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Integer Holdings Corporation (ITGR - Free Report) delivered adjusted earnings per share (EPS) of $1.04 in the second quarter of 2022, which declined 2.8% year over year. The figure lagged the Zacks Consensus Estimate by 11.9%.
The adjustments include expenses related to the amortization of intangible assets, among others.
GAAP EPS for the quarter was 62 cents a share, reflecting a plunge of 30.3% year over year.
Revenues in Detail
Integer Holdings registered revenues of $350.1 million in the second quarter, up 12.2% year over year. The figure beat the Zacks Consensus Estimate by 1.4%.
Organically, revenues increased 5.3%.
Robust performances by the Medical segment of the company drove the top line.
Segmental Analysis
Integer Holdings operates through two segments — Medical Sales and Non-Medical Sales.
Medical Sales reported revenues of $339.8 million, up 12.7% year over year on a reported and 5.6% on an organic basis.
Medical Sales has three product lines — Advanced Surgical, Orthopedics and Portable Medical (AS&O); Cardio & Vascular; and Cardiac & Neuromodulation.
Integer Holdings’ AS&O business includes sales under a supply agreement with the acquirer of the divested AS&O product line. Revenues amounted to $23.3 million, flat year over year on a reported and up 0.1% on an organic basis. Per management, this resulted from a decline in demand for COVID-related ventilators and patient monitoring components.
Revenues at the Cardio & Vascular business totaled $180.6 million, up 24.8% from the prior-year quarter on a reported basis and up 16.7% organically. The strong year-over-year performance was driven by solid demand in the neurovascular, electrophysiology and structural heart markets, as well as the Oscor and Aran acquisitions.
Revenues at the Cardiac & Neuromodulation business were $135.9 million, up 1.7% year over year on a reported but down 5.4% on an organic basis. The business recorded strong year-over-year sales growth resulting from the Oscor, Inc. buyout. However, this was offset by labor and supply-chain constraints.
Revenues in the Non-Medical segment totaled $10.2 million, down 1.4% year over year, both on a reported and an organic basis. Sales at the Electrochem product line, part of the Non-Medical segment, declined 1% due to supplier shortages, which hampered Integer Holdings’ ability to fulfill strong customer demand.
Integer Holdings Corporation Price, Consensus and EPS Surprise
Integer Holdings generated gross profit of $92.9 million in the second quarter, up 4.7% year over year. The gross margin in the reported quarter contracted 191 basis points (bps) to 26.5%.
Selling, general and administrative expenses were $41.8 million, up 18.1% year over year. Research, development and engineering costs were $14.9 million in the quarter, up 8.2% year over year. Adjusted operating expenses of $56.7 million increased 15.4% year over year.
Adjusted operating profit totaled $36.2 million, reflecting an 8.6% plunge from the prior-year quarter. Adjusted operating margin in the second quarter contracted 235 bps to 10.4%.
Financial Position
Integer Holdings exited second-quarter 2022 with cash and cash equivalents of $15.6 million compared with $25.7 million at the end of the first quarter. Total debt (including the current portion) at the end of second-quarter 2022 was $947.1 million compared with $829.6 million at the end of the first quarter.
Cumulative net cash flow from operating activities at the end of second-quarter 2022 was $37 million compared with $68.8 million a year ago.
2022 Guidance
Integer Holdings has revised its financial outlook for the full-year 2022 owing to strong demand, accelerating new product introductions and its recent Oscor and Aran buyouts.
For 2022, the company now expects revenues in the range of $1,370 million - $1,395 million (suggesting an improvement of 12- 14%) from the 2021 reported figure, up from the previously-provided outlook of $1,356 million to $1,381 million (suggesting an improvement of 11- 13%) from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $1.37 billion.
Organically, sales growth expectations have been increased to 6-8% from 5-7%.
The company has lowered its expectations for full-year adjusted EPS to the band of $4.20 to $4.50 (suggesting an improvement of 3-10%) from the 2021 reported figure, compared to the earlier-provided projection of $4.32 to $4.62 (suggesting an improvement of 6-13%) from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $4.51.
Our Take
Integer Holdings exited the second quarter of 2022 with better-than-expected revenues. The strong year-over-year top-line performance is impressive. Robust performances by the Medical segment along with strength in the Cardio & Vascular and Cardiac & Neuromodulation product lines are encouraging. Continued business recovery despite the U.S. labor constraints and global supply-chain disruptions is encouraging. A raised revenue outlook raises our optimism.
However, lower-than-expected earnings and year-over-year fall in the bottom line is disappointing. Lower Non-Medical sales in the quarter is disappointing as well. Contraction of both margins also does not bode well. The company’s business was also widely hampered by labor and supply-chain constraints.
Zacks Rank and Key Picks
Integer Holdings currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , Humana Inc. (HUM - Free Report) and Alkermes plc (ALKS - Free Report) .
Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 7.1% compared with the industry’s 3.2%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
Humana, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $8.67, which beat the Zacks Consensus Estimate by 13%. Revenues of $23.7 billion outpaced the consensus mark by 1.2%.
Humana has an estimated long-term growth rate of 14.1%. HUM’s earnings surpassed estimates in all the trailing four quarters, the average being 9.1%.
Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.
Alkermes has an estimated long-term growth rate of 25.1%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.
