDP has declined 19.6% compared with the industry’s 64% fall.
Masimo has a historical growth rate of 15.1%. Masimo’s earnings beat estimates in each of the trailing four quarters, the average surprise being 4.4%. The company currently carries a Zacks Rank #2.
Masimo has underperformed the industry in the past year. MASI has declined 34.5% compared with a 17.7% fall of the industry.