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Integra LifeSciences Holdings Corporation (IART - Free Report) delivered adjusted earnings per share (EPS) of 86 cents for the third quarter of 2022, flat year over year. The metric surpassed the Zacks Consensus Estimate by 19.4%.
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 third quarter was 60 cents, a significant 17.6% surge from the year-ago quarter.
Revenue Discussion
Total revenues in the reported quarter dropped 0.4% year over year to $385.2 million. The metric, however, beat the Zacks Consensus Estimate by 1.9%. Organically, revenues increased 3.5% year over year. The quarter’s figure was within the company’s third-quarter sales estimate of $383 million to $391 million.
Segmental Details
Coming to product categories, revenues from the Codman Specialty Surgical (CSS) segment were $249.8 million, reflecting a decline of 2.6%. Organically, revenues grew 1.6% from the third quarter of 2021. In the quarter, strength in advanced energy and CSF management was partially offset by the impact of the CereLink recall in neuro monitoring.
Integra LifeSciences Holdings Corporation Price, Consensus and EPS Surprise
Tissue Technologies' revenues totaled $135.4 million in the third quarter, up 3.9% year over year on a reported basis and 7.2% on an organic basis. This improvement was driven by strong sales of Integra skin, amniotics and ACell MicroMatrix.
Margin Trend
In the reported quarter, gross profit totaled $236.7 million, down 2.3% year over year. The gross margin contracted 119 basis points (bps) to 61.5%. The company-adjusted gross margin was 66.7%, marking a 160-bps contraction year over year.
Selling, general and administrative expenses dropped 7.8% to $143.8 million in the quarter under review, while research and development expenses declined 4.2% to $24.7 million.
Overall, adjusted operating profit rose to $68.2 million, up 12.6% year over year. Adjusted operating margin saw a 205-bp expansion year over year to 17.7%.
Financial Position
Integra exited the third quarter of 2022 with cash and cash equivalents of $511.9 million, up from $447.2 million at the end of Q2.
Cumulative net cash flow from operating activities at the end of the third quarter was $179.1 million compared with $243.2 million in the year-ago period.
Guidance Updated
The company updated its financial guidance for 2022 and provided the fourth-quarter view.
For 2022, revenue expectations remain at the midpoint of its August 2022-announced guidance when the company tapered the revenue projection range to $1,551 million to $1,563 million (on the Q2 earnings call, the revenue expectation band was $1,557-$1,575 million). This suggests reported growth of approximately 0.5% to 1.3% (down from 1% to 2.1% announced on the Q2 earnings call). The Zacks Consensus Estimate for the same is pegged at $1.56 billion.
Foreign exchange is now expected to unfavorably impact 2022 reported growth by 250 basis points compared to 2021. Integra has also tightened its organic growth expectation to the range of 3.7% to 4.5% (4% to 5.2% previously).
The company expects to report adjusted earnings per share in the band of $3.29 to $3.33 for 2022 (an increase of 15 cents at the mid-point compared with the company’s August guidance). The Zacks Consensus Estimate for the same is pegged at $3.15.
For the fourth quarter of 2022, Integra expects revenues in the range of $391 million to $403 million, down 0.6% to 3.5% on a reported basis but up 1.3% to 4.3% on an organic basis. The Zacks Consensus Estimate for the same is pegged at $402.5 million.
Adjusted earnings per share are estimated in the range of 87 cents to 91 cents. The Zacks Consensus Estimate for the metric is pegged at 88 cents.
Our Take
Integra exited the third quarter of 2022 with better-than-expected earnings and revenues. The year-over-year organic growth in both the CSS and Tissue Technology segments buoys optimism. During the quarter, while the company noticed a recovery in procedure volumes leading to solid growth across most of its product portfolio, it was largely offset by the impact of legal challenges, foreign exchange headwinds, and continuing supply challenges. The impact of the recall of CereLink in the quarter was significant.
The increase in costs put pressure on the gross margin. The lackluster 2022 guidance is also concerning.
Zacks Rank & Key Picks
Integra currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Accuray (ARAY - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an earnings yield of 5.5% against the industry’s (2.3%). ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, having a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $384 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 22.7% for 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 22.04%.
Accuray reported fourth-quarter fiscal 2022 adjusted loss per share of 4 cents, which surpassed the Zacks Consensus Estimate by 33.3%. Fourth-quarter revenues of $110 million outpaced the Zacks Consensus Estimate by 4.9%. It currently has a Zacks Rank #2.
Accuray has an estimated growth rate of 100% for fiscal 2023. ARAY’s earnings surpassed estimates in three of the trailing four quarters and lagged the same in one, the average surprise being 20.8%.