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Integer Holdings (ITGR) Q2 Earnings Miss, FY22 View Revised
Integer Holdings Corporation (ITGR - Free Report) delivered adjusted earnings per share (EPS) of $1.04 in the second quarter of 2022, which declined 2.8% year over year. The figure lagged the Zacks Consensus Estimate by 11.9%.
The adjustments include expenses related to the amortization of intangible assets, among others.
GAAP EPS for the quarter was 62 cents a share, reflecting a plunge of 30.3% year over year.
Revenues in Detail
Integer Holdings registered revenues of $350.1 million in the second quarter, up 12.2% year over year. The figure beat the Zacks Consensus Estimate by 1.4%.
Organically, revenues increased 5.3%.
Robust performances by the Medical segment of the company drove the top line.
Segmental Analysis
Integer Holdings operates through two segments — Medical Sales and Non-Medical Sales.
Medical Sales reported revenues of $339.8 million, up 12.7% year over year on a reported and 5.6% on an organic basis.
Medical Sales has three product lines — Advanced Surgical, Orthopedics and Portable Medical (AS&O); Cardio & Vascular; and Cardiac & Neuromodulation.
Integer Holdings’ AS&O business includes sales under a supply agreement with the acquirer of the divested AS&O product line. Revenues amounted to $23.3 million, flat year over year on a reported and up 0.1% on an organic basis. Per management, this resulted from a decline in demand for COVID-related ventilators and patient monitoring components.
Revenues at the Cardio & Vascular business totaled $180.6 million, up 24.8% from the prior-year quarter on a reported basis and up 16.7% organically. The strong year-over-year performance was driven by solid demand in the neurovascular, electrophysiology and structural heart markets, as well as the Oscor and Aran acquisitions.
Revenues at the Cardiac & Neuromodulation business were $135.9 million, up 1.7% year over year on a reported but down 5.4% on an organic basis. The business recorded strong year-over-year sales growth resulting from the Oscor, Inc. buyout. However, this was offset by labor and supply-chain constraints.
Revenues in the Non-Medical segment totaled $10.2 million, down 1.4% year over year, both on a reported and an organic basis. Sales at the Electrochem product line, part of the Non-Medical segment, declined 1% due to supplier shortages, which hampered Integer Holdings’ ability to fulfill strong customer demand.
Integer Holdings Corporation Price, Consensus and EPS Surprise
Integer Holdings Corporation price-consensus-eps-surprise-chart | Integer Holdings Corporation Quote
Margin Analysis
Integer Holdings generated gross profit of $92.9 million in the second quarter, up 4.7% year over year. The gross margin in the reported quarter contracted 191 basis points (bps) to 26.5%.
Selling, general and administrative expenses were $41.8 million, up 18.1% year over year. Research, development and engineering costs were $14.9 million in the quarter, up 8.2% year over year. Adjusted operating expenses of $56.7 million increased 15.4% year over year.
Adjusted operating profit totaled $36.2 million, reflecting an 8.6% plunge from the prior-year quarter. Adjusted operating margin in the second quarter contracted 235 bps to 10.4%.
Financial Position
Integer Holdings exited second-quarter 2022 with cash and cash equivalents of $15.6 million compared with $25.7 million at the end of the first quarter. Total debt (including the current portion) at the end of second-quarter 2022 was $947.1 million compared with $829.6 million at the end of the first quarter.
Cumulative net cash flow from operating activities at the end of second-quarter 2022 was $37 million compared with $68.8 million a year ago.
2022 Guidance
Integer Holdings has revised its financial outlook for the full-year 2022 owing to strong demand, accelerating new product introductions and its recent Oscor and Aran buyouts.
For 2022, the company now expects revenues in the range of $1,370 million - $1,395 million (suggesting an improvement of 12- 14%) from the 2021 reported figure, up from the previously-provided outlook of $1,356 million to $1,381 million (suggesting an improvement of 11- 13%) from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $1.37 billion.
Organically, sales growth expectations have been increased to 6-8% from 5-7%.
The company has lowered its expectations for full-year adjusted EPS to the band of $4.20 to $4.50 (suggesting an improvement of 3-10%) from the 2021 reported figure, compared to the earlier-provided projection of $4.32 to $4.62 (suggesting an improvement of 6-13%) from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $4.51.
Our Take
Integer Holdings exited the second quarter of 2022 with better-than-expected revenues. The strong year-over-year top-line performance is impressive. Robust performances by the Medical segment along with strength in the Cardio & Vascular and Cardiac & Neuromodulation product lines are encouraging. Continued business recovery despite the U.S. labor constraints and global supply-chain disruptions is encouraging. A raised revenue outlook raises our optimism.
However, lower-than-expected earnings and year-over-year fall in the bottom line is disappointing. Lower Non-Medical sales in the quarter is disappointing as well. Contraction of both margins also does not bode well. The company’s business was also widely hampered by labor and supply-chain constraints.
Zacks Rank and Key Picks
Integer Holdings currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , Humana Inc. (HUM - Free Report) and Alkermes plc (ALKS - Free Report) .
Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 7.1% compared with the industry’s 3.2%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
Humana, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $8.67, which beat the Zacks Consensus Estimate by 13%. Revenues of $23.7 billion outpaced the consensus mark by 1.2%.
Humana has an estimated long-term growth rate of 14.1%. HUM’s earnings surpassed estimates in all the trailing four quarters, the average being 9.1%.
Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.
Alkermes has an estimated long-term growth rate of 25.1%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.