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Integra's (IART) Q3 Earnings Top, Gross Margin Declines
Integra LifeSciences Holdings Corporation (IART - Free Report) delivered adjusted earnings per share (EPS) of 86 cents for the third quarter of 2022, flat year over year. The metric surpassed the Zacks Consensus Estimate by 19.4%.
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 third quarter was 60 cents, a significant 17.6% surge from the year-ago quarter.
Revenue Discussion
Total revenues in the reported quarter dropped 0.4% year over year to $385.2 million. The metric, however, beat the Zacks Consensus Estimate by 1.9%. Organically, revenues increased 3.5% year over year. The quarter’s figure was within the company’s third-quarter sales estimate of $383 million to $391 million.
Segmental Details
Coming to product categories, revenues from the Codman Specialty Surgical (CSS) segment were $249.8 million, reflecting a decline of 2.6%. Organically, revenues grew 1.6% from the third quarter of 2021. In the quarter, strength in advanced energy and CSF management was partially offset by the impact of the CereLink recall in neuro monitoring.
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 $135.4 million in the third quarter, up 3.9% year over year on a reported basis and 7.2% on an organic basis. This improvement was driven by strong sales of Integra skin, amniotics and ACell MicroMatrix.
Margin Trend
In the reported quarter, gross profit totaled $236.7 million, down 2.3% year over year. The gross margin contracted 119 basis points (bps) to 61.5%. The company-adjusted gross margin was 66.7%, marking a 160-bps contraction year over year.
Selling, general and administrative expenses dropped 7.8% to $143.8 million in the quarter under review, while research and development expenses declined 4.2% to $24.7 million.
Overall, adjusted operating profit rose to $68.2 million, up 12.6% year over year. Adjusted operating margin saw a 205-bp expansion year over year to 17.7%.
Financial Position
Integra exited the third quarter of 2022 with cash and cash equivalents of $511.9 million, up from $447.2 million at the end of Q2.
Cumulative net cash flow from operating activities at the end of the third quarter was $179.1 million compared with $243.2 million in the year-ago period.
Guidance Updated
The company updated its financial guidance for 2022 and provided the fourth-quarter view.
For 2022, revenue expectations remain at the midpoint of its August 2022-announced guidance when the company tapered the revenue projection range to $1,551 million to $1,563 million (on the Q2 earnings call, the revenue expectation band was $1,557-$1,575 million). This suggests reported growth of approximately 0.5% to 1.3% (down from 1% to 2.1% announced on the Q2 earnings call). The Zacks Consensus Estimate for the same is pegged at $1.56 billion.
Foreign exchange is now expected to unfavorably impact 2022 reported growth by 250 basis points compared to 2021. Integra has also tightened its organic growth expectation to the range of 3.7% to 4.5% (4% to 5.2% previously).
The company expects to report adjusted earnings per share in the band of $3.29 to $3.33 for 2022 (an increase of 15 cents at the mid-point compared with the company’s August guidance). The Zacks Consensus Estimate for the same is pegged at $3.15.
For the fourth quarter of 2022, Integra expects revenues in the range of $391 million to $403 million, down 0.6% to 3.5% on a reported basis but up 1.3% to 4.3% on an organic basis. The Zacks Consensus Estimate for the same is pegged at $402.5 million.
Adjusted earnings per share are estimated in the range of 87 cents to 91 cents. The Zacks Consensus Estimate for the metric is pegged at 88 cents.
Our Take
Integra exited the third quarter of 2022 with better-than-expected earnings and revenues. The year-over-year organic growth in both the CSS and Tissue Technology segments buoys optimism. During the quarter, while the company noticed a recovery in procedure volumes leading to solid growth across most of its product portfolio, it was largely offset by the impact of legal challenges, foreign exchange headwinds, and continuing supply challenges. The impact of the recall of CereLink in the quarter was significant.
The increase in costs put pressure on the gross margin. The lackluster 2022 guidance is also concerning.
Zacks Rank & Key Picks
Integra currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Accuray (ARAY - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an earnings yield of 5.5% against the industry’s (2.3%). ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, having a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $384 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 22.7% for 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 22.04%.
Accuray reported fourth-quarter fiscal 2022 adjusted loss per share of 4 cents, which surpassed the Zacks Consensus Estimate by 33.3%. Fourth-quarter revenues of $110 million outpaced the Zacks Consensus Estimate by 4.9%. It currently has a Zacks Rank #2.
Accuray has an estimated growth rate of 100% for fiscal 2023. ARAY’s earnings surpassed estimates in three of the trailing four quarters and lagged the same in one, the average surprise being 20.8%